Marketing Fundamentals PDF

Marketing Fundamentals Jikyung (Jeanne) Kim / [email protected] 1  Session 2. Definition of marketing The Agenda 1. Definition of marketing 2. Marketing process revisit 3. The customer concept (the history) 4. Macroenvironment 5. Microenvironment...

Marketing Fundamentals Jikyung (Jeanne) Kim / [email protected] 1  Session 2. Definition of marketing The Agenda 1. Definition of marketing 2. Marketing process revisit 3. The customer concept (the history) 4. Macroenvironment 5. Microenvironment 2 What is Marketing ? 3  What is Marketing? ▪ the process of making value for patrons and creating good relationships with customers to get value from customers in return. (Kotler, Armstrong & Opresnik 2022) ▪ Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (American Marketing Association 2023) ▪ Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. (Chartered Institute of Marketing 2020) 4  Marketing Organizational Finance behavior Business Decision Science Accounting School Operations Strategy 5  The Customer Concept ▪ 1904 First marketing course (Wharton) ▪ 1934 First marketing department was created  A brief history of marketing 1900 1920 2000 1904 first marketing course 1934 first marketing department was created 1926 The first supermarket in Chicago Before After ▪ 1937 First shopping cart was used in Humpty Dumpty supermarket chain ▪ Introduced by Sylvian Goldman 1922 first radio ad 1941 first TV ad  A brief history of marketing Production orientation 1900 1920 1950 1904 first marketing course 1922 first radio ad 1926 first “supermarket” in Chicago 1934 first marketing department was created 1937 first shopping cart used 1941 first TV ad 1960 Direct marketing is born  A brief history of marketing Production orientation Selling orientation Customer orientation 1900 1920 1950 1980 2000 1904 first marketing course 1922 first radio ad 1926 first “supermarket” in Chicago 1934 first marketing department was created 1937 first shopping cart used 1941 first TV ad 1960 Direct marketing is born 1980 “Customer satisfaction” 1981 AA Frequent Fliers 1990 Internet revolution 19 (In linear scale) 20  Changing ways Starting Focus Means Ends point The selling Existing Selling and Profits Factory through concept products promoting volume Profits The Customer Integrated through Market marketing needs marketing customer concept satisfaction 21 Customer vs. consumer… what is the difference? 22  Definition: customer A customer is any person or organization, in the channel of distribution or decision (other than competitors) whose actions can affect the purchase of the firm’s products and services. 23 Direct customer vs. Indirect customer 24 INTC 25 Current customer vs. future customer 26 Marketing Fundamentals Session 3. Project briefing and Environment analysis Jikyung (Jeanne) Kim [email protected] 1 What does a typical business plan look like? Executive summary Company description Product and services Market analysis Marketing strategy Logistics/ operations Financials/ budget  The marketing process (outline of your marketing plan) Analysis Marketing strategy Marketing implementation Customer Segmentation & Targeting Company Customer Competitors POSITIONING acquisition Context Customer Value proposition retention Collaborators Understand value Create value Deliver value Capture value 3  Understanding the Environment Customer S2. Customer concept Company Mission statement, portfolio an., Micro- p/m expansion environment Competitors Context Macroenvironment (PESTEL) Collaborators ❖ All of the above can be summarized with SWOT analysis. 4 Marketing Environments in a nutshell Political Company Legal Economic Collaborator Customer Competitor MICRO (4Cs) Social Environmental Technological MACRO (PESTEL) 5 Microenvironment 1. Company Company Collaborator Customer Competitor  Company Company name, business structure Company Legal status and structure description History and evolution Details of product and services offered Product and Business model service What do we sell and why is it different? Who are we? Mission Company identity statement Company vision and long-term goal  Mission Statement the organization’s purpose; what it wants to accomplish in the larger environment. “Who we are.” Statement of value it gives and clear target group that defines the company Sometimes may not cover all activities and business functions done by the company Product vs. market oriented statements Product oriented Marketing oriented We sell burritos and Food with integrity, long- other Mexican food term welfare of customer and environment We are an online social Connect people around network the world, help them share important moments We sell tools and home Empower homeowners to improvement items achieve house of their dreams “Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” “To connect the world’s professionals to make them more productive and successful.” “Bring inspiration and innovation to every athlete in the world.* If you have a body, you are an athlete.” “We save people money so they can live better.” 10 11  Business portfolio ▪ The business portfolio is the collection of businesses (SBU: strategic business unit) and products that make up the company. ▪ Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company.  Portfolio analysis (BCG growth-share matrix) Market share High Low High Market growth Stars Question mark (Hold) (Build) Low Dog Cash cow (Harvest) (Divest)  (Google) ▪ Has 250+ products Search engine Advertising Web-based Gemini Nexus Communication Services/ Pixel Publishing Hardware Chromecast Operating Android Chrome OS Developer Gerrit systems tools Web toolkit Google Docs Google Chrome Apps Google Maps … Alphabet portfolio analysis Market share High Low High Market growth Low The future directions of developing strategies: Product/market expansion grid Product Existing New Market Product Present penetration development Market Not Market Diversification present development ❖ A.k.a. Ansoff matrix ▪ Market penetration Company growth by increasing sales of current products ▪ Product development Company growth by offering new products to current market segments ▪ Market development Company growth by identifying new market for existing products ▪ Diversification Company growth by starting/acquiring business outside company’s products and markets Microenvironment 2. Competitor Company Collaborator Customer Competitor Competitive forces around a company (Direct) (Indirect competitor) Competitor Substitutes Collaborator Company Customer (Upstream partners: (Downstream partners) Suppliers and sellers) Market entrants (Future competitor) ❖ Adapted from Porter’s 5-force model  Direct vs. Indirect competitors ▪ Direct competitors: Target similar customers by offering similar benefits and values with similar products, technology, and business models. ▪ Indirect competitors: Target the same customers with similar benefits and values, but have different products, technology, and/or business models. Who are the competitors of Nintendo gaming consoles? Direct competitors Indirect competitors  How to tell who is your direct competition? A perceptual map Unhealthy of selected restaurants in the eastcoast US Fast eating Dining McAlister’s Healthy  Threat of new entrants ▪ Barriers to entry: - Strong economies of scale - Cost advantages: Through learning, cost can be reduced - Capital advantage - Channel access - Customer brand loyalty Macroenvironment Political Legal