Marketing Full Notes PDF

What Marketing is all about? The American Marketing Association (AMA) defines marketing as "the process of planning and executing the conception, pricing, promotion and distribution of ideas, …………………………………………………………………………. goods and services to create exchanges that satisfy individual and organiz...

What Marketing is all about? The American Marketing Association (AMA) defines marketing as "the process of planning and executing the conception, pricing, promotion and distribution of ideas, …………………………………………………………………………. goods and services to create exchanges that satisfy individual and organizational objectives …………………………………………………………………………. …………………………………………………………………………. The scope of marketing Marketing deals with identifying and meeting human and social needs. There are two perspectives to understanding marketing. ……………………………………………………………............... 1. Social perspective 2. Managerial perspective …………………………………………………………………………. Social perspective states that marketing deliver a higher standard of living …………………………………………………………………………. Managerial perspective states that marketing involve carefully analysis of markets to understand needs, selection of target groups of customers and a/so tailoring the product offering to achieve a customer satisfaction Role played by marketing is "delivering a higher standard of living."  The American Marketing Association Definition for Marketing “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.” Marketing management is identifying market opportunities and implementing strategies to tell you consumer base about your product/services/business that can help you become profitable and build a brand Formally it can be described as, The art and science of choosing target markets, and getting, keeping and growing customers through creating, delivering and communicating superior customer value  Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Kotler and Keller - 2016 Marketing is no longer a function - it is an educational process.  What is a customer ……………………………………………………………………… Customers are individuals or organizations who purchase, have purchased, or may potentially purchase a good, product, or service from the business or organization ……………………………………………………………………… …………………………… Difference between a customer and a consumer Customer is the one who is purchasing the goods. Consumer is the one who is the end user of any goods or services. A customer is not dependent on us, we are depending on him. A customer is not an interruption to our work, he is the purpose of it. we are not doing a favor by serving him, he is doing us a favor by giving us an opportunity to do so. A customer is not someone to argue or match with. Nobody ever won an argument with a customer. A cutomer is a person who bring us his wants. It is our job to handle them profitably to him and ourselves. Core Concepts of Marketing Needs, Wants, and Demands Target Markets, Positioning, and Segmentation Offerings and Brands Marketing Channels Paid, Owned, and Earned Media Impressions and Engagement Value and Satisfaction Supply Chain Competition Marketing Environment Needs – state of felt deprivation including physical, social and individual needs Wants – needs become wants when they are directed to specific objects that might satisfy the need Demand – A want combined with the purchasing power can be considered as demand  Stated needs needs that customers express or state when asked about their requirements  Real needs an actual requirement or necessity that a person or group of people must have to survive, function properly or achieve a specific goal  Unstated needs needs that customers may not be aware of, but which can be inferred through observation and analysis  Delight needs needs that delight the consumer when they are satisfied  Secret needs needs that a customer may not express or recognize, but which might be one of the primary reasons for selecting a specific product  What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want  Persons Places Organizations Information Ideas Experiences Events Properties Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything  A set of actual and potential buyers for the product  Similar needs and wants  Purchasing power  Willingness to buy through exchange process  Consumer markets  Business markets  Global markets  Nonprofit/Government markets  Marketer is someone who seeks a response from another party.  A responded party is called prospect.  What is Marketed? Goods Places Services Properties Events Organizations Experiences Information Persons Ideas  Simple Marketing System Communication Goods/services Industry Market (a collection (a collection of sellers) Money of Buyers) Information  For an exchange to occur….. There are at least two parties. Each party has something that might be of value to the other party. Each party is capable of communication and delivery. Each party is free to accept or reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.  Market orientations Production concept consumers inexpensive prefer products that are widely available and consumers favor products that offer the most quality, Product concept performance or innovative features Selling concept consumers will buy products only if the company aggressively promotes/sells these products Marketing concept focuses on needs/wants of the target markets and delivering value better than competitors Holistic marketing concept connects all the different marketing channels and departments of a company. Focuses on moving beyond the marketing department to an enterprise wide role The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies. Company Orientations Towards the Marketplace Consumers prefer products that are Production Concept widely available and inexpensive Consumers favor products that Product Concept offer the most quality, performance, or innovative features Consumers will buy products only if Selling Concept the company aggressively promotes/sells these products Focuses on needs/ wants of target Marketing Concept markets & delivering value better than competitors  Customer Delivered Value Starting point Focus Means Ends Existing Selling and Profits through Factory products promotion sales volume (a) The selling concept Customer Integrated Profits through Market needs marketing customer satisfaction (b) The marketing concept  The Holistic Marketing concept The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies.  Holistic marketing recognizes that “everything matters” with marketing and that a broad, integrated perspective is often necessary.  The Four Ps The Four Cs Marketing Mix Place Product Conven- Customer Solution Price Promotion ience Customer Communication Cost Traditional Organization Chart Top Management Middle Management Front-line people Customers Customer-Oriented Organization Chart Customers Front-line people Middle management Top manage- ment Evolving Views of Marketing’s Role Finance Production Production Finance Human resources Marketing Human resources Marketing a. Marketing as an b. Marketing as a more equal function important function Evolving Views of Marketing’s Role Production Marketing Customer c. Marketing as the d. The customer as the major function controlling factor Evolving Views of Marketing’s Role Production Marketing Customer e. The customer as the controlling function and marketing as the integrative function  Marketing Management Tasks Developing marketing Shaping market offerings strategies Delivering value Capturing marketing Communicating value insights Creating long-term growth Connecting with customers Building strong brands Marketing Management: MKT2311: Session 02: Understanding the marketing environment Sanju Wickramasinghe Department of Marketing Bachelor of Business Administration Degree Faculty of Management and Finance University of Colombo  Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is “meeting needs profitably.” Formal definition: 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.(The American Marketing Association – AMA) 3  Marketing Management is basically identifying market opportunities and implementing strategies to tell your consumer base about your products/services/business that can help you become profitable and build a brand. Formal definition: Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. 4  Marketing plan and marketing mix A marketing plan is a document that lays out the marketing efforts of a business in an upcoming period, which is usually a year. It outlines the marketing strategy, promotional, and advertising activities planned for the period. 1. Marketing plan objectives 2. Market Research Structure of a Marketing Plan 3. Target Market 4. SWOT analysis 5. Marketing strategy 1. Marketing Plan Objectives 6. Marketing budget 7. Performance analysis This section outlines the expected outcome of the marketing plan with clear, concise, realistic, and attainable objectives. It contains specific targets and time frames. Ex: Increase the customer base by 10% at the end of the financial year 2. Market Research – Market Analysis/Consumer Analysis Market analysis includes topics such as market definition, market size, industry structure, market share and trends, and competitor analysis. Consumer analysis includes the target market demographics and what influences their buying decisions (e.g., loyalty, motivation, and expectations), what are the unsatisfied needs –. 