Summary Marketing PDF 2020

Florine Locoge 2020 Synthèse : Marketing CHAPTER 1 : MARKETING In Ch. 1, we learn 1. To define marketing and understand steps in the marketing process 2. To understand the importance of understanding the marketplace and customer needs 3. To identify key elements of a customer-value driven mar...

Florine Locoge 2020 Synthèse : Marketing CHAPTER 1 : MARKETING In Ch. 1, we learn 1. To define marketing and understand steps in the marketing process 2. To understand the importance of understanding the marketplace and customer needs 3. To identify key elements of a customer-value driven marketing strategy 4. To discuss customer relationship management and what it entails for both customers as well as organizations 5. To be aware of major trends in the marketing landscape 1. WHAT IS MARKETING? Marketing deals with customers. Textbook definition: Marketing is the process by which companies engage customers, build strong customer relationships and create customer value in order to capture value from customers in return The Chartered Institute of Marketing, 2001: Marketing is ‘the management of process of anticipating, identifying and satisfying customer requirements profitably - ‘Value Creation’ and ‘Value approbation’ (Mizik & Jacobson, 2003 JM) = acquiring new customers Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others. Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. - Existing new customers = retaining existing customers Marketing is NOT only selling and advertising BUT satisfying customers need. The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself (Peter Drucker) Marketing Sales Focus on long-term satisfying of customer needs Focus on short-term satisfying of customer needs Based to a larger extent on customer input in Based to only a limited extent on customer input in designing the offering (co-creation) designing the offering Puts the focus on stimulating demand Rather than focusing on stimulating demand, it tends to focus more on satisfying existing demand Marketing =! Selling a)Takes an inside-out view that focuses on existing products and heavy selling. The aim is to sell what the company makes rather than making what the customer wants. No long-term relationships, only sale transaction It is used for unsought goods that customers do not think of buying blood donation, insurance b)Takes an outside-in view that focuses on satisfying customer needs as a path of profits. Customercentred instead of product-centred = customer driven companies (works when clear need and wants) Customer-driving marketing = understanding the customers’ needs even better than customers do, meet both existing and latent needs (ex: car instead of faster horses) Marketing =! Advertising - After determining its overall marketing strategy => company begin planning the details of the marketing mix. - Marketing mix= set of tactical marketing tools that the firm blends to produce the response it wants in the target market. It consists everything a firm can do to engage consumers and deliver customer value - Many possibilities= the four Ps Product= the goods- and-services combination the company offers to the target market Price= the amount of money customers must pay to obtain the product Place= includes company activities that make the product available to target consumers Promotion= refers to activities that communicate the merits of the product and persuade target customers to buy it 2 - Four Ps take the seller’s view and not the buyer’s view Exchanges and Relationships Exchange is a two-way dyadic process. It is the act of obtaining a desired object from someone by offering something in return. Not always just paying a price (politicians => votes, church => membership, orchestra => audience, social action group => idea acceptance). Companies want to build strong relationships by delivering superior customer value. Value can only be created by co-creation between supplier and consumer: - Supplier provides a ‘value proposition’ - Offer only has value for the con summer correct usage with the goal of satisfying one’s needs/ wants/ demand => ‘value in use’ Ex: whitening toothpaste and brushing teeth Marketing is also for not-for-profit organizations (churches, local governments, museums, universities, public hospitals, …). Central goal is not just profit => generating awareness, acquiring volunteers, inform the people, lobby for legal amendments, increasing geographical impact, … 3 The Societal Marketing Concept = The idea that a company’s marketing decisions should consider consumers’ wants, the company requirements, consumers’ long-run interests, and society’s long run interests. It shows that companies should balance the three considerations underlying the societal marketing concept: company profit, consumers’ wants, and society’s interests. It calls for sustainable marketing: deliver value to customer while maintaining/ improving both customer’s and society’s well-being. The Marketing Process = a five-step model model of the marketing process for creating and capturing customer value. First 4 steps: companies work to understand customers, create customer value and build strong customer relationships Final step: companies reap the rewards of creating superior customer value 4 By creating value for customers, company capture value from customers in form of sales, profit and longterm customer equity. 2. UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS o Customer Needs, Wants, and Demands Human Needs: - physical needs – food, clothing - social needs – affection - individual needs – knowledge, self-expression Wants: They are the shape human needs take, shaped by culture and personality. They are objects that will satisfy the needs ( need = food, want = burger/ rice) Demands: When needs are backed by buying power, they become demands. People demand products and benefits that add up to the most value and satisfaction. o Market offerings- Products, Services, and experiences Market offering is a combination of product, services, information or experiences offered to a market to satisfy a need or want. Marketing myopia is the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products => only focus on customer wants but forget about underlying needs. Ex: want a quarter-inch drill because need a quarter-inch hole o Markets and the marketing systems A market is the set of all actual and potential buyers of a product/ service/ … These buyers share a need or want that can be satisfied through exchange relationship. - Each party in the system adds value for the next level ( Walmart cannot promise low prices if suppliers don’t provide low costs) - Arrows represent relationships (with partners AND with customers, external and internal) that must be developed and managed to create customer value and profitable customer relationships 5 ð A company’s success at engaging customers and building profitable relationships depends on its action AND on how well the entire system serves the needs of the final customer 3. DESIGNING A CUSTOMER VALUE-DRIVEN MARKETING STRATEGY Once a company fully understands its customers and the marketplace, it must decide which customers it will serve and how to bring them value. => marketing management can design a customer-driven marketing strategy. Marketing management is the art and science of choosing target markets and building profitable relationships with them. 1) Selecting customers to serve (=> chapter 7) Market segmentation = Company divides market into segment of customers … Target marketing = … and select which segments it will go after 2) Choosing a value proposition (=> chapter 7,18) Company decides how it will serve targeted customers and how it will differentiate and position itself in the marketplace Value proposition = a brand’s set of benefit or value it promises to deliver to customers to satisfy their needs. Companies must design strong value proposition to have greatest advantage in their target markets. 3) Marketing management orientations = concepts under which organizations design and carry out their marketing strategies to engage target customers and profitable relationships with them. Five concepts under which organizations design and carry out their marketing strategies: o The Production Concept (1900s - production) Consumers will favor available and highly affordable products => Management should focus on improving production and distribution efficiency When demand > supply BUT can lead to marketing myopia o The Product Concept (1915 - quality) Consumers will favour products that offer the most quality, performance, innovative features => Management should focus on continuous product improvements 6 o The Selling Concept (1930 - sales) Consumers will not buy enough of the firm’s product unless the firm undertakes a large-scale selling and promotion effort Ex: for unsought goods (life insurance, blood donations) Aggressive selling that carries risks: focus on creating sales transactions rather than on building long-term, profitable customer relationships. Aim is to sell what company makes rather than make what market wants. => see a) selling concept BUT can create marketing myopia o The Marketing Concept (1960 - needs) Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. =>see b) marketing concept o The Societal Marketing Concept (1975 - environment) Short-term customer wants vs long-term customer well being 4. PREPARING AN INTEGRATED MARKETING PLAN AND PROGRAM The marketing program builds customer relationships by transforming the market strategy into action. The marketing mix = the set of marketing tools the firm uses to implement its marketing strategy. ð Four broad group of tools: the four P’s First create a need-satisfying market offering: Product Then decide how much to charge: Price How it will make the offering available for targeted customers: Place Finally engage targeted consumers, communicate about the offering, persuade of the offer’s merit: Promotion The firm must blend each marketing mix tool into a comprehensive marketing program that communicate and delivers the intended value to customers. Designing the marketing mix (4Ps) nearing in mind 4Cs they represent Product Consumer needs Price Costs for the customer Place Convenience Promotion Communication 7 5. ENGAGING CUSTOMERS AND MANAGING CUSTOMER RELATIONSHIPS The first 3 steps of the marketing process lead to the most important step: engaging customers and managing profitable customer relationships. 