Economic Environmental Social Technological  China’s edtech collapse New Oriental Technology and TAL Education group Education High of 200 USD High of 90 USD Macro-social environment Macro-political environment Macro-environmental environment 30 Macro-social environment 32 PESTEL analysis: an example Potential Marketing Plan for Cabify Alternative A. Expansion into the US and other markets (Market development) Alternative B. Move into car-sharing services (Product development) Alternative C. Focus on domestic market and increase share in the premium segment (Market penetration)  How to write PESTEL analysis Justification Political: With geopolitical tension, fuel prices are unstable Final Marketing Plan for Cabify Economic: In times of hyper- inflation, even affluents are more “Focus on domestic market and attracted to ride-hailing services increase share in the premium Social: Consumers are increasingly segment.” aware of sustainability Technological: EV cars are Dismissed alternative A. Expansion into becoming more reliable and the US and other markets affordable Environmental: Transportation Dismissed alternative B. Moving into car services are considered culprits for sharing services global warming Legal: Many international markets have regulations to protect their taxi industries  How NOT to write PESTEL analysis 1. Including information that is irrelevant to your strategy. → It’s better to leave them blank! 2. Writing about company strategy rather than external factors → Remember, PESTEL is the external justification for your marketing strategy, not the analysis of the company’s current strategy A good way to summarize: SWOT analysis  SWOT analysis Good things Bad things Strength Weakness Internal capabilities Internal limitations Own company that helps reach that interfere with objectives reaching objectives Environmental conditions Opportunity Threat External (or Current or emerging anticipated) factors external factors that that company may challenge company’s exploit performance SWOT analysis example: Layla’s Delicies A small business based in NJ, US, born from Tunisian immigrant Madame Berrima in 2018  Environmental analysis ▪ LD products are often purchased as gifts as they are described as “exquisite,” “jewel-like,” and “art-pieces” ▪ The popularity of healthy new eating experience based on exotic food ingredients among millennials has been increasing ▪ Immigrants often face challenges regarding access to capital (lack of credit history) ▪ Lack professional connections ▪ LD products often evoke nostalgia and pride of MENA (North African and Middle-East) heritage ▪ FDA regulations regarding new food changes often ▪ MENA population in US have strong tradition of sharing exquisite gifts during special celebrations such as Ramadan and Diwali SWOT analysis of Layla’s Delicacies Strength Weakness ▪ Great product ▪ Lack credit history Own company experience ▪ Lack connections ▪ Have a clear target market Environmental conditions Opportunity Threat ▪ Growing popularity of ▪ FDA regulations are exotic, healthy food fickle and restrictive among Millennials ▪ Well integrated with traditions of core segment  Marketing environment checklist ▪ Macroenvironment: PESTEL ▪ Microenvironment: – Market: segments, size, growth rate, consumer trend,… – Competition: Direct, indirect, threat of entry – Buyer and supplier – Company: Portfolio analysis (growth-share matrix) ▪ SWOT analysis: everything in one package  Marketing Fundamentals: Consumer Behavior Theories Jikyung (Jeanne) Kim [email protected] 1  Today’s agenda ▪ What is consumer behavior? ▪ Why do consumers buy? 2 I keep six honest serving men They taught me all I knew, Their names are What and Why and When And How and Where and Who 3 Understanding customers WHAT is a customer? WHO are your customers? HOW do customers choose and buy? WHY do customers buy? WHEN and WHERE do customers buy? 4 What happens? Black box of the consumer Response Feelings Goals Needs Attitude Subconscious Thoughts processes 5  Consumer behavior ▪ The study of the processes involved when individuals or groups select, purchase and use products, services, or experiences ▪ Relevant disciplines: Social psychology, cognitive psychology, sociology, anthropology, demography, economics, statistics 6 Why do consumers buy? 7  Why do consumers buy? Easy to Cultural observe, indirect Social personal Hard to psychological observe, direct 8  Memorize this Cultural Social Personal Psychological What you believe Because we are Our situation Subconscious social animals process, deep- down feelings Culture Groups Demographics Motivation Subculture Family Personality Perception Social class Social role Lifestyle Memory Attitude 9 10  Cultural factors ▪ Culture: sum total of learned beliefs, values and customs that serve to direct the consumer behavior of members of a particular society. ▪ Environmental condition that a person was brought up in ▪ Value system of a culture: collective set of beliefs about what is important Achievements, Respect for authority, Individualism, Collectivism, Practicality, Honor/ cause, … … Cultural 11  Patagonia ▪ Mission statement: “Patagonia exists to inspire solutions to the environmental crisis” ▪ “1% for the planet”: funds many environmental NGOs ▪ Not through trumpeting the social cause but championing a mythical world of sophisticated adventure, which resonated powerfully with upper-middle-class Americans of all political stripes Cultural 12 13  Cultural factors 2 - subculture ▪ Smaller groups of a larger culture that share some cultural values and patterns of behavior within individual subgroup. ▪ Nationality, religious, geographic, racial, age, gender ▪ Hobbies, interests, beliefs Cultural 14 ▪ Born out of underground DJ + street fashion tradition, combining with haute couture ▪ Appealing to minority and subversive identity, satirizing the mainstream fashion Cultural 15  Cultural factor 3 – Social class ▪ NOT a social factor! ▪ Society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. ▪ Hierarchical ▪ Used often in luxury marketing ▪ Identifiers: Income, education, occupation+ geography (zip code) e.g., PRIZM (US), ACORN (UK) Cultural 16  Luxury brand marketing ▪ Luxury brand as a modern identity for social class ▪ Many luxury brand strategies leverage identities adopted by the upper class (e.g., exclusivity, sophistication, abstractness, legacy, authenticity) Cultural 17  Social factors ▪ Groups and social network: – Leads to word-of-mouth (WOM) – Opinion leaders (Influencer marketing) ▪ Family ▪ Social roles and status Social 18 Why is WOM so effective? Social influence mechanism Social pressure: Desires to Informational belong, Fear of missing out (FoMO) Competitive Mere pressure exposure  Personal factors ▪ Age and life-cycle stages ▪ Occupation ▪ Economic situation ▪ Lifestyle ▪ Personality and self-concept personal 22 23 24  Cultural Social personal psychological 25  Psychological factors 3. Learning and memory 2. Perceptual process 4. Attitude 1. Motivation psychological 26 Decision making process Jikyung (Jeanne) Kim [email protected] 1 Understanding customers WHAT is a customer? WHO are your customers? HOW do customers choose and buy? WHY do customers buy? WHEN and WHERE do customers buy? 2  Decision making process Information Need search recognition (1) (2) (3) (4) (5) Postpurchase Evaluation of Purchase behavior alternatives decision 3 Do consumers always go through five steps? 