3. Target Market This defines the target customers by their demographic profile, such as gender, race, age, and psychographic profile, such as their interests. This will assist in the correct marketing mix for the target market segments. 4. SWOT Analysis A SWOT analysis will look at the organization’s internal strengths and weaknesses and external opportunities and threats. SWOT analysis includes the following: Strengths are internal organization’s competitive advantages that are not easily duplicated. They represent the skills, expertise, and efficiencies that an organization possesses over its competitors. Weaknesses are internal negative factors which stop an organization from performing at its optimum level. They are areas where the business needs to improve to remain competitive. These can include outdated machinery, inadequate working capital, and inefficient production methods, less skilled workforce Opportunities refer to favorable external factors that could give an organization a competitive advantage. They could include entry into new markets, adopting digital marketing strategies, or following new trends. Threats are external factors that can affect the business negatively, such as a new powerful competitor, legislative changes, natural disasters, or political situations, changes of socio cultural values. 5. Marketing Strategy The marketing strategy is a businesses' overall game plan which include actual strategies according to the marketing mix in order to reach perspective consumers and turning them into customers of their product. (The real strategies which is going to be executed to achieve the marketing objectives stated in the step 01 ) The correct marketing mix is developed according to the target market. The marketing mix is the set of controllable, tactical marketing tools that a company uses to produce a desired response from its target market. The marketing mix can be divided into four groups of variables commonly known as the four Ps: (The four Ps of marketing) : product, price, place and promotion Product: The goods and/or services offered by a company to its customers. Price: The amount of money paid by customers to purchase the product. Place (or distribution): The activities that make the product available to consumers. Promotion: The activities that communicate the product’s features and benefits and persuade customers to purchase the product. 5. Marketing Budget The marketing budget or projection outlines the budgeted expenditure for the marketing activities documented in the marketing plan. The marketing budget consists of revenues and costs stated in the marketing plan in one document. Ex: Marketing department has to request necessary funds from the Finance department in order to execute the marketing strategies 6. Performance Analysis A marketing performance assessment is a means of measuring the success of a marketing campaign or ongoing marketing activity in order to determine whether they can be improved upon in the future. Ex: Whether the expected objective is achieved, If not what are the loopholes ?  Environment in Business The surrounding factors and conditions that can affect the organization's operations, performance, and overall success. It is important to understand the changes and occurrences in the environment as these changes and occurrences can have significant impact and influence over different aspects of a business and lead the business towards success or decline.  Marketing Environment “The actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with its target customers.” - Philip Kotler Essentially, the marketing environment refers to all the factors and conditions that can impact an organization's marketing efforts and its ability to achieve its marketing objectives. Or the marketing environment refers to all the factors and conditions that can impact on meeting customers’need at a profit  Marketing Environment Marketing Environment Micro Environment Macro/General External Environment (Partially Controllable) (Uncontrollable) Task Environment Suppliers, Intermediaries Political, Economic, Customers, Competitors, Publics Demographic, Technological, Natural, Global, Social Internal Environment The Company  The Microenvironment The microenvironment refers to the actors and forces that are closer to the organization and directly affect its ability to serve its customers. It can be devided into two main parts as follows, 1. Internal Environment 2. Task Environment Internal Environment The internal environment of the business includes all the forces and factors inside the organization which affect its marketing operations and these factors are fully controllable. It includes the following: The Company (Vision, mission, members, resources , other departments etc. )  The Microenvironment - Internal Environment Company This refers to the internal environment of an organization, including its mission, vision, values, culture, resources, capabilities and different departments. The company's marketing decisions and strategies are influenced by its internal environment. Example: Mercedes bens vision believes its time to bring luxury and sustainability even close together - sustainable modern luxury. Its marketing strategy may involve promoting its product's features and value proposition in a way that aligns with the company's vission and the societies future needs. VISION AVTR – inspired by AVATAR - This concept vehicle embodies the vision, mission, values and capabilities of Mercedes-Benz designers, engineers and trend researchers for mobility in the distant future. The aim was to bring the luxury and sustainability even close together (sustainable modern luxury)  Task Environment The task environment consists of outside forces that are immediately relevant for the achievement of the goals of business organizations. This belongs to the external environment and this is partially controllable. It is composed of factors that are directly related to the competitive position of a business. It includes the following, 1. Customers 2. Suppliers 3. Intermediaries 4. Competitors 5. publics  The Microenvironment - Task Environment Customers The customers are the individuals or organizations that buy the organization's products or services. Understanding their needs, preferences, and behavior is critical for successful marketing. Example: A Luxury sports car company may create a unique identity in thieir cutomers mind to promote their products among real lovers.  The Microenvironment - Task Environment Suppliers The suppliers are the individuals or organizations that supply the organization with the raw materials, components, and other resources which need to produce its products or services. Suppliers can affect the organization's pricing, quality, and delivery schedules. Example: At present, Companies committed to fostering responsible practices in their supply chain too. A car manufacturer may have multiple suppliers for its components. If one of the suppliers fails to deliver the required components on time, it may delay the production process, affecting the organization's ability to meet its customers' demand. Companies committed to fostering responsible practices in their supply chain too Nestlé Responsible Sourcing Standard Describes the requirements and ways of working that we apply together with our suppliers to ensure the sustainable long-term supply of materials and services to Nestlé. It sets out basic non-negotiable standards as well as important and urgent sustainability practices that we ask our suppliers, their employees, agents and subcontractors to respect and to adhere to at all times when conducting business. The four key pillars to their approach Environment Human rights Animal welfare Transparency https://www.nestle.com/sustainability/sustainable-sourcing/farming-communities-ecosystems  The Microenvironment - Task Environment Intermediaries Intermediaries are the individuals or organizations that help the organization in promoting, selling, and distributing its products or services. They can include retailers, wholesalers, agents, and brokers. Example: A cosmetics brand may use retailers like Sephora or Oriflame to promote and distribute its products to consumers. The brand's marketing strategy may involve using brand ambassadors and affilitate marketers to increase their sales reach across markets. Oriflame : https://www.youtube.com/watch?v=asEw2UzdbS0  The Microenvironment - Task Environment Competitors The competitors are the organizations that offer similar products or services to the organization's target market. Understanding the competition and developing competitive strategies is crucial for successful marketing. Example: A fast food rsturant chain Mc donald may identify its competitors to be other fast food rsturant chain Burger King. To differentiate itself and gain a competitive advantage, the company may focus on promoting its unique taste, ingredients, or packaging and convinience to reach in its marketing campaigns. https://youtu.be/EwX9sdSlhvU?si=cn5rN8dnLGZeqxnk  The Microenvironment - Task Environment Publics The organization's micro environment also includes various publics. A public is any group that has an actual or potential impact on an organization's ability to achieve its objectives. The range of public is as follows: Find how these can impact on marketing activities ? Financial publics - influence the company’s ability to obtain funds. Media publics - carry news, features, and editorial opinion. Government publics - Management must take government developments into account. Citizen-action publics - A company’s marketing decisions may be questioned by consumer organizations, environmental groups, etc. Local publics - include neighborhood residents and community organizations. General public - The general public’s image of the company affects its buying. Internal publics - include workers, managers, volunteers, and the board of directors.  