5.1 Customer Relationship Management (CRM) = the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It is the most important concept of modern marketing. Deals with acquiring, engaging and growing customers. Key to building long lasting customer relationship is to create superior customer value and satisfaction. Data = knowing your customers Relevant targeting (person-and/or location-, time-adapted) Loyalty programs (financial, structural, community-linked basis) Customer perceived value = the customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competitive offerings. It is not objective ð Customer buys from firm with the most customer perceived value. Customer satisfaction = the extent to which a product’s perceived performance matches a buyer’s expectations. => Customer Relations Management (CRM) Can be with low prices (ALDI) or with high services (L.L.bean) ð Expectancy (dis)confirmation theory: If performance < expectation => not satisfied If performance = expectation => satisfied If performance > expectation => highly satisfied Higher level of customer satisfaction => greater loyalty => results in better company performance Delighted customer when only promise what you can deliver, then deliver more than promised. 8 Requires balance: customer satisfaction vs profit !!! Do not overpromise 5.2 Customer Engagement Before: marketing = marketing brans to customers Now: Customer-engagement marketing = make the brand a meaningful part of consumers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversation, experiences, and community. It is more than repeated purchases ð Evolved from transaction- to relationship-orientation 5.3 Consumer-generated marketing = brand exchanges created by consumers themselves – both invited and uninvited- by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers It is a form of customer-engagement marketing. Ex: online discussion about the brand consumer-to-consumer, brand letting consumer do an ad and runs the best at Superbowl game, … => using social media to create buzz !! can backfire, ex: McDo launched #McDStories for good anecdotes but turned into messages about consumers bad experiences. Social media brought empowerment to consumers; they have a say in everything, company have to master the new digital and social media relationship tools or risk being left behind. 6. CAPTURING VALUE FROM CUSTOMERS This final step involves capturing value in return in the form of sales, market shares, and profits. The outcome of creating customer value is: customer loyalty, share of market and share of customer, and customer equity Dissatisfaction can create enormous drop in loyalty, the aim is thus to create customer satisfaction and delight. Customer lifetime value = the value of the entire stream of purchases a customer makes over a lifetime of patronage. Losing a customer = losing the entire stream of purchases that the consumer would make over a lifetime + worst if he talks about it to other consumers Companies want to earn a greater share of the customer’s purchases and capture their lifetime value Customer equity = the total combined customer lifetime of all company’s current and potential customers. It’s a measure of the future value of the company’s customer base The more loyal the firm’s profitable customers => the higher the customer equity. The ultimate aim for a company = to produce high customer equity 9 Sales, market share reflect past ; customer equity suggests future => better measure of a firm’s performance. Ex: Cadillac vs BMW Customer Relationship Groups : customers can be separated in 4 groups depending on their loyalty and potential profitability. Cost of customer acquisition is greater than the cost of customer retention => better to invest in long-term relationship for customers that are already there 7. THE CHANGING MARKETING LANDSCAPE The marketplace changes so rapidly => the ability to change has become a competitive advantage. Five major developments 1) The digital age Digital and social media marketing = using digital marketing tools such as websites, social media, mobile apps and adds, online video, email, and blog to engage consumers anywhere at any time via their digital devices. + aligning marketing content with real-world events and trending topics Companies reach out to costumers with multiple websites, newsy and tweets and Facebook pages,… that solve consumer problems and help them shop Marketers set up company and brand websites that provide information and promote the company’s products. Ex: Sony’s PlayStation forum 10 2) Dynamic economic environment Challenge is to balance the brand’s value proposition with the current times while enhancing its long-term equity. Rather than slashing prices in uncertain economic times, many marketers hold the line on prices and instead explain why their brands are worth it. !! cutting down the marketing budget is a big mistake 3) The growth of not-profit marketing Not-for-profits face stiff competition for support and membership, marketing