4 Buying decision behavior Involvement High Low Difference between brands Complex Variety-seeking Significant buying behavior buying behavior Dissonance -reducing Habitual Few buying behavior buying behavior 5 Dissonance reducing 6 Variety seeking 7 Habitual 8  Need recognition Need Information Evaluation of Purchase Postpurchase search recognition alternatives decision behavior 9  Where does need come from? ▪ Need: State of felt deprivation Self- actualization Esteem needs Social needs Safety needs Physiological needs 10  Want ▪ The form human needs takes depending on culture, personality, etc. Self- actualization Esteem needs Social needs Safety needs Physiological needs 11 “Work injuries lead to 110 million lost workdays a year.” 12 13 14  Information search Need Information Evaluation of Purchase Postpurchase recognition search alternatives decision behavior ▪ Process of exploring more information on future purchase ▪ Why is search important? 15 For what? Where? For how long? 16  Search ad market ▪ Search advertising (paid search, sponsored search) – 40% of the digital advertising market * Source: Statistia.com 17  Key word Search Engine Results Page (SERP) Publisher Paid search (pay-per-click) Rank 1 Rank 2 … Organic results 18  SEM vs. SEO Search engine marketing Search engine optimization Search engine advertising ▪ Getting better ranking in the ▪ Also called paid search organic result advertising (more broadly, ▪ No cost but difficult pay per click) ▪ Either bidding or fixed-fee 19  How is paid search populated? ▪ A combination of: – How much you offered to pay per click of the keyword – Relevance of keyword with your ad/website – How much it has been clicked, when SERP showed your ad/website (this also reduce cost per click) 20 Is more consumer search good? For consumers For business ▪ YES when ▪ YES for lesser known involvement is high brands and complex ▪ Usually NO: Time products constraints and ▪ NO if your brand is already laziness on consumers’ mind or they have discovered you Need Information Evaluation of Purchase Postpurchase recognition search alternatives decision behavior 21 22 Discouraging further search Need Information Evaluation of Purchase Postpurchase recognition search alternatives decision behavior 23  Evaluation and choice Need Information Evaluation Purchase Postpurchase recognition search decision behavior 24  Choice making rules Rational Boundedly rational ▪ Classical economics ▪ Anomalies view ▪ Non-compensatory rules ▪ Attribute-based ▪ Heuristics evaluation ▪ Uncertainty evaluations – Simple additive (prospect theory) – Weighted additive 25  Attribute based evaluation Attribute Landrover Seat Ateca Mitsubishi Skoda Discovery Outlander Kodiaq Engine Reliable Price Design 26  Attribute based evaluation Attribute Landrover Seat Ateca Mitsubishi Skoda Discovery Outlander Kodiaq Engine Excellent Fair Bad Good Reliable Very Good Bad Good Good Very Price Excellent Excellent Very good Bad Design Excellent Bad Fair Good 27  Attribute based evaluation Attribute Landrover Seat Ateca Mitsubishi Skoda Discovery Outlander Kodiaq Engine 90 50 30 60 Reliable 80 30 60 70 Price 10 100 100 90 Design 90 20 50 70 28  Attribute based evaluation Attribute Landrover Seat Ateca Mitsubishi Skoda Discovery Outlander Kodiaq Engine 90 50 30 60 Reliable 80 30 60 70 Price 10 100 100 90 Design 90 20 50 70 Simple 270 200 240 290 additive 29  Attribute based evaluation Importance Landrover Seat Ateca Mitsubishi Skoda Attribute weight Discovery Outlander Kodiaq Engine 30% 90 50 30 60 Reliable 10% 80 30 60 70 Price 20% 10 100 100 90 Design 40% 90 20 50 70 100% 30  Attribute based evaluation Importance Landrover Seat Ateca Mitsubishi Skoda Attribute weight Discovery Outlander Kodiaq Engine 30% 90 50 30 60 Reliable 10% 80 30 60 70 Price 20% 10 100 100 90 Design 40% 90 20 50 70 Weighted 100% 73 46 55 71 additive 31  Decision anomalies 32  Comparison of brands Dimension 2 Quality A B Dimension 1 Economy 33  Attraction effect Dimension 2 Quality A B Decoy C Dimension 1 Economy 34 Plan A ▪ Web subscription $59 68% ▪ Print and web subscription $125 32% Plan B ▪ Web subscription $59 16% ▪ Print and web subscription $125 84% ▪ Print subscription $125 35  Compromise effect Dimension 2 Quality A B C Dimension 1 Economy 36 37 Non-compensatory rules 38  Examples of non-compensatory decision rules ▪ Conjunctive Strategy (CS) – sequential options – Set cutoff for each attribute – Choose first brand that meets all cutoffs ▪ Elimination by aspect (EBA) – concurrent options – Eliminate brands that don’t meet cutoff on most important dimension – Eliminate brands that don’t meet cutoff on 2nd most important dimension – Continue until 1 brand remains 39  Conjunctive ▪ Location: in Europe ▪ Salary: at least 70K ▪ Days off: at least 42 days Location Salary Days off Goldman London 80K 40 days JP Morgan New York 100K 35 days Morgan Stanley Madrid 70K 45 days 40  Elimination by aspect (EBA) ▪ 1st screen size: Cannot be smaller than 8 in ▪ 2nd weight: Has to be lighter than 600g ▪ 3rd Salary: at least 80K 41 Heuristics 42  Choice based on heuristics ▪ Heuristics – Mental shortcuts that consumers simplify their decision- making task – Usually reasonable decisions – Trade off effort and accuracy – But: Bad decisions in specific situations ▪ Examples? – Price vs. quality  Heuristics ▪ Representative heuristics ▪ Availability heuristics ▪ Simulation heuristics ▪ Anchor-and-judgment heuristics  Representative heuristic ▪ Evaluations and choices are influenced by the resemblance of items and events to the category prototypes ▪ Judging the probability of a hypothesis by considering how much the hypothesis resembles available data ▪ Can lead to conjunction and base rate fallacy  Conjunction Fallacy ▪ Increasing the perceived likelihood of things that are more representative ▪ P(A & B) > P(A)? A&B A B  Conjunction fallacy “Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations.” A. Linda is a bank teller B. Linda is a bank teller and a feminist activist 14% 86% Bank teller Feminist  Availability heuristic ▪ Searching memory for relevant examples of a particular event and basing one’s prediction of that event on how easily these examples come to mind ▪ Factors that determine availability – Frequency – Vividness  Availability heuristic ▪ ratio of the number of deaths caused by car accidents to the number of deaths caused by colon cancer Subjects said on average 7:1 Actual number 1:1.4 (35,000:49,000)  Simulation heuristic ▪ An event or sequence of events that is easy to imagine also seems very likely to occur “Imagine how likely you are to contract Hyposcencia- B.” Group A Group B Headaches Disorientation Muscle aches Malfunctioning nervous Low energy system Inflamed liver “Likely”: high percentage Low percentage Decision-making under uncertainty What option would you choose? Option A: win $500 for certain Option B: 50% chance of winning $1,000, otherwise win nothing Now what will you choose? Option A: lose $500 for certain Option B: 50% chance of losing $1,000, otherwise lose nothing Risk seeking in the loss region Version 1 : Loss region – Option A: lose $500 for certain 29% – Option B: 50% chance of losing $1,000, 71% otherwise lose nothing Version 2 : Gain region – Option A: win $500 for certain 83% – Option B: 50% chance of winning $1,000, 17% otherwise win nothing  U(1000) U(500) 0.5 x U(1000) 500 1000 Value Better!! Sure gain of 500 = U(500) 50% chance of 1000, 50% chance of 0 = 0.5 x U(1000) + 0.5 x