Marketing Environment Marketing Environment Micro Environment Macro/General External Environment (Partially Controllable) (Uncontrollable) Task Environment Suppliers, Intermediaries Political, Economic, Customers, Competitors, Publics Demographic, Technological, Natural, Global, Social Internal Environment The Company, Members Management, Money  The Macroenvironment The macroenvironment refers to the broader social, economic, political, and cultural forces that shape the organization's marketing environment, but are not directly controlled by the organization. The macro environment tends to be harder to influence than the micro environment, but this does not mean that organizations must simply remain passive; the inability to control does not imply the inability to influence. It includes the following: Demographic environment Natural environment Economic environment Technological environment Political & legal environment Socio-cultural environment  The Macroenvironment Demographic Environment The demographic environment refers to the characteristics of the population that affect consumer behavior and preferences, such as age, gender, income, education level, religion and ethnicity. Example: When there is a greater population of children, it is a good opportunity for toy manufacturers. When there is a greater population of adults in a country, it is a threat for the businesses producing goods for children. Example 2: When there is a low per capita income of a country, luxury brands may not have a big market in such a country.  The demographic environment is of major interest to marketers. Why is that? Changes in the world demographic environment have major implications for businesses. Thus, 1. They should analyze changing age and family structures, geographic population shifts, educational characteristics and population diversity 2. keep a close eye on demographic trends and developments in their markets  Here are some key demographic trends that some scholars believe will shape the business environment over the next 10 years. 1. A growing, but ageing population will affect the availability of skills When the population is growing, but it is also ageing. Ex: opportunity for business who targets age-friendly products and services in housing, transportation, entertainment and leisure etc. Robots help the elderly in Japan's nursing homes.mp4 2. Geographic shifts in population This is period of great migratory movement between and within countries Population shifts interest marketers because people in different regions buy differently Ex: Land disputes in Israel and Palestine 3. The “typical” customer is changing As the age and location profile of our population changes, so is the education level and class structure. The increasing share of jobs requiring a degree or higher, is affecting the class structure of our society, and the overall customer base. Ex: Middle class population increasing with the increase of education level as they have the ability to earn more income  The Macroenvironment Natural Environment The natural environment refers to the natural resources and forces that affect the organization's marketing activities and the way of conducting, such as climate, weather patterns, and natural disasters. This is clear in the recent trend of energy companies creating clean energy alternatives for their consumers, such as solar and wind energy. A specific example of environmental factors in the general environment impacting businesses is when some plastic water bottle companies switched to using recycled plastic to manufacture their bottles in response to used bottles ending up in landfills.  Here are some key natural environments trends that some scholars believe will shape the business environment over the next 10 years. Find how these can impact on marketing activities ? 1. Growing shortage of raw materials 2. Increased pollution 3. Increased government intervention in natural resources management 4. Environment sustainability.  The Macroenvironment Economic Environment The economic environment refers to the economic conditions that affect consumer purchasing power and spending patterns, such as GDP, inflation, unemployment, and income distribution. Example: When the rate of employment is high, people earn a better income, which can broaden the market. This is an opportunity. A rise in the interest rate for loans is a threat for businesses  The Macroenvironment Technological Environment The technological environment refers to the advancements and innovations that affect the organization's production processes, products, and services. Example: cameras are becoming less common household items as more people use their cell phones to take similar- quality images. The technological advancement of cell phones changed the camera industry. Another advancement in technology is the switch to online ordering for restaurants and coffee shops. Though food service is not the only industry that uses online ordering, this technological change in the general environment allows food service businesses to offer an additional service to their customers. “We didn’t do anything wrong, but somehow, we lost” - CEO- NOKIA Nokia has been a respectable company. They didn’t do anything wrong in their business, however, the world changed too fast. Their opponents were too powerful. They missed out on learning, they missed out on changing, and thus they lost the opportunity at hand to make it big. Not only did they miss the opportunity to earn big money, they lost their chance of survival. The message of this story is, if you don’t change, you shall be removed from the competition. It’s not wrong if you don’t want to learn new things. However, if your thoughts and mindset cannot catch up with time, you will be eliminated.  The Macroenvironment Political & Legal Environment The political and legal environment refers to the laws, regulations, and government policies that affect the organization's marketing activities. Example: For example, a nation with a stable government and consistent trade regulations often attracts more international business, as international companies know that these factors will ensure that the nation conducts business effectively. Those same companies may be less likely to do business within nations that lack this infrastructure.  The Macroenvironment Socio-cultural Environment The socio-cultural environment refers to the values, beliefs, attitudes, and lifestyles of the society that affect consumer behavior and preferences. Example: One example of a sociocultural factor that impacts businesses is the rise in health consciousness in the general population, leading companies to market some products differently. As a result of this new awareness among consumers, some soda companies now offer more diet soda options and natural fruit flavors to attract health-conscious consumers.  Another way socio-cultural trends impact business strategies is by shaping market demand. For example, the rise of health-conscious consumers has led to an increased demand for organic and healthy food options. This trend has prompted many food and beverage companies to diversify their product offerings to include healthier alternatives. Similarly, the growing trend of remote work has led to a surge in demand for home office equipment and digital communication tools, prompting businesses in these sectors to adapt their strategies accordingly. Moreover, socio-cultural trends can also influence a company's branding and marketing strategies. For example, the increasing importance of social justice and equality in society has led many businesses to take a stand on these issues in their marketing campaigns. This not only helps businesses to connect with their target audience on a deeper level but also enhances their brand image and reputation.  Introduction to Value Stage One Stage Two Stage Three Stage Four Minimum Customer Customer Competitive Focus on Requirements Focus Attitudes Targeted Markets Customer Value Customer Meeting critical Loyalty needs of targeted Customer customers Satisfaction Retaining our Conformance Quality customers Outperforming Providing what competitors customers want Getting them to Creating new, unique Delivering what we recommend us Responding to benefits promise customer complaints 21st Century Meeting standards Growth Company Source: Adapted from Managing Customer Value by Bradley T. Gale, (New York, The Free Press, 1994) The Value Proposition The whole cluster of benefits the company promises to deliver 4 Total customer value is the relationship between what a customer pays and what he or she receives when making a purchase Total customer Value Total Customer Cost Customer Delivered Value The difference between total customer cost and total customer value. For the consumer, price is only one part of total cost of a product. The consumer has the additional costs of transportation, usage and eventually, disposal of the product. Together, these costs are referred to as the total customer cost (TCC) 5  What is Customer Perceived Value? Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. What is customer value? Customer value is best defined as how much a product or a service is worth to a customer What is Customer Value? VALUE Quality Price Source: Adapted from Customer Satisfaction in Practice by the American Productivity & Quality Center, 1998 Customer Value Defined Overall Value Satisfaction Overall Relative Price Quality Competitiveness Product Customer Marketing Order Fulfillment Quality Service Sales Sub-attributes Sub-attributes  Determinants of Customer Perceived Value Total customer benefit Total customer cost Product benefit Monetary cost Type text here Services benefit Time cost Personnel benefit Energy cost Image benefit Psychological cost  Identify and evaluate potential markets Analyze customer needs, preferences, and customer segments to understand and behaviors, as well as market trends where the best opportunities for delivering and competitor offerings, to gain insights value lie. into what customers value most. 1. Assess Market 2. Conduct Opportunity Analysis Type text here Customer Value Management 4. Measure and 3. Commit to a Reward Value Proposition Performance Track and assess how well your Develop and commit to a clear product or service delivers on the value propositions that outlines value proposition, and reward the unique benefits and value your employees or teams based on their product or service will provide to performance in delivering customers. customer value. Adjust strategies as needed based on performance metrics and feedback. Total Customer Satisfaction Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing product’s perceived performance in relation to his or her expectation Customer Satisfaction is the extent to which product’s perceived performance matches a buyer’s expectation. 12  Customer (dis)satisfaction the average business loses 10-30% of its customers each year (without knowing which, when or why lost) it’s more costly to win a new customer than to lose an existing one (5-7 times greater); it takes 12 positive incidents to make up for a negative one Customers are three times more likely than service providers to recall the quality of the personal element in a transaction 96% of dissatisfied customers never complain to the business, but 91% will not make return purchases 70-85% of dissatisfaction is due to customer service not product; 68% of customers who stop buying do so because they perceive an employee as discourteous or indifferent dissatisfied customers on average tell 12 friends of the poor service; satisfied people tell 5 friends (2:1 ratio) 70% will return if complaint is resolved, and 95% of customers would do business again if a problem is resolved quickly and effectively highly effective companies spend 10% of their operations budget on fixing problems related to customer complaints; ineffective ones spend 40% Satisfaction Value The Entire Current Customer Service Relationship Lead Lag Indicator Indicator Company Company Vs. Performance Competition Proven Tenuous Link Relationship to to Business Business Performance Performance  Measuring Satisfaction Periodic surveys Customer loss rate Mystery shoppers Monitor competitive performance 17  Customer complaint activity is Perceived value is measured measured as the percentage of respondents ACSI through overall price given quality who reported a problem with the measured and overall quality given price; it Components has somewhat less impact on companies’ product or service within a (American specified time frame; it has an inverse satisfaction and repeat purchase. Customer relationship to customer complaints. Satisfaction Index) Perceived quality refers to overall quality, reliability, and the extent to which a product or service meets the customer’s needs; this shows the greatest impact on customer satisfaction. Customer expectations Customer Loyalty is measured by likelihood influence the evaluation of to purchase a company’s products or services quality and forecast (from at various price points. Customer satisfaction customers’ pre-purchase has a positive effect on retention, but the perspective) how well the magnitude of that effect varies greatly across product or service will perform. companies and industries.  Attracting and retaining customers Investing on customer retention Measuring customer profitability 19  Maximizing Customer Lifetime Value Customer profitability Focus on retaining high-profit customers by providing exceptional service and personalized experiences. Reduce costs associated with Total Customer equity combined lifetime value of all customers less profitable customers without compromising overall customer satisfaction. Lifetime value Enhance customer equity by investing in marketing equity by investing in marketing and service initiatives that increase the loyalty and lifetime value of all customer CLV us the total revenue a company segments. Build strong relationships and brand loyalty expects to earn from a customer over to increase customer retention and attract new high-value a entire duration of their relationship. customers. increase CLV by encouraging repeat purchases, upselling and cross selling. implementing loyalty programs, offer personalized promotions, and maintain high customers satisfaction to extend the duration of the customer relationship. 20  Estimating Lifetime Value Annual customer revenue: $500 Average number of loyal years: 20 Company profit margin: 10 Customer lifetime value: $1000 21  Drivers of Customer Equity Value equity Perceived value customers get from a product or service in terms of quality, price and convenience. Brand equity Value derived from customers' perceptions of and attitudes toward the brand, including its reputation and emotional appeal. Relationship equity Value derived from the relationship customers have with the company, which encourages repeat business and loyalty. 22  Customer Retention A company’s ability to turn customers into repeat buyers and prevent them from switching a competitor. Acquisition of customers can cost 5 times more than retaining current customers. The average customer loses 10% of its customers each year. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. The customer profit rate increases over the life of a retained customer. 23  Loyalty A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. 24  Customer hopes & asks but doesn’t Customer tells what expect; if met then is important; delighted. Unlikely to satisfaction vs. cause dissatisfaction. dissatisfaction if Build customer met loyalty Benefits above & beyond expectations; identify and suggest innovations with new Meeting basic respect products & courtesy needs; dissatisfaction if not met; indifference if met Some key points on developing loyalty Since what was once unexpected/unstated becomes expected/stated, you must keep innovating Performance excellence occurs by design, not default All parts of the organization are part of creating customer loyalty Reliability: Keeping your promise, doing what you said you will do. Doing things right the first time. Assurance: Making the customer feel safe in their dealings with you, being thoroughly professional and ethical. Tangibles: How the product/service looks to the client, the appearance of personnel and equipment, etc. Empathy: The degree to which the organization and service personnel understand the individual client and their needs, the ability to adapt the service to each client, the willingness to 'go the extra' for the client. Responsiveness: The availability, accessibility and timeliness of the service. The ability to respond to enquiries and complaints in a timely fashion. Parasuraman, A., Zeithaml, V., & Berry L. (1984, August). A conceptual model of service quality and Its implications for future research. Cambridge, MA: Marketing Science Institute.  Building Loyalty Basic Company only meets the minimum expectation nothing more Reactive company respond to customers issues or needs when they arise Accountable company follow up with customers to ensure they're satiafied and address any issues that arise. takes responsibilty for the customer Proactive company anticipates customer needs and addresses them before the customer even realizes there's an issue. Partnership the company and customers work closely together. the company becomes a trusted advisor, understanding the customer's needs deeply and collaborating on long term solutions. 27  Top Brands in Customer Loyalty Apple iPhone Google Clairol Amazon Samsung Bing Mary Kay J.Crew Grey Goose AT&T Wireless Clinique Discover Card Avis Verizon Wireless Wal-Mart Cheerios  Reducing Customer Defection Define and measure retention rate Distinguish causes of customer attrition Estimate profit loss associated with loss of customers Assess cost to reduce defection rate Gather customer feedback 29  Forming Strong Customer Bonds Add financial benefits Add social benefits Add structural ties 30 Marketing Management: MKT2311: Session 04: Consumer Behavior Sanju Wickramasinghe Department of Marketing Bachelor of Business Administration Degree Faculty of Management and Finance University of Colombo 1 WHAT IS CONSUMER BEHAVIOUR? Philip Kotler defines consumer behavior as: "the actions and decision-making processes of individuals and households in the acquisition, usage, and disposition of goods, services, ideas, or experiences." In other words, consumer behavior refers to how consumers behave when making purchasing decisions, including how they identify their need to satify, search for information, evaluate alternatives, make purchase decisions, and dispose of products or services after they have been consumed. 