can help them attract membership, funds and support. Ex: WWF with the lastselfie campaign, Cliniclowns ‘rire c’est guerir », 4) The rapid globalization 5) The call for sustainable marketing practice Social responsibilities place strict demands on companies. Some companies view it as an opportunity to do well by doing good, other wait for legal obligation to change. Testimonial Nicolas Lambert: CEO Fairtrade ð See qcm in ppw + pp55 review q? 11 CHAPTER 2: COMPANY AND MARKETING STRATEGY 1. COMPANY-WIDE STRATEGIC PLANNING: defining marketing’s role 1.1 Level of planning • Concern-/company level Ex: Nestlé • SBU-level (strategic business unit). It can be: § a company division, ex: Nestlé pet care § a product line within a division, ex: Nestlé per care - food § a single product or brand, ex: Nestlé pet food ‘Gourmet’ Ex: personal care, household care, pet food, food • Product/market-combinations Ex: gourmet § = delineated product groups that operate on a clearly definable market § = more than 1 possible SBU 1.2 Strategic planning process = The process in which the objectives and capacities (assets and competencies) of the company are continuously matched against evolving opportunities and threats in the external environment Company-wide strategic planning guides the rest of planning in the firm( marketing strategy and planning) Each company must find the game plan for long-run survival and growth Strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment 4 steps: 1.3 Defining market-oriented mission Purpose of the organisation should be stated with a mission statement. Mission statement = the organization’s purpose - what it wants to accomplish in the larger environment. 12 The mission statement guides people in the organization and is market-oriented, not product-oriented. Profit is only the rewards of creating customer value => mission focus on customer Ex: Facebook = “we connect people around the world and help them share important moment in their lives” NOT “we are an online social network” Microsoft = “empower every person and every organization on the planet to achieve more” NOT “to create the world’s best software, technologies and devices ð How to define a Mission Statement ? 1) Based on a vision (=> how management sees the branch/market in its whole) 2) Start from basic needs of the market => not in term of product/ technology (marketing myopia) but in term of customer need (means vs end) 3) Not delineated too narrow (myopia), but neither too broad (windowdressing) => actionable guidelines 4) Realistic = based on your company’s own unique assets and competencies 5) Motivating (i.e. giving employees a sense that they can provide a positive contribution to other’s live, rather than merely achieving the company’s profit goals 2. DESIGNING THE BUSINESS PORTFOLIO 2.1 Defining your business scope Abell-diagram = what business are we in? - What? => customer needs - Who? => customer segment - How? => product/ technologies/ services/ … Often applied to analyse a business’ scope of operation – which technologies and product does a business operate in a market with? What kind of group does it responds to? It is handy aid in delineating the market. 2.2 Designing the business portfolio The business portfolio = the collection of businesses and product that make up the company. Portfolio analysis = a major activity in strategic planning whereby management evaluates the products and businesses that make up the company. 13 2.3 Analysing the current business portfolio 1st step 2nd step 3rd step Most standard portfolio analysis methods evaluate SBUs on 2 dimensions: - Attractiveness of the SBU’s market or industry - Strength of the SBU’s position in that market or industry Best known portfolio-planning method = Boston Consulting Group approach BCG Growth-Share Matrix: = a portfolio-planning method that evaluates a company’s SBUs in term of market growth rate and relative market share 10 circles = 10 SBUs Area of circle proportional to SBUs dollar sales ð Company classifies all its SBUs according to the growth-share matrix - Stars: high-growth, high-share businesses or products requiring heavy investment - Cash cows: low-growth, high-share businesses or product that are established and successful SBUs requiring less investment to maintain market share 14 - Question marks: low-share business units in high-growth markets requiring a lot cash to hold their share - Dogs: low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash ð Then company decide the role of each SBU Company invests fund from mature, successful products and businesses (cash cows) to support promising product and businesses in faster-growing markets (stars and ?), hoping to turn them into future cash cows - Build = invest more to build its share - Hold = invest just enough to hold the SBU’s share at current level - Harvest = milking the short-term cash flow regardless of the long-term effect - Divest = selling it or phasing it out and use the resources elsewhere Company must decide how much invest in each SBU, decide whether to hold, harvest or divest. - - Stars o Build sales and/or market share o Invest to maintain/increase leadership