U(0) Utility  Sure loss of 500 = U(-500) 50% chance of -1000, 50% chance of 0 = 0.5 x U(-1000) + 0.5 x U(0) -1000 -500 Better!! Value 0.5 x U(-1000) U(-500) U(-1000) Utility  Reference point effect Mr. A was given tickets to lotteries involving the World Series. He won $50 in one lottery and $25 in the other. Mr. B was given a ticket to a single, larger World Series lottery. He won $75. Who was happier? Mr. A > Mr. B 63% 20% (indifferent 17%)  Reference point effect Mr. A received a letter from the IRS saying that he made a minor arithmetical mistake on his tax return and owed $100. He received a similar letter the same day from his state income tax authority saying he owed $50. There were no other repercussions from either mistake. Mr. B received a letter from the IRS saying that he made a minor arithmetical mistake on his tax return and owed $150. There were no other repercussions from his mistake. Who was more upset? Mr. A > Mr. B 63% 23% (indifferent 14%) Reference point effect U(25)+U(50) U(75) U(50) U(25) 25 50 75 Value 25+50=75, but U(25)+U(50)>>U(75) !!! Utility  Reference point effect -50+(-100)=-150, but U(-50)+U(-100) P = dissatisfaction performance Need Information Evaluation of Purchase Postpurchase recognition search alternatives decision behavior MF session 5. Psychological Factors Jikyung (Jeanne) Kim [email protected] 1  Cultural Social personal psychological 2  Psychological factors 3. Learning and memory 2. Perceptual process 4. Attitude 1. Motivation psychological 3 Psychological factors 1. Motivation Self- actualization Esteem needs Social needs Safety needs Physiological needs * Maslow’s Hierarchy of needs psychological 4  Psychological factors 2. Perceptual Process psychological 5  Cognitive process of consumers 2. Perceptual 3. Learning and 4. Attitude process memory Comprehension Judgement Perceptual Behavior process Learning Belief Attitude 6  Perceptual process Comprehension An Apple! Sensation, Attention Exposure Perception “Process of receiving, selecting, and interpreting environmental stimuli involving the five senses.” 7  Definitions ▪ (Sensory) exposure – When a stimulus is detected by physical senses ▪ Attention – Focusing on one or more environmental stimuli while potentially ignoring others ▪ Perception – Process of developing an interpretation of a stimulus ▪ Comprehension – Ability to interpret and assign meaning to the new information by relating it to knowledge already stored in memory 8 Exposure 9  When do consumers detect a stimulus? ▪ When the stimulus exceeds lower limits of [absolute threshold] ▪ [ Absolute threshold ] : Minimum level of stimuli needed for an individual to experience a sensation 10  Just-Noticeable-Difference ▪ Also called differential threshold ▪ The amount of differential change required for a person to detect a difference between two similar stimuli ▪ Marketing applications: – Stay within J.N.D limit to Implement indirect price increase: Package downsize pricing ‘Modernize’ brand logo without losing brand equity – Go beyond J.N.D to Create buzz 11 12 Package downsizing fail (2016) 170g 150g 13 14 15 16  2016 2014 2021 2018 2023 2021 17  Subliminal Message ▪ When stimulus is lower than absolute threshold ▪ James Vicary’s study in New Jersey movie theater in 1957 ▪ 2 messages flashed (every 5 seconds, for 1/3000th of a second) during playing of film: “Drink Coca- Cola” and “Hungry? Eat Popcorn” ▪ Results : 18.1% increase in Coca- Cola sales; 57.8% jump in popcorn purchases 18  ▪ 3 minute clip from drama Spooks twice, each time one group with blindfolds ▪ Test group: Every 5 seconds, for 1/3000th of a second flashed “Lipton” ▪ Test group (refined): 53% Lipton, 47% water ▪ Control group (refined): 61% Lipton, 39% water BBC replication study (2015) 19  Does it work? ▪ Not really – Vicary admitted to faking data – Audio self-help tapes are bogus (Greenwald and colleagues) ▪ It depends… – Subliminal activation of mentally represented constructs (e.g., attitudes, goals, emotions, traits, stereotypes) influence people’s judgments, preferences, choices, and behaviors (Bargh and colleagues) 20 Attention 21  Attention ▪ Attention: The amount of cognitive resources focused towards a stimulus 2. Varies in intensity: what limits attention? 1. Directional: selective in nature Attention 3. Voluntary or Involuntary 22 23  Intensity of attention Short term Arousal memory ▪ Miller’s rule Attention – Hold up to 7+/- 2 ▪ Why positioning has to be about one or two critical benefits Attention Arousal 24  Super Bowl ad study (Newell et al., 2001) Fans of finalists Fans of other teams 25  Kinds of attention ▪ Voluntary – Focusing our attention to something meaningful and appealing ▪ Involuntary – Nature of the stimuli Salient stimuli: something that stands against the background (for everyone) Vivid stimuli: something that inherently stands out for some people 26  Salient stimuli ▪ Stimuli are salient only when they are different from other stimuli (context dependent) ▪ Figure-ground principle 27  Creating salient stimuli ▪ Novelty: new, original, different, or unexpected ▪ Intensity: loud, bright, or long ▪ Complexity: something that challenge consumers (intriguing and draws attentions) 28 Novelty 29 Intensity 30 Intensity 31  Vivid stimuli ▪ Attention drawing in all contexts, because they are – emotionally interesting – concrete: easy to imagine or picture – Proximal Sensory proximity (“Seeing is believing”) Temporal proximity Spatial proximity ▪ Point of differentiation: – salient stimuli get attention of all people depending on the context – vivid stimuli get attention of some people across all contexts 32 33 Vivid 34 Perception 35  Perception does not always match the reality ▪ Although people assume everyone else perceives the world as we do ( Phenomenal absolutism ), since reality should be objective, ▪ Perception represents “subjective reality” A B A B 36 Which way is the girl spinning? 37 White/gold or blue/black? 38  How is perception “colored”? ▪ Several factors influence perception – Goals and motives (people see what they want to see) – Expectations (people see what they expect to see) 39  Goals and motives ▪ “The sexual overperception bias,” Haselton, 2003 (JRP) – “When men see someone of the opposite sex smile at them they tend to think “she must be interested”. Women simply see a smile.” (New Scientist) – False positive (no sexual interest, but interpreted as sexual interest) significantly higher for men 40 Expectations (beer taste test) 41 Blind condition 42 Non-blind condition 43  Take away points ▪ Perceptual process – Exposure → attention → perception → comprehension ▪ Exposure – Has to be greater than some threshold – Just-noticeable-difference is often applied in marketing ▪ Attention – Selective and varies in intensity – Salient and vivid stimuli will (involuntarily) grab attention ▪ Perception is subjective – Depends on one’s goal (motives) and expectations 44 MF session 6. Learning and judgment Jikyung (Jeanne) Kim [email protected] 1  Cultural Social personal psychological 2  Psychological process Comprehension Judgement Perceptual Behavior process Learning Belief Attitude 3  Where do these come from? Comprehension An Apple! Sensation, Attention Exposure Perception 4  Learning ▪ Unintentional/ behavioral – Stimulus and response model – Learning is called “conditioning” – Classical conditioning and operant conditioning ▪ Intentional/ cognitive – Mind is like a computer – Information is processed