3  What are the stimuli and sensory receptors? Stimuli are any units of inputs from objects that are perceived by any one of the five senses-vision, sound, touch, taste and smell (Wells & Prensky, 1996). Or anything which can generate reaction In consumer behavior. Sensory receptors Eyes - vision Nose - smell Ears - hearing Mouth - taste Skin - touch 4 Model of Buyer Behaviour – Black box model (Stimulus response model) Attitude 5 Three components of Consumer Black Box in simple terms, What is a stimuli ? - Anything which can generate a reaction in consumers mind What is the consumers black box ? – The consumer mind What is the response ? - Whether to buy, or not buy a certain product or service this black box model represents how consumers mind reacts on different stimuli which eventually generates a particular response. Marketers’ goal is to influence buyers black box to get favorable responses for their marketing campaigns or towards their products. Example: A random customer is exposed to thousand stimuli per day – so cant pay attention to all – filter out few stimuli and interpret them and give meanings to them – If the meanings are align with their beliefs, attitudes, experiences and preconceptions, then they will generate a favorable response to stimuli (possible to buy that product) 6 Factors Affecting Consumer Behaviour Factors Affecting Consumer Behaviour Psychological Factors( Other Factors ( consumer Consumer psuchology) characteristics) Perception Cultural Factors Motivation Social factors Learning Personal factors Attitude 7  Psychological Factors Motivation: Consumer behavior is driven by a consumer's needs and wants. Some needs are biogenic/biological - hunger, thirst, shelter, health Other needs are psychogenic/psychological - need for recognition, esteem, or belonging A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act. For examples, 1. A consumer may be motivated to purchase a drink to fulfil their need for thirst. The motivation can be internal as his body demanding inputs to fulfil that pressing need. Remember : motivated people are ready to buy. How can marketers creates more means to fulfill this need ? 2. A consumer may be motivated to purchase a gym membership to fulfil their need for physical fitness and health. The motivation can be internal, such as a personal desire to improve fitness, or external, such as a societal pressure to look fit. How marketers can creates more means to fulfill this need ? 9  Psychological Factors Perception: perception is “the process by which people select, organize and interpret information to form a meaningful picture of the world” Kotler and Armstrong (2001) Or Perception refers to how consumers interpret and make sense of information about a product or service based on their past experiences, knowledge, beliefs, values, and cultural background. For example, a consumer may perceive a car brand with high price as a more quality product than the other product and they may perceive it as a symbol of status and prestige because of their cultural beliefs and values associated with expensive items. 11  Psychological Factors Learning: Consumers learn about new products and services through various sources such as advertising, word-of-mouth recommendations, and personal experiences and they use their learned knowledge when making purchase decision Learning by WOM recomendations Example 01 : a consumer may learn about a new type of smartphone from a friend who has recently purchased it, and based on their positive experience, they may decide to purchase it for themselves. Learning by personal experience Example 02 : Suppose you buy an HP laptop computer. If your experience is rewarding, your response to the laptop and HP will be positively reinforced. Later, when you want to buy a printer, you may assume that because it makes good laptops, HP also makes good printers. In other words, you generalize your response to similar stimuli. 12 Learning by association Learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. ( marketers can create meaning to their products and services by marketing tactics ) For an example: Lux associating their products to the beauty of female celebrities using them in their commercials. Learning by practices If your grand mother and mother has been using detergent powders when washing dirty clothes, instead of soap, You will also learn this consumption behavior and adopt it. Activity : Find more details about how nestle company promoted their coffee in Japan and how it can be related with learning 13  Psychological Factors Attitude: Consumer attitudes refer to the overall evaluation of a product or service, based on beliefs and values. There should be a perception to form an attitude. But all the perception don’t create positive or negative attitudes. For example: a consumer may have a positive attitude towards a particular luxury car brand because they perceive it to be comfortable, stylish, and of high quality and will enhance the social status. This positive attitude may or may not lead to make the purchase. 14 Another example: A Sri Lankan consumer may have a negative attitudes towards a particular Mexican red color pizza because they had perceived it to be spicy. Sri Lankan people usually give meaning to the red colored food as spicy foods. But Mexican pizza usually uses a lot of tomatoes which turn them look more red colored. 15 Other Factors Affecting Consumer Behaviour – Cultural factors: Culture refers to a consumer's values, beliefs, and customs. For example: in japanese culture, it is common to drink tea, and this can influence consumer behavior when purchasing beverages. Subculture Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example: McDonald’s adapt its menu to cater to the Indian market, which has a large vegetarian population due to religious beliefs - vegetarian options, such as the McAloo Tikki burger, to appeal to the local culture and increase sales. 17 Social class can affect consumer behavior by influencing a consumer's aspirations, values, and attitudes towards different products or services. For example, a consumer from a higher social class may be more likely to purchase luxury goods such as designer clothing or expensive jewellery. 18  Other Factors Affecting Consumer Behaviour – Social Factors Reference groups: Reference groups are groups of people that consumers associate with (relatives, familiy members, friends) or aspire to be like ( celebrtieis and heroes). For example, a consumer may purchase a certain brand of clothing because it is popular among their social group. Reference groups are two types 1. Primary groups - basically the set of people whom you meet every day and may have a direct and strong impact on your lives and your buying decisions (family, friends etc. ) 2. Secondary groups - usually formal and they speak less frequently and power to influence people is quite less as compared to primary reference groups (professionals, your collogues, your seniors ) 19 Two more widely recognize reference group types. 1. Aspirational Group The aspirational group is the one to which a person may want to become part of. For example: who like MJ, they want to dress like him and dance like him 2. Dissociative Group This is totally opposite to the people in the aspirational group. Here people deny becoming or getting connected to a particular group. For example: if people don’t like a particular community, they would never like being connected to them. ( Caste systems in India ) Family and household: Family and household factors can influence consumer behavior by affecting a consumer's purchasing decisions and behavior. For example: Children in the family prompt their parents to subscribe to Disney Channel, Cartoon network and so on. Another example: A young bachelor would not mind spending on alcohol, attending night parties, casinos but the moment he has a wife at home, he would instead spend on household and necessary items. 20  Other Factors Affecting Consumer Behaviour - Personal factors Age and the stage in the life cycle Occupation and economic circumstance Personality and self concept Life style and values 21  The Buying Decision Process The Five Stage Model of the Consumer Buying Process 1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase behaviour 23  The Buying Decision Process Problem Recognition The first step in the consumer buying process Consumers become aware of an unsatisfied need or problem that requires a solution Internal stimuli (e.g., hunger, thirst) or external stimuli (e.g., advertising, word-of-mouth) can trigger need recognition Marketers can create effective campaigns to stimulate need recognition For an exammple : unsatisfied need or the problem is that not having a mobile phone to keep in touch with a loved ones. Solution is buying a mobile phone. 