position o Repel competitive challenges o Ex: iPhone 11 Cash cows o Hold sales and/or market share o Defend position o Use excess cash to support stars, selected question marks and new product development o - - Ex: iPhone 6 Question marks o Build selectively o Focus on defendable niche where dominance can be achieved o Harvest or divest the rest o Ex: apple car Dogs o Harvest or o Divest or o Focus on defendable niche o Ex: iPod shuffle 15 ð With time, SBU’s change their positions in the matrix: Start with question marks => star if they succeed => cash cows as market falls => die off or turn into dogs in end of life cycle Company needs to add new product continuously so some of them become stars, then cash cows that will help finance other SBUs ð Analysing current business scope: § Portfolio analysis § Deciding on what SBUs receive same/more/less budget allocation § Ex: BDG matrix 2.4 Developing strategies for growth and downsizing ð Developing growth strategy: § Determining what new products/services and markets are added to the current business scope § Ansoff matrix 16 The product/market expansion grid = portfolio-planning tool to identify company growth opportunities through market penetration, market development, product development, or diversification. Market penetration: company growth by increasing sales of current market segments without changing the product. => adjustment to product design, advertising, pricing, distribution efforts Ex: Gold card for Plopsaland – Coca-cola advertises to drink in the morning Market development: company growth by identifying and developing new market segments for company products. Ex: Product development: company growth by offering modified or new products to current market segments. Ex: Albert Heinz does ‘aller hande box’ Diversification: company growth through starting up or acquiring businesses outside the company’s current products and markets Ex: Dyson (aspirateurs) => sèche-mains Question: Position each of the following four examples regarding potential growth strategies of Bacardi in the Ansoff matrix. Explain. 1.Introduction of 70cl – bottle of Breezer for use at home 2.Introduction of alcohol free Breezer targeted at the -16 year old market 3.Introductin of Breezer ice lollies 4.Offering workshops rhum distillery as B2B team building activity R/ Link with Abell-diagram = Who? -market development How? -product development 17 3. PLANNING MARKETING: partnering to build customer relationships 3.1 Internal partnerships for creating customer value Partnering with other company departments Value chain = a series of department that carry out value creating activities to design, product, market, deliver and support a firm’s product. ð firm success also depends on how the various department coordinate. 3.2 External partnerships for creating customer value Partnering with others in the marketing system Value delivery network: network composed of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system. Companies partner with other members of the supply chain to improve performance of the customer value delivery network 18 4. MARKETING STRATEGY AND THE MARKETING MIX Marketing Strategy = the marketing logic by which the company aims to create customer value and achieve profitable customer relationships 1) Company decides which customer to serve => segmentation and targeting 2) How create value for them? => differentiation and positioning 3) Company identifies promising segments and focus on serving and satisfying those 4) Company designs and an integrated marketing mic (4ps) that deliver intended value to targeted customers => find best strategy and mix by engaging marketing analysis, planning, implementation and control. Core = customers 4.1 Customer value-driven marketing strategy: STP logic MARKET SEGMENTATION is the division of the market into distinct groups of buyers who have different needs, characteristics, or behaviour and who might require separate products or marketing mixes. ð Every market has segments but not all segments are equally useful MARKET SEGMENT is a group of consumers who respond in a similar way to a given set of marketing efforts MARKET TARGETING is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. MARKET POSITIONING is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers DIFFERENTIATION begins the positioning process 19 4.2 Developing an integrated Marketing Mix After determining marketing strategy, company do planning of the marketing mix MARKETING MIX is the set of controllable, tactical marketing tools- product, price, place, and promotion- that the firm blends to produce the response it wants in the target market. ð It is everything the firm can do to engage consumer and create customer value o Product o Price o Place (company activities that make the product available to target consumers o Promotion (activities that communicate the merit, persuade consumers to buy it) All the marketing activities included in the 4Ps: Take the seller’s view, the buyer’s view is described as the 4 As - Accessibility = does product exceed customer’s expectation - Affordability = is customer willing and able to pay price - Awareness = is