elaborately for meaning – Memory plays central role 5  Classical conditioning Unconditioned Unconditioned stimulus response Existing Association Stimulus Pairing Conditioned Association Conditioned Conditioned stimulus response 6  Application in marketing context Unconditioned Unconditioned stimulus response Existing “Liking” Association Stimulus “Liking” Pairing Conditioned “Liking” Association Conditioned Conditioned 7 stimulus response Cognitive learning: memory 8  Kind of memory ▪ Sensory memory – Iconic (visual) : 1-2 sec – Echoic (auditory) : 3-4 sec – Works unconsciously 9 PYFG VJSA DHBU 10  Kind of memory ▪ Sensory memory ▪ Short-term (workbench) memory – Iconic (visual) : 1-2 sec – Active memory – Echoic (auditory) : 3-4 sec – Lasts 18 sec or less – Works unconsciously – Miller’s rule, consideration set, … ▪ Implicit memory – Active memory, but not consciously detected ▪ Long-term memory – Inactive memory – Large storage capacity 11  Transfer of information Learning Pay Rehearse Sensory attention Short Term Long Term info Memory to Memory Memory (elaborate) info Retrieving Remembering 12  Long-term memory ▪ Organized by categorization, prototypes, and schemas ▪ Through technique called “categorization” – Three levels: superordinate, basic, subordinate ▪ Example: “What do you want to drink?” Soda Basic level category 13  Categorization ▪ networks of associated memories that have features in common with each other ▪ Example: “What do you want to drink?” Beverages Superordinate Alcoholic Soda Juices Basic Cola Lemon/limes Flavors Non-flavors Subordinate Pepsi Coke DP Sprite 7-up M Dew Fanta Seltzer Subordinate 14 Associative Network Spreading activation  Prototype ▪ Member of the category that is most average or typical of the category “cat” 16  Strategy 1: be the prototype ▪ Category member that is the most representative – Often most frequently encountered, and/or comes to mind first ▪ Examples Facial tissues Copying machine Artificial Intelligence 17  Strategy 2: belong to a desirable category ▪ Affect Transfer: The evaluation of the product category transfers to your brand Fast food Fast casual Casual quality dining 18 Country of origin effect 19 Information processing 20 Elaboration likelihood model ▪ There are two different routes to persuasion ▪ Consumers are sometimes likely to elaborate on ad messages (take central route) ▪ Sometime likely not to elaborate (peripheral route) 21  Central route ▪ High elaboration (i.e., high number of message-induced thoughts) ▪ Requires effort ▪ Form an opinion based on central cues: important, diagnostic information – Facts – Evidence – Examples – Logical reasoning 22 23 24  Peripheral route ▪ Low elaboration ▪ Little effort ▪ Form an opinion based on peripheral cues: easy-to- process, but unimportant information – Source attractiveness/expertise – Mood/positive feelings – Message length/number of features 25 You’d want to dent it. 26 27  Comprehension Judgement Perceptual Behavior process Learning Belief Attitude 28  What does comprehension lead to? “Judgement” Comprehension Red Vitamin An Apple! Smells good I like apples … Sensation, Attention Exposure Perception  Judgment Non - evaluative Evaluative ▪ Belief ▪ Attitude ▪ Connection between ▪ Ratings of good or stimulus and bad, favorable/ attributes unfavorable ▪ “Listerine kills germs ▪ “Listerine is a better in the mouth, and product than Scope” Scope doesn’t”  Attitude ▪ Evaluative judgment ▪ Definition: Relatively enduring, learned disposition involving ratings of good/bad, favorable/unfavorable, or pleasant/unpleasant Why is attitude important? Belief Attitude Behavior “Ethical” 32 Does attitude always lead to behavior? ▪ Wicker (1969): Low Attitude – Behavior correlation – External factors Attitude But I have no But I don’t Behavior money plan to travel I like I stay in Hilton Hilton hotel But I like Hyatt But the more hotel is full – Individual differences, such as High vs. low self-monitors How is attitude formed? Belief Affect Attitude Behavior High involvement purchase contexts 34  How is attitude formed? High involvement Belief Affect Attitude Behavior Low involvement Belief Behavior Affect Attitude Behavioral influence Behavior Belief Affect Attitude On-the-spot Affect Attitude 35  Behavioral influence ▪ Self-Perception: Looking at your own behavior vis-à- vis target can help you figure out what your attitude toward that target is head nodding test holding pencil with teeth vs (Bem study) lips (Strack study)  On-the-spot attitude Affect Attitude ▪ How happy are you in your marriage? – Finding dime in the phone makes people happier in their marriage ▪ How happy are you with your apartment? – Waiting in a small room makes people happier with apartment, and vice versa ▪ How satisfied are you with your life? – Pleasant weather makes people more satisfied with their life  How attitudes are changed ▪ Attitudes Can Change – Over time – Following new information – Depending on their strengths ▪ Strategies and theories of attitude change – Using attribute-based evaluation model, change attribute importance – Use balance theory – Cognitive dissonance Changing the importance of attributes Cognitive dissonance explained ▪ What is Cognitive Dissonance? The unpleasant state of psychological arousal resulting from an inconsistency within one important attitudes, beliefs, or behaviors College freshmen going through unpleasant initiation rituals to enter exclusive fraternity Religious sect members not giving up their faith after the lies about the institution is revealed Smokers creating reasons to smoke even though they know it is harmful to their health  Cognitive dissonance explained i v e Attitude n i t ce Behavior o g an “Smoking is bad for health”C o n i s s “But I like smoking” d Solution 1. Change behavior Quit smoking (Really hard) Solution 2. Change attitude “Not smoking causes stress, which is worse for health” “There is no definitive proof that smoking causes cancer” (easier to change your thinking) Marketing Intelligence: Marketing research Jikyung (Jeanne) Kim [email protected] 1  Where do you need marketing research? Analysis Marketing strategy Marketing implementation Customer Segmentation & Targeting Company Customer Competitors POSITIONING acquisition Context Customer Value proposition retention Collaborators Understand value Create value Deliver value Capture value 2 Marketing intelligence needs 1 Environment (5Cs) Customer ▪ How big is the market? Company Market potential research ▪ What are the characteristics of our Competitors potential customers? Market characteristics research Context Collaborators 3  Marketing intelligence needs 1 Environment (5Cs) ▪ How is our company performing? Customer Market share research ▪ What is the image of our brand or company? Company Image research Competitors ▪ Where and how are our products selling (and competitors)? Context Sales analysis ▪ How well is our product going to perform in the Collaborators future? Forecasting research ▪ How will our customers´ need evolve? Business trends research 4  Marketing intelligence needs 2 Strategic phase (STP) Segmentation Targeting Positioning Segmentation research – Determine basis of segmentation – Establish market potential and responsiveness for various segments – Select target markets and create lifestyle profiles: demography, media, and product image characteristics 5  Marketing intelligence needs 3 Implementation phase (4Ps) Place Product Promotion Price (distribution) Product research – Test concept – Determine optimal product design – Package tests – Product modification – Brand positioning and repositioning – Test marketing 6  Marketing intelligence needs 3 Implementation phase (4Ps) Place Product Promotion Price (distribution) Promotion research – Optimal promotional budget – Optimal promotion mix – Copy decisions – Creative advertising testing – Evaluation of advertising effectiveness 7  Marketing intelligence needs 3 Implementation phase (4Ps) Place Product Promotion Price (distribution) Distribution research – Attitudes of channel members – Intensity of wholesale and retail coverage – Channel margins – Retail and wholesale locations 8  Marketing intelligence needs 3 Implementation phase (4Ps) Place Product Promotion Price (distribution) Pricing research – Importance of price in brand selection – Pricing policies – Product line pricing – Price elasticity of demand – Initiating and responding to price changes 9 What is marketing research? ▪ Marketing research: the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. ▪ Market research: Collection and analysis of data (information) about certain customers or specific markets regarding product, services, or marketing programs. Marketing research Market research 10 Marketing research process Collect Develop data/ research information design (1) (2) (3) (4) (5) Report, Make decision Analyze Define data problem 11  Step 1. Defining problem Define Research Collect Analyze problem design data data Report 12  Step 1. Defining problem ▪ Involves stating the general problem and identifying the specific components of the marketing research problem. Management decision problem Marketing research problem Should a new product be introduced? To determine consumer preferences and purchase intentions for the proposed new product Should the advertising campaign be To determine the effectiveness of the changed? current advertising campaign Define Research Collect Analyze problem design data data Report 13  Step 2. Research design ▪ A framework or blueprint for conducting a marketing research project. ▪ It details the procedures necessary for obtaining the information needed to structure or solve marketing research problems. Define Research Collect Analyze problem design data data Report 14  Marketing research dashboard Objective of Exploratory Descriptive Causal research Study design Non-experimental Experimental Nature of data Qual. Quant. Quantitative Collection Primary Second. Primary Secondary Primary Second. purpose In-depth Data Survey, Sales Experiment Quasi- interview, mining, conjoint, study, RFM (lab, field) experim. focus group, panel perceptual analysis Research observation, study mapping techniques ethnography Panel study, correlation study 15  According to research objectives… Q: %? A: _____% “Our organization has been “What % of people “Do watching advertisements having high employee turn likes our product A?” for this product increase sales?” over. The management has no clue why.” Exploratory Descriptive Causal 16  Exploratory ▪ Research that puts major emphasis on gaining ideas and insights on the problem ▪ Purpose – Increase familiarity of a problem – Gather preliminary information that will help define the problem and suggest hypothesis – Clarify concepts – Often followed by a descriptive or experimental research 17  Descriptive ▪ Majority of formal studies, often guided by initial hypothesis ▪ Purpose – Describe (quantitatively) characteristics of certain groups – Estimate proportion of groups who behave in certain way – Examine associations (correlation) between two or more variables – Make specific predictions 18 Causal research 19  Causal research ▪ Research with emphasis on explaining cause-and- effect relationship ▪ Causation = One variable produces some effects in another variable ▪ Correlation ≠ Causation! ▪ Can be done only through experimental research 20 Spurious correlations 21  Which approach: exploratory, descriptive, or causal? ▪ What are the main reasons why virtual reality technology was not widely adopted by consumers by 2023? ▪ Effect of putting a “wash your hand” sign in a bathroom on people’s hand-washing behavior. ▪ Predicting the outcome of a new casual mobile game. 22  Marketing research dashboard Objective of Exploratory Descriptive Causal research Study design Non-experimental Experimental Nature of data Qual. Quant. Quantitative* Collection Primary Second. Primary Secondary Primary Second. purpose In-depth Data Survey, Sales Experiment Quasi- interview, mining, conjoint, study, RFM (lab, field) experim. focus group, panel perceptual analysis Research observation, study mapping techniques ethnography Panel study, correlation study * There does exist descriptive qualitative research. 23  By nature of data ▪ Qualitative research – An unstructured, primarily exploratory design based on small samples, intended to provide insight and understanding – “Words” ▪ Quantitative research – Research techniques that seek to quantify data and, typically, apply some form of statistical analysis. – “Numbers” – Descriptive and experimental research 24  Marketing research dashboard Objective of Exploratory Descriptive Causal research Study design Non-experimental Experimental Nature of data Qual. Quant. Quantitative* Collection Primary Second. Primary Secondary Primary Second. purpose In-depth Data Survey, Sales Experiment Quasi- interview, mining, conjoint, study, RFM (lab, field) experim. focus group, panel perceptual analysis Research observation, study mapping techniques ethnography Panel study, correlation study * There does exist descriptive qualitative research. 25  By collection purposes ▪ Primary data – Data originated by the researcher specifically to address the research problem ▪ Secondary data – Data collected for some purpose other than the problem at hand – Data generated within an organisation, information made available by business and government sources, commercial marketing research firms, and computerised databases. 26  Importance of secondary data ▪ An economical and quick source of background information ▪ Essential in problem definition ▪ Primary data are expensive and effortful to collect, so it should not be collected until the available secondary data have been fully analysed! 27 Qualitative Research Jikyung (Jeanne) Kim [email protected]  Qualitative research techniques Objective of Exploratory Descriptive Causal research Study design Non-experimental Experimental Nature of data Qual. Quant. Quantitative Collection Primary Second. Primary Secondary Primary Second. purpose In-depth Data Survey, Sales Experiment Quasi- interview, mining, conjoint, study, RFM (lab, field) experim. focus group, panel perceptual analysis Research observation, study mapping techniques ethnography Panel study, correlation study 2  Classifications Define Research Collect Analyze problem design data data Report 3  Focus Group Interview ▪ Characteristics Group Size 8-12 participants Group Homogeneous; respondents Composition prescreened Physical Setting Relaxed, informal atmosphere Time Duration 1 to 3 hours Recording Audio or both audio and video Moderator Observational, interpersonal, and communication skills of the moderator are critical 4  Focus Group Interview One-way mirror Viewing room looking into the focus group room through one-way mirror Layout of focus group room and viewing room 5  Focus Group Interview ▪ A focus group is an interview conducted