24  The Buying Decision Process Information Search The consumer seeks information to find a solution to their problem or need Sources of information can be internal (memory, past experiences) or external (friends, family, online reviews, advertising) The extent of the search depends on the perceived risk and involvement of the purchase. High involvement purchases may require extensive information search Marketers can provide accessible and relevant information to facilitate the search 25  The Buying Decision Process Evaluation of Alternatives The consumer evaluates different products or brands based on their attributes and benefits Consumers use a set of criteria, which may include price, quality, features, or other factors Consumers may use heuristics (mental shortcuts) to simplify the decision- making process Marketers can highlight product benefits and differentiate from competitors 26  The Buying Decision Process Purchase Decision The consumer makes a decision on which product or brand to purchase Factors such as price, availability, and convenience may impact the final decision The purchase intention can be influenced by unexpected factors (e.g., peer influence, financial concerns) Marketers should create positive purchase experiences and minimize barriers 27 The Buying Decision Process Post-purchase Behaviour The consumer evaluates their satisfaction with the product after the purchase If the product meets or exceeds expectations, the consumer may become a repeat customer or brand advocate If the product falls short of expectations, the consumer may experience cognitive dissonance (buyer's remorse) Marketers should manage post-purchase experiences and address customer concerns 28  Introduction to Segmenting, Targeting & Positioning “If you try to be everything to everyone, you’ll end up becoming nothing to anyone 2  Introduction to Target marketing Markets consist of buyers & they are different There are three major steps in target marketing. 3  Segmenting, targeting, and positioning (STP) refer to three marketing strategy steps designed to help the firm allocate its resources to reach its most valuable customers. It enables companies to identify the most profitable market segments, target them effectively, and create an unique value proposition. STP forms the foundation of a marketing strategy and provides a basis for decision- making on product, price, place, and promotion. 4  What is Market Segmentation? Market Segmentation can be defined as: "the act of dividing a market into distinct groups of buyers who have different needs, characteristics, or behavior and who might require separate products or marketing programs." The purpose of segmentation is to identify and serve different groups of customers more effectively by tailoring marketing efforts to their specific needs and preferences 5 Bases for Segmentation 6  Geographic Segmentation Dividing the market into different geographical units, such as nations, states, regions, counties, cities, or neighborhoods. Examples : 1. KFC and McDonald use geographical segmentation to tailor its menu offerings to local tastes and preferences. 2. Coca-Cola uses geographical segmentation to tailor its advertising campaigns to local cultural and social norms. For example, in the Middle East, Coca-Cola has launched campaigns during the holy month of Ramadan. The purpose is to connect with consumers during this important religious period. 7 Several geographic parameters (or types of market segmentation) Location This variable can impact geographic segmentation by covering a small area, like a neighborhood, or a large area like a continent, with towns, cities, states and countries in between. Examples: 1. Uniliver delivers different product portfolios – They introduced more mouth wash options for countries where people do not often use toothbrush to brush their teeth. But they promote toothbrush and toothpaste brands in Asian countries 2. Nike in the US is likely to focus on American football and baseball , while you’re unlikely to see American football or baseball commercials in Europe – you’ll see product ads for Soccer (Football in Europe) instead American football.mp4 8  Climate Involves selling products that are appropriate for the climate, weather, and season in a particular area. For example, if you’re planning a trip to Antarctica, warm clothes and boots will be crucial to keep you comfortable and safe. Therefore, if you’re a winter boots manufacturer, your product marketing strategy revolves around targeting people who are searching for holidays in that region. It's more than a jacket _ The North Face.mp4 9  Culture You may have to adapt your products to take account of cultural variations and sensitivities. Examples: 1. Hindus don’t eat beef — and the cow is considered sacred. Since the majority of the population follows Hinduism, there’s no (less) beef on McDonalds ’menus in India. There’s also no (less) pork menus out of respect for Muslims. 2. Also, different countries will enjoy different flavors and often have unique items, such as Thailand McDonald’s (Samurai Pork Burger) vs. UK McDonald’s (Mozzarella Dippers). 11  Population Population density or population type will help make effective marketing campaigns because you’re more likely to relate to and serve customers within your target audience groups. A brand may choose to market in cities rather than rural areas because there are simply more target buyers, and urban distribution is easier. For example, in China and Japan, capsule hotels are an increasingly popular method of accommodation for Japanese citizens who want to keep costs low. For tourists, on the other hand, demand for traditional hotels is on the up. Capsule hotel concept a hit in Milan _ AFP.mp4 Language Ex: A newspapers producer should produce Tamil language newspaper for Jaffna 12  Demographic Segmentation Dividing the market into groups based on variables (parameters) such as; Age Gender Family size or life cycle Income Occupation Education Religion Race Generation Nationality Examples : 1. Companies that sells soft drinks based on age Elephant house Nektar for children, Elephant house cream soda for youth 2. Surf excel for high income earners, sunlight for low income earners 13  Psychographic Segmentation Dividing a market into different segments based on social class, lifestyle, or personality characteristics. Examples : 1. Rolex targeting the affluent and status-conscious. 2. Redbull targets different lifestyles and personalities – mainly who are enregetic, adventurous and outgoing 15  Personality Personality is the unique set of traits and behaviors that define our personal identity. Different personality traits such as, Openness: Willingness to embrace new experiences and ideas. Conscientiousness: Organized, clear-headed, and attentive to details. Extroversion: Outgoing and energized in social settings. Agreeableness: Empathetic and kind, with a tendency to avoid conflict. Neuroticism: Emotionally unstable and susceptible to negative emotions. Everyone Can Shine with New Rin - Banker.mp4  Lifestyle Lifestyle is a way to group people by the way they live life and express themselves through their activities, interests, and opinions. It can include hobbies, habits and spending patterns, and reflects what individuals truly value as they invest their time, money, and energy to meet self-defined standards. For instance, a fitness apparel company can customize its marketing messages to appeal to health-conscious individuals by emphasizing the importance of an active lifestyle and presenting their items in workout settings. B-Boy Victor _ World of Red Bull Commercial 2016.mp4 17  Behavioral Segmentation Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product Examples : See how Sephora uses a “Shop by Concern,” category to find out more about what benefits and features are most important to each shopper. 18  Benefits seeker Group customers based on the benefits they're looking for in a product, service or company to encourage them to buy. This can include factors such as convenience, affordability, performance, status, and innovation. Examples: 1. buying toothpaste has several benefits: clean teeth, fresh breath and healthier gums and whiter teeth. 2. of skincare. Consumers who buy skincare products do so for various reasons. Here are some segmentation examples for the different benefits customers may prioritize: Oily skin fix Removes dark circles Smells gorgeous Price Non-irritating ingredients for sensitive skin Vegan or cruelty-free company ethics 19  Occasion Purchasing Occasion-based segmentation is often used by businesses to tailor their marketing efforts to specific occasions or events that are important to their customers. Holidays and celebrations: - consumers who purchase products or services related to holidays and celebrations such as Thanksgiving, Valentine’s Day, or Halloween. යහගුණ පිරි ආහාර සංස්කෘතීන්, ආගම් හා පරම්පරා එක්කරයි. Nestle with Avurudu -AD Films.mp4 Special events: This group purchases products or services related to special events such as weddings, birthdays, and graduations. Seasonal occasions: summer vacations, winter sports, and back-to-school. 