customer informed about product’s features, persuade to try it and reminded to repurchased 20 5. MANAGING THE MARKETING EFFORT AND MARKETING RETURN ON INVESTMENT 5.1 Managing the Marketing Effort • Marketing Analysis Managing the marketing function starts by analysing the company’s situation with a SWOT analysis. It evaluates the company’s: Goal of the company: match de strengths to attractive opportunities while eliminating or overcoming the weaknesses and minimizing the threads. • Marketing Planning Company develops company-wide strategic plan and then translates them into marketing and other plans for each division Company decides what to do with each business unit. Choose the marketing strategies to help company attain objective => detailed marketing plan needed for each business, product, brand. Sections of a typical product/brand marketing plan: 21 • Implementation and Organization => company turns plans into marketing actions to accomplish the objectives • Control => measuring and evaluating the results of marketing activities and correct where needed. p81 describe in own words 5.2 Return on Marketing Investment (ROMI) Marketing ROI = net return from a marketing investment divided by the costs of the marketing investment = Measurement of the profits generated by investments in marketing activities ð Net return divided by the cost Can be hard to calculate as the returns (engagement, advertising impact) aren’t easy to put in dollar returns. Beyond measuring return on investments in term of standard performance measures such as sales or market share, many companies are using customer relationship measure: customer satisfaction, engagement, retention, equity (more difficult to measure but capture both current and future performance. 22 ð Here you see marketing expenditures as investments that produce returns in the form of more profitable customer relationships ð Marketing investments result in improved customer value , engagement, and satisfaction -> in turn increase customer attraction and retention. ( increase also customer equity) ð Increased customer equity, in relation to the cost of the marketing investment, determines return on marketing investment + view review q? slide 59 23 CHAPTER 3: ANALYSING THE MARKET ENVIRONMENT In chapter 3, we learn: • To describe the environmental forces that affect the company’s ability to serve its customers. • To explain how changes in the demographic and economic environments affect marketing decisions. • To identify the major trends in the firm’s natural and technological environment. • To explain the key changes in the political and cultural environments. • To discuss how companies can react to the marketing environment. 1. THE MICROENVIRONMENT AND MACROENVIRONMENT The marketing environment = the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Micro-environment = the actors close to the company that affect its ability to serve its customers -the company, suppliers, marketing intermediaries, customer markets, competitors, and public. Macro-environment = the larger societal forces that affects the microenvironment -demographic, economic, natural, technological, political, and cultural forces § The microenvironment - The company: In designing marketing plans, marketing managers takes other company groups into account: o Top management o Finance o R&D o Purchasing o Operations o Accounting They all have responsibilities in creating customer value and understanding customer needs - Suppliers: Provide the resources to produce goods and services Treated as partners to provide customer value 24 - Marketing Intermediaries: = firms that help the company to promote, sell, and distribute its goods to final nuyers. o Resellers (help to find customers or make sales to them) o Physical distribution firms (ex: DHL) o Marketing service agencies (advertising agencies, media firms, marketing consulting firms that help promote the products to the right markets) o Financial intermediaries (banks, credit companies, … help finance transactions/ insurance) - Competitors: To be successful, firms must gain strategic advantage by positioning their offerings strongly against competitor’s’ offering in the minds of consumers => provide the greater customer value than competitors - Publics: = Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives: 7 types of publics o Financial publics. This group influences the company’s ability to obtain funds. o Media publics. This group carries news, features, and editorial opinion. o Government publics. Management must take government developments into account o Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. o Local publics. This group includes neighborhood residents and community organizations. o General public. A company needs to be concerned about the general public’s attitude toward its products and activities. o Internal publics. This group includes workers, managers, volunteers, and the board of directors. - Customers: Most important actors. Company might target any or all of five groups: o Consumer markets consist of individuals. o Business markets buy goods and services for further processing or use in their production processes. o Reseller markets buy goods and services to resell at a profit. o Government markets consist of government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them. o International markets consist of various buyers in other countries, including consumers, producers, resellers, and governments. 