by a trained moderator among a small group of respondents in an unstructured and natural manner. ▪ Advantages – Relatively low costs – Synergistic effects in groups ▪ Disadvantages – Less representative – Highly dependent on moderator – Follow the opinion leader 6  When to use Focus group ▪ When consumers' creativity is required, such as conflicting opinions or totally different points of view (idea generation) ▪ When the marketing team needs to be able to see the consumers vividly ▪ When opinions from distinct groups are not required ▪ When representativeness is not very important 7  In-Depth Interview ▪ A depth interview is an unstructured, direct, personal interview in which a respondent is probed by a skilled interviewer to uncover underlying motivations, beliefs, attitudes, and feelings on a topic. ▪ One-to-one interview 8  In-Depth Applications ▪ Detailed probing of the respondents ▪ Discussion of confidential, sensitive, or embarrassing topics ▪ Situations where strong social norms exist and the respondents might be easily swayed by the group’s response ▪ Detailed understanding of complicated behavior ▪ Interviews with professional people ▪ Interview with competitors, who are unlikely to reveal the information in a group setting 9  Classifications Define Research Collect Analyze problem design data data Report 10  Projective methods ▪ Personality tests designed to let a person respond to ambiguous stimuli, presumably revealing hidden emotions and internal conflicts ▪ “Deeper” interviewing techniques borrowed from psychology ▪ Finding answers to what people don’t want to say or don’t even realize 11  Brand personification ▪ Asks people to think about brands as if they were people and to describe how the brands would think and feel Demographic: how old? Is it a he/she? What’s their job? Lifestyle: What do they like to do? Their outfit? Where do they live? Values: what is important to them? What do they value? Relationship: if this is a person, how is your relationship with this person? How do you feel about them? Etc. Active Adventurous Courageous Powerful Risk taking Outgoing Energetic 12  Completion tasks ▪ People are given an incomplete story or line and are asked to provide an end to it ▪ Used to understand the deeper thoughts of a person, also in research to know about their relationship with a certain brand or product ▪ “Men are…” “Life is…” 13  Word associations ▪ Stimulus words/phrases are presented one at a time and participants respond with the first word or phrase that comes to their minds 14  Third-person technique ▪ Used to elicit deep-seated feelings and opinions held by respondents, that might be perceived as reflecting negatively upon the individual ▪ Respondents can safely voice their true feelings without the risk of exposing themselves to moral/ ethical judgment 15  Laddering technique ▪ Uncovers emotional/functional benefits of an object/brand ▪ Finding out the true “need” behind a “want” ▪ Used for brand positioning or communication development What does “⃝⃝⃝⃝⃝⃝⃝⃝⃝” remind you of? Why? What does it give you? Why is it important to you? 16  Observation methods ▪ Recording of behavioral patterns of people, objects, and events in a systematic manner to obtain information about the phenomenon of interest. ▪ Does not suffer from biases caused by respondent unwillingness or inability. ▪ While used for exploratory studies, can complement descriptive method (e.g., survey) 18  Personal observation Keltner’s study of power and empathy 46% of wealthy cars drove through pedestrian zone on a University campus (0% of non-wealthy car did) 19  Ethnography ▪ Ethnographic research is a qualitative method where researchers observe and/or interact with a study’s participants in their real-life environment. Ethnography was popularized by anthropology, but is used across a wide range of social sciences. ▪ Advantages – help identify and analyze unexpected issues – uncovering and analyzing relevant user attitudes and emotions ▪ Disadvantages – Many times require a long period of time – subjects may not act naturally during a short study 20  “What do users eat while watching the series?” “How do they behave?” “What kind of interactions do they have between them in this moment?” 21  Trace analysis (indirect observation) ▪ Collection of “traces” of past behavior to uncover insights o Computer cookies o Garbology – evidence of purchasing patterns in garbage o Traffic patterns in store by dirt on floor (or wear in floor) 22 Targeting Marketing Fundamentals Jikyung (Jeanne) Kim  Marketing Strategy: Targeting Analysis Marketing strategy Marketing implementation Customer Segmentation & Targeting Targeting Company Customer Competitors POSITIONING acquisition Context Customer Value proposition retention Collaborators Understand value Create value Deliver value Capture value  Targeting ▪ What is targeting? A process of selecting which customer segments and how many of them to serve. (implying company’s decision to develop an offering that matches the needs of a segment of customers.) ▪ To consider: (1) Market (customer) attractiveness (2) Company capability vs. competitive threat (3) Company long-term objectives  Segment attractiveness* ▪ “Inherent” attractiveness of the segment ▪ Size of the market ▪ Growth potential ▪ Has unmet (or underserved) needs * See Appendix 1 for the full list Company capability Company long-term objective Targeting Methods Undifferentiated targeting (Mass marketing) Differentiated targeting (Segmented marketing) Concentrated targeting (Niche marketing) Individual targeting  Appendix 1. List of market segment attractiveness and company strength Market Segment Attractiveness Business Strengths Market segment size Market segment share Market segment potential Profitability record Market segment growth rate Liquidity Ability to use available resources Financial leverage Potential profit margins Distribution facilities Likely competitor resources Brand value Technological change Marketing skills Barriers to entry Production capacity Barriers to exit Technological expertise Regulatory constraints Modernity of plant and equipment Social factors Raw materials position Degree of vertical integration Government relations Customer service valued Sales force Needs that are unmet or underserved Service levels Positioning Marketing Fundamentals Jikyung (Jeanne) Kim  Marketing Strategy: Positioning Analysis Marketing strategy Marketing implementation Customer Segmentation & Targeting Company Customer Competitors POSITIONING acquisition Context Customer Value proposition Value proposition retention Collaborators Understand value Create value Deliver value Capture value  What is positioning? ▪ Noun: Complex set of perceptions, impression, and feelings that consumers have for the product compared with competing products and their own needs ▪ Verb: Company effort of placing the offering clearly in consumers’ minds  Why do positioning? “Isn’t making good quality product enough? Won’t customers realize that we have a good product sooner or later?” 1. There are too many choices out there, and some consumers might not even have chance to consider your product at all 2. By convincing the customers that your product has favorable and unique positioning, you may extract more value from them  True or false? ▪ “Positioning (noun) is always the result of company’s communication effort toward the consumer public.” ▪ “Positioning is the detailed information about the benefit of the product – the more customer knows, the better positioning it is.”  