20  Loyalty In this segmentation strategy, customers are grouped based on their past behavior, including their purchasing history and their level of engagement with your brand. Starbucks, for instance, has a loyalty program that rewards customers for purchasing using their app. An app user can collect points as they complete a Starbucks purchase and use them later on a free drink or food item. Starbucks-preview.jpg Usage Heavy users (Super users) —purchase most frequently Medium users (Average users/Mid-level users) — Customers that semi-regularly, but not very frequently, use or purchase your products (often time- or event-based) Light users — Customers that use or purchase much less than other customers, sometimes even only once 21 22 Criteria for Effective Segmentation - MASDA Measurable: The size, purchasing power, and characteristics of the segment should be measurable. Accessible: The segment should be effectively reached and served with marketing mix. Substantial: The segment should be large and profitable enough to serve. Differentiable: The segments are conceptually distinguishable and respond differently to marketing elements and programs. Actionable: Effective marketing programs can be designed for attracting and serving the segments. 23 What is Targeting? Targeting can be defined as: "the process of evaluating each market segment's attractiveness and selecting one or more segments to enter." The purpose of targeting is to focus marketing efforts on the most profitable and suitable market segments. 3 You should ideally consider the below criteria to choose your targetable segments: Size: Your audience segments must have enough potential customers to be worth marketing to. If your segments are too small, you may not get enough conversions to justify your marketing efforts. Difference: There should be a measurable difference between any two segments. The lack of it leads to unnecessary duplication of efforts. Reachability: The segments should be accessible to your sales and marketing teams and not be marred by technical or legal complications. Profitability: The segment should have a low-to-medium customer acquisition cost (CAC) while bringing in high returns, i.e., the audience must be willing to spend money on your product. 4 Targeting Strategies Targeting Targeting broadly narrowly 5  Targeting Strategies Undifferentiated (Mass) Marketing : A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Example : "Share a Coke" campaign. Differentiated (Segmented) Marketing : A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. Examples 1. Unilever targeting different segments with its multiple laundry detergent brands. 2. Nike targets different sports categories as segmonts Nike - Unlimited.mp4 6  Targeting Strategies Concentrated (Niche) Marketing : A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. Example : Rolls Royce focusing on the luxury electric vehicle market Micromarketing (Local or Individual Marketing) : Tailoring products and marketing programs to the needs and preferences of individual customers. Example : Starbuck’s #itstartswithyourname campaign Interior My Video.mp4 7  Ethical Considerations in Targeting Avoiding vulnerable or disadvantaged groups Marketers should be cautious in targeting vulnerable or disadvantaged groups, as it may raise ethical concerns Inclusive marketing Ethical targeting practices should promote inclusivity and consider the diversity of consumers, avoiding stereotypes and discriminatory marketing messages. Privacy and data protection Marketers must adhere to ethical standards in collecting, using, and sharing consumer data to ensure privacy and prevent misuse. Truthful and non-misleading communication Ethical targeting requires that marketing messages are truthful, accurate, and do not mislead or manipulate consumers. Social and environmental responsibility Ethical targeting should consider the broader social and environmental impacts of marketing decisions. Encouraging responsible consumption Ethical targeting should encourage consumers to make informed, responsible choices rather than exploiting impulsive or harmful behaviors. 8 What is Positioning? Positioning can be defined as: "the act of designing the company's offering and image to occupy a distinctive place in the mind of the target market." The purpose of positioning is to create a unique and appealing value proposition for the target customers. For example, A handbag maker may position itself as a luxury status symbol. Spa Ceylon Luxury Ayurveda.mp4 10  A perceptual map in positioning A perceptual map is used to show consumer perception of certain brands. An example of consumers’ perception of the price and quality of brands in the automobile industry is mapped below: 11 Value proposition a value proposition expresses why a customer should choose your products and examines your company’s benefits. (Basically, the point of differences) The greatest value proposition examples usually include a headline, subheadline, or short paragraph and a visual to add extra interest, such as an image, video, or illustration. After reading value propositions, customers should have no misunderstandings about what a brand stands for and what it can offer them. Example: Nike value proposition Nike bases its value proposition on the practice of sport as a generator of confidence and success, will and effort, going against what is established, and bringing inspiration and innovation to every athlete in the world. 12 Apple Apple offers both essential information about Short but sweet, Grammarly tells you everything what and multiple value factors about their new you need to know right away with its value operating system. proposition. 13  Deciding on a positioning requires, 1. choosing a frame of reference by identifying the target market and relevant competition 2. identifying the optimal points-of-parity and points of-difference brand associations given that frame of reference 3. creating a brand mantra summarizing the positioning and essence of the brand. 14 1. Choosing a frame of reference The competitive frame of reference is a fancy way of describing the market or context in which you choose to position your brand. How many times have you taken a step back to think about what industry your company or product/service is playing in? Where do you compete? Being really clear about what we call your “competitive frame of reference” is critical as it defines your current and potential future competitors and should drive your product/service innovation strategy 15  Let us take Coca-Cola as an example. Consider each of the frames of reference outlined in the following table: Frame of Reference Potential Competitors Point of difference Cola Pepsi, RC Cola ? Carbonated beverage (soda) 7 Up, Dr. Pepper ? Soft drink Crystal Light, Gatorade ? Non-alcoholic beverage Chocolate milk, root beer float ? Beverage Wine, beer ? Liquid refreshment Water, bottled water ? Coke - waterbottle.mp4 Psychological refreshment A walk in the woods, yoga, a swim ? 16  Benefits of Frame of Reference Parity: Frame of reference can help you identify points of parity—or similarities—between your brand and successful competitors, equating your brand with companies that people already trust and see as effective Differentiation: Understanding the frame of reference for your product helps you identify the positive ways that it differs from other similar products on the market. Consumer insight: Locating your frame of reference helps you understand the target audience you're trying to reach, which can help inform your brand strategy. You can use these consumer insights to discover what your target market values, and tailor your brand messaging to prioritize these values. Brand positioning: Positioning your brand within a frame of reference offers your consumers a value proposition by giving them the ability to weigh the points of difference and points of parity of your brand with your competitors. 17 2. Identifying the points-of-parity and points of-difference Once marketers have fixed the competitive frame of reference for positioning by defining the customer target market and the nature of the competition, they can define the appropriate points-of-difference and points-of- parity associations. Points-of-Parity Points-of-parity (POPs), on the other hand, are attribute or benefit associations that are not necessarily unique to the brand but may be shared with other brands. Points-of-Difference Points-of-difference (PODs) are attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand. Both are related to positioning, but only one separates a business from the competition. 18  Comparison between POP and POD POP POD Essential industry standards that make a business This should be determined once the POP has a legitimate one in their field. been covered. Qualities which should have by all businesses to Things that are unique to your business and give a be competitive and to par with one another. competitive edge In other words, industry-specific similarities are When you are creating a marketing mix, POD are shared among many businesses. what you should highlight This feature cannot be replicated by any other company and forms the unique selling point for the brand. 