25 Each market type has a special characteristic that call for careful study by the seller. § The macro-environment - The demographic environment: Demography is the study of human population. Demographic environment involves people, and people make up markets. => on of the major interest to marketers. Demographic trends include changing age and family structures, geographic population shifts, educational characteristics, and population diversity. Changes in demographic environment have major impact on business. § The changing age structure of the population o o Baby boomers – born btw 1946 and 1964 o spend more carefully and planning to work longer. o Wealthiest generation in US history. o Open to more brand Generation X – born btw 1965 and 1976 o More sceptical, research product before purchase o prefer quality to quantity o Less receptive to over marketing pitches and more receptive to irreverent ad pitches that make fun of convention and tradition. § Millennials – born btw 1977 and 2000 o First generation to grow up with computers, mobile phones, TVs, social network, … § o Engage with brands in a new way (mobile/social media). o Generation with the least financial meanbut still huge market. Generation Z – born after 2000 o represent tomorrow’s markets 26 o § influence their parent’s purchase decision Geographic shifts in population o Migratory movement between and within countries matter because people in different regions buy differently o § Shifts in where people live also shifts where people work. Increasing diversity o Markets are becoming more diverse. At home (National) and also abroad (International) because operations become more international in scope. o - Diverse in Ethnicity, LGTB, disabled The economic environment = The economic factors (interest rates, income, cost of living, …)that affect consumer purchasing power and spending pattern § After Great Recession (2008-2009): consumers buy less, looking for greater value § Marketers look for way to offer greater value § Value marketing involves offering financially cautious buyers the greatest value -the right combination of quality and services at a fair price § Income distribution: over the past several decades, the rich have grown richer, the middle class has shrunk, and the poor remained poor. - Natural environment = the physical environment and the natural resources that are needed as input by marketers or that are affected by the marketing activities. Ex: cold winter => sales decrease for florist, tourist destinations, airlines, restaurant, … § Trends in the Natural Environment (that marketers should be aware): o Growing shortages of raw material o Increased pollution o Increased government intervention o Developing strategies that support environmental sustainability => Environmental sustainability= developing strategies and practice that creates a world economy that the planet can support indefinitely - Technological environment Most dramatic force changing the marketplace New product, opportunities ð Marketers should watch the technological environment closely; new replace old ð Companies that don’t keep up => will soon find their products outdated 27 ð If it happens, they will miss new product and market opportunities Concern for the safety of new products ð Government and other agencies create regulations for the safety of technology, companies must be aware of those regulations when applying new technologies and developing new products - Political and social environment Laws, government agencies, pressure groups affect marketing decisions. Legislation Regulatory Business intend to protect: § Companies from each other § Consumers from unfair business practices § Interests of society against unrestrained business behaviour Increased emphasis on ethics: Business is also governed by social codes and rules of professional ethics - Socially responsible behaviour Enlighted companies look beyond what the regulatory system allows and simply do the right thing These socially responsible firms seek out ways to protect the long-run interests of their consumers and the environment. Well-meaning people can disagree about the right course of action in a given situation => many industrial and professional trade associations have suggested codes and ethics - Cause-related marketing Many companies link themselves to worthwhile causes to exercise social responsibilities and build more positive image. = commercial organization trying to differentiate by sponsoring popular social goals (causes), in order to appeal to a target audience. ð Mutual benefit for commercial organization and non-profit cause = a commercial activity whereby companies and non-profit organizations form an alliance to market an image, product or service at their mutual benefit ð Positive brand image 28 ð Respect among employee ð Customer loyalty o Distinction between non-profit and profit organizations : 1) Product: non-profit ‘products’ tend to be characterized by a weaker USP (i.e., less clear direct benefits) 2) Price: e.g., what is the price one pays for voting for a certain political party?; what amount of money do you want to donate to charity? 