Positioning Topics Understanding brand perception in relation to… Perceptual Map ▪ Other brands ▪ Important benefits Discover competitive advantage in terms of… Differentiation strategy Product Service Channel People Image ▪ Answers the question “Why should I buy your brand?” Value proposition ▪ Benefits vs. price 3X3 matrix Positioning A succinct statement to communicate to stakeholders statement regarding: Target Brand Category Benefit Reason Perceptual Map  Three components of the perceptual map 1. Benefit dimensions Comfortable 2. Brand positions Audi 90 3. Preferences (ideal spots) Ford T-bird Eagle Talon BMW 318i Infinity G20 Economic Premium Mercury Capri Toyota Supra Pontiac Firebird Sporty * The US Sedan market in 2000s  Constructing Perceptual Maps 1. Choose a group of brands to be plotted 2. Come up with a list of benefits that are relevant 3. Survey on the sample of people you whose opinion you are interested in 4. Principal component analysis 5. Plot the result on a graph  An Illustrative Example 1. Choose a group of brands to be plotted Audi90, BMW 381i, Inifiniti G20, Toyota Supra, Ford T-Bird, Eagle Talon, Mercury Capri, Pontiac Firebird 2. Come up with a list of benefits that are relevant Attractive, prestige, sporty, comfortable, well-bulit, Interesting, reliable, roomy, quiet, powerful, fun, expensive An Illustrative Example Creating a survey 3. Survey on the sample of people you whose opinion you are interested in ▪ Mark how much you agree to this statement regarding each brand. “This product is powerful.” Completely BMW 381i Completely 1 2 3 4 5 6 7 agree disagree Audi 90 1 2 3 4 5 6 7 Infiniti G20 1 2 3 4 5 6 7 … 1 2 3 4 5 6 7 “This product is unreliable.” “This product is quiet.” … An Illustrative Example Taking responses ▪ Sample: Those who know the sedan market and are willing to buy, about 70-100 people Respondent Make Powerful Unreliable* Quiet … 1 BMW 6 1 7 1 Audi 7 1 7 1 Infinity 5 2 5 1 Toyota 3 3 4 … 2 BMW 6 3 6 2 Audi 6 2 6 2 Infinity 3 2 5 2 Toyota 3 4 5 …… * Reverse coded An Illustrative Example Principal component analysis ▪ Transforms the observed values onto a new coordinate system such that the directions (principal components) capturing the largest variation in the data can be easily identified Observed Prestige Unreliable Quiet … Principal Comp. 1. Comp. 2. C3. c4. 52% 19% … components 14% 8% (X-axis) (Y-axis) An Illustrative Example Mapping benefits and brands ▪ Using correlation coefficient as coordinates, plot benefits as arrows and brands as points on the graph where horizontal is comp. 1 and vertical is comp. 2 (+) Comp. 2 Audi 90 Prestige Quiet FordRoomy T-bird BMW 318i Attractive -1 Eagle Talon (-) Comp 1 Infinity G20 Unreliable (+) Comp. 1 Interesting Mercury Capri Poorly built Toyota Supra Pontiac Firebird Sporty Uncomfortable (-) Comp 2  Insights from perceptual map Comfortable For Infinity G20… Audi 90 1. What kind of a brand is it? Ford T-bird 2. Closest competitor? 3. Is it positioned well? Infinity G20 BMW 318i Eagle Talon Economic 4. Where should it move to? Premium (Strategy) Mercury Capri Toyota Supra 5. How does it get there? Pontiac Firebird (Implementation: 4P) Sporty * The US Sedan market in 2000s Differentiation  Differentiation ▪ differentiated on features, benefits, Product performance, usage occasion, design, etc. ▪ differentiation through speedy or Service convenient service ▪ through superior channel coverage, Channel expertise, and performance ▪ through hiring and training better people People than their competitors do ▪ through creative logo design, persons, Image color, etc.  POD and POP ▪ Points of differentiation (POD): What competitive advantage does your company/brand have over the competitors? ▪ Points of parity (POP): What competitive advantage do your competitors have over your company/brand? What characteristics of your business are not differentiated from your competitor? “No sugar. No water. No concentrates.” (Attribute) (Attribute/benefits) (Benefit) “For growing kittens.” (Benefit) Differentiation by service - With respect to competitors Differentiation by service - Daybreak delivery Differentiation by channel (Through personal network) Amway Differentiation by people - Apple store genius Differentiation by image (color) Value proposition  What is value proposition? ▪ A full positioning of a brand in terms of benefits against the price consumers have to pay ▪ The answer to “Why should I buy this brand?” (more) More More More for for for less more same Benefits Same Meh… for less Less for NOPE much less (less) High price Low price  Examples Luxury Upscale discounter, brands designer outlets Often not sustainable (more) More More More for for for less more same Category killers Benefits Same (Toys r Us), Meh… for less Mercadona, Costco Less for NOPE much Aliexpress, Temu less (less) High price Low price Positioning statement  Positioning statement ▪ A Succinct statement that identifies the target market for which the product is intended, product category in which it competes, the unique benefit that the product offers, and reasons to believe the claim. ▪ “Among [target customers/market], [our brand] is a brand of [product category/frame of reference] that [unique benefit] because [reasons to believe].”  Examples ▪ “For upscale American family, Volvo is the automobile that offers the utmost in safety through knowledge that has accumulated since 1937.” ▪ “Among snackers, Snickers is the brand of candy bar that satisfies the hunger because it is packed with peanuts.” Quantitative Methods 1. Primary Designs Marketing Fundamentals Jikyung (Jeanne) Kim  Quantitative research techniques Objective of Exploratory Descriptive Causal research Study design Non-experimental Experimental Nature of data Qual. Quant. Quantitative Collection Primary Second. Primary Secondary Primary Second. purpose In-depth Data Survey, Sales Experiment Quasi- interview, mining, conjoint, study, RFM (lab, field) experim. focus group, panel perceptual analysis Research observation, study mapping techniques ethnography Panel study, correlation study 2 Quantitative methods by data types Primary Secondary “Big data” Surveys Experiments Transaction/ UGC Search Passive usage  AGENDA 1. Survey ▪ Data collection methods ▪ Conjoint analysis 2. Experimental design ▪ What is causality? ▪ Experimental designs 3. Sampling ▪ Definition and basic concepts ▪ Sampling process 4  What is survey? ▪ The collection of information from a sample of individuals through their responses to a structured questionnaire ▪ Descriptive, non-experimental, quantitative study ▪ Designed to elicit specific information such as… ✓ Service/product satisfaction ✓ Purchase intention ✓ Brand/issue attitude ✓ Brand perception (perceptual map) ✓ Conjoint analysis 5  By collection methods Telephone Personal Postal mail Electronic ▪ Computer- ▪ Computer-assisted ▪ Mail, mail panel ▪ E-mail assisted (CATI) (CAPI), mall ▪ Not accessible ▪ Internet web ▪ Not accessible intercept, at home through the service through internet ▪ Long survey internet ▪ Large and ▪ Lower budget representative ▪ Complicated sample questions ▪ Need to use physical stimulus 6 Internet survey (vs. telephone, personal, mail) Pros Cons ▪ Cheap ▪ Little control over data collection environment ▪ Fast collection ▪ Complicated/ difficult ▪ Fast data processing questions cannot be asked ▪ Little interviewer bias