19 Example: Angel Soft - Toilet Paper Points of Parity Everyone has toilet paper in their home. It’s a necessity with basic points of parity like: It needs to be made of durable softwood fiber paper that won’t tear. The tube should fit standard toilet paper holders. It has to be flushable, so it won’t clog the toilet. Points of Difference Angel Soft toilet paper recently found a great differentiator. They’ve leveraged an overlooked part of the toilet paper roll – the tube. Angel Soft has added a lavender fragrance to their toilet paper tubes. Now you don’t need potpourri because your toilet paper is pulling double duty. This is a big differentiator that comes from Angel Soft’s understanding of complementary products that are used in the bathroom. Product Video Sample - Product Marketing - Product Photography.mp4 20 In-class activity When to use POP and POD? Should be focused on …………………… If the company is a market leader where it needs to maintain the position of market leader and the company should be seen as superior. Should be focused on …………………… If the competitor is a laggard or a me-too type company, then to survive Should be focused on highlighting …………………… When the market is mature and established and the new company enters it, then the likelihood of customer conversion is very low because of the habitual loyalty of the customer to the existing products or services Should be focused on …………………… When the market is price sensitive, then the organization should focus on providing more benefits to justify the pricing so that the customer does not focus on the price but rather on the features or the customers are to be introduced to cheaper alternatives which may or may not be a substitute of the original. When the market is very fast growing, and the organization is also growing along with it then to meet the primary demand of the market, …………………… should be the focus to capture new customers Homework Find out about the POP and POD tradeoff or how to balance POP and POD when executing positioning strategies Find what are the points of parities and points of difference you can see in the Sri Lankan banking industry. If you need, you can take one bank specifically to make the comparison with other banks 21 3. Creation of a Brand mantra Brand mantra, also known as a brand essence or core brand promise. A brand mantra is a short three- to five-word expression of the most important aspects of a brand and its core brand associations. Let’s take a look at some famous brand mantras: Nike: Authentic Athletic Performance Disney: Fun Family Entertainment BMW: Ultimate Driving Machine Apple: Think Different A brand mantra serves major purposes: It communicates the idea behind the brand It simplifies the message of the brand It clarifies the positioning of the brand It inspires people & creates an emotional connection 22 3 Step Rule to Create a Brand Mantra Brand function - It describes the nature of the product or service or the types of experience or benefits the brand provides. The descriptive modifier -This further describes whom the brand is basically for, i.e. athlete, family. The emotional modifier - It describes how consumers should feel about your brand, i.e. athletic, fun, raw. Disney+.mp4 BMW - We Only Make One Thing.mp4 23  Nike: Authentic Athletic Performance - Nike - Unlimited.mp4 Nike marketers adopted the three-word brand mantra, “authentic athletic performance,” to guide their marketing efforts. Thus, in Nike’s eyes, its entire marketing program—its products and the way they are sold—must reflect that key brand value. Over the years, Nike has expanded its brand meaning from “running shoes” to “athletic shoes” to “athletic shoes and apparel” to “all things associated with athletics (including equipment).” Each step of the way, however, it has been guided by its “authentic athletic performance” brand mantra. For example, as Nike rolled out its successful apparel line, one important hurdle was that the products must be made innovative enough through material, cut, or design to truly benefit top athletes. At the same time, the company has been careful to avoid using the Nike name to brand products that do not fit with the brand mantra (like casual “brown” shoes) 24 29 30  Marketing Information MKT2311: Marketing Management Dinuka Wijetunga Department of Marketing Definitions of marketing & the relevance of information Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is “meeting needs profitably.” Marketing Management is identifying market opportunities and implementing strategies to tell your consumer base about your products/services/business that can help you become profitable and build a brand. If this is marketing, what information about who and what does a marketer need to perform the marketing activities effectively? 2 Activity: Why and What information? Imagine you are the marketing manager of Ritzbury Chocolates You want to increase your market share in Sri Lanka Identify some key information you need to have to keep your current consumers and get new ones You have to say who/what (e.g., consumers, competitors, business environment, etc.) the information is about, what information you need about them/it and why you need that information to increase your market share Be as creative as you can 3 Why and What information? To create value for customers and build meaningful relationships with them marketers need insights about customers and markets (including the competitive and broader environment) Customer (and market) insights: Fresh information-based understandings of customers and the marketplace that become the basis for creating customer value, engagement, and relationships. Example: Maggi noodles in India What kind of insights? (Some examples) Customers: Who are our current customers (demographics, lifestyle)? Why are they buying our products (to satisfy what needs)? How do they use them? How often do they buy? Markets: Who is in the target market who are not our customers? What products are they buying? Why are they buying those products and not ours? Are there potential new customers we can target? Competitors: Who are our competitors? What marketing strategies are they using? What new things are they planning for the future? Broader environment: What are the trends in the broader environment (technological, political, etc.)? How do those trends affect our market and marketing activities? 4 Activity: Do marketers have enough information today? Going back to our attempt at increasing the market share of Ritzbury, where can you find the information you identified in the first activity? 5 Do marketers have enough information today? The problem is not a lack of information but information overload “Thus, marketers don’t need more information; they need better information. And they need to make better use of the information they already have” (Kotler et al., 2018, p.125) 6 Insights and information – The same or different? “Although customer and market insights are important for building customer value and engagement, these insights can be very difficult to obtain. Customer needs and buying motives are often anything but obvious – consumers themselves usually can’t tell you exactly what they need and why they buy. To gain good customer insights, marketers must effectively manage marketing information from a wide range of sources.” (Kotler et al., 2018, p.124) Insights refer to actionable deep understandings of patterns in the customer and market behaviors Managers need to combine and analyze relevant information from different sources to identify patterns relevant to marketing actions A good marketing information system can help with this 7 The marketing information system “A marketing information system (MIS) consists of people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights” (Kotler et al., 2018, p.125) It should find out what information is needed, generate that information and help managers to use it appropriately It should give managers “the right information, in the right form, at the right time and help them to use this information to create customer value, engagement, and stronger customer relationships” (Kotler et al., 2018, p.125) 8 The marketing information system (Kotler et al., 2018, p.126) 9 The marketing information system: Assessing information needs Need to balance between what the information users - Would like to have Some may want a great deal of information that may be of little use to them - What they really need Some may not be aware of what they need - What is feasible to offer Obtaining, analyzing and delivering information is costly Need to assess the value of the information against the cost of generating it 10 The marketing information system: Internal databases Can monitor ongoing, current information about our current customers Kinds of information it can provide - Who are our customers (gender, age, occupation, etc.) - What are they buying? When? How frequently? - What do they like/dislike about our products and services? Methods: Consumer and market information from data sources within the company - Instore and online transactions - Company’s web and social media sites - Customer complaints - Sales, costs and cashflows - Inventories How Keells uses its Nexus loyalty data 11 The marketing information system: Marketing intelligence “The systematic monitoring, collection, and analysis of publicly available information about consumers, competitors, and developments in the marketplace” (Kotler et al., 2018, p.127) Kinds of information it can provide - Who are our competitors? What are they doing? What do consumers think about them compared to us? - What are the trends in our target market (not just our customers)? What do they like? Dislike? Are their likes/dislikes and buying habits changing? How? - What are other general environmental trends – technological, ecological, social, political – and how do they affect us and our target market? Example: How Kodak failed to respond to market trends 12 The marketing information system: Marketing intelligence “The goal …is to improve strategic decision m