3) Involvement: often extremely involved pro/con 4) Segmentation: often undifferentiated marketing as compared to profit context 5) Mission statement: cause-related rather than striving to be the best Message: Emotional (creating a memorable emotional response among the target audience of donors Rational (giving donors a reason to donate, based on objective facts) Marketing isn’t only for profit => short term customer wants vs long term customer well being - Cultural environment = Institutions and other forces that affect a society’s basic values, perception, and behaviors. § Persistence of Cultural values o Core beliefs and values = persistent and passed from parents to children and are reinforced by school, churches, businesses, and government. o Secondary beliefs and values = more open to change and include people’s view of themselves, others, organizations, society, nature, and the universe. Ex: believing in marriage - Reacting to the marketing environment Many companies view the marketing environment as uncontrollable to which they must react and adapt. Other take a proactive stance toward this environment and develop strategies to change it, can even take aggressive actions (hire lobbyist, stage media event,…) 29 In many cases marketing management must settle for simply watching and reacting. Ex: cannot influence geographic population shifts. - Bringing this all together: the CONFRONTATION MATRIX From swot to confrontation and drawing strategic conclusion +review q ? slide 104 30 CHAPTER 7: CUSTOMER VALUE-DRIVEN MARKETING STRATEGY Companies cannot appeal to all buyers in the same way. They have to identify the parts of the market they can serve the best and most profitably. Mass marketing => target marketing ð Must develop customer-driven marketing that build the right relationship with right customers 1. MARKETING STRATEGY - 4 major steps in designing customer-driven marketing - STP process: Segmentation à Targeting à (Differentiation and) Positioning 2. MARKET SEGMENTATION Market Segmentation= dividing a market into smaller segments with distinct needs, characteristics, or behaviour that might separate marketing strategies or mixes. ð These groups need a different marketing mix Segmentation allow segments to be reached more efficiently with products/services that match their unique needs Further stimulated by new technologies and communication techniques 4 segmentation topics: o Segmenting Consumer markets Marketer has to try different segmentation variable (alone and in combination) § Geographic segmentation à divides the market into different geographical units such as nations, regions, states, countries, cities or even neighbourhoods, population density (urban, suburban, rural), climate o Ex: Carrefour hypermarket/ market/ express/ drive to adjust to need of urban/suburban/rural consumers 31 Ex: ajuster le stock fonction du climat (chaud=> plus de maillots, froid=> plus de pulls) § Demographic segmentation à divides the market into segments based on variables such as age, life-cycle stage (single, young family, …), gender, income, occupation, education, religion, ethnicity and generation. o Ex: age – Lego for 3yo, 5yo, 10yo, 12yo Ex: gender – Lego princess for girls, construction for boys Ex: religion – McDonald’s kosher Ex: life-cycle – monospace cars vs 2-seats § Psychographic segmentation à divides a market into different segments based on social class, lifestyle, values, or personality characteristics. Ex: clothing lines for athletes, city bikes/trekking bikes § Behavioural segmentation à divides market into segments based on consumer knowledge, attitudes, uses of product, or response to a product. • Occasions o Grouping according to occasions where consumer get idea to buy, make purchase or use the purchased item o Ex: Starbuck’s pumpkin spice latte only for fall, Campbell adversities soup in winter, “merci” chocolates • • Benefits sought o Searched benefit? Good service, quality, safe money, … o Ex: FujiFilm’s waterproof disposable camera User status o • • Usage rate o Light, heavy user, … o Ex: bigger jar of Nutella/ small jar Loyalty status o § Non-user, ex-user, potential user, first-time user According to degree of loyalty Multi-segmentation à used to identify smaller, betterdefined target group. o Segmenting Business markets § Use many of the same variables as consumer market § Additional variable: • Customer operating characteristics (technology, service level need, …) • Purchasing approaches (existing relations, …) • Situational factors (urgency, order size, …) • Personal characteristics (sector, size company, …) 32 o Segmenting International markets § Geographical location: nations closes together have common behaviours § Economic factors: by income level, overall economic development § Political and legal factors: by type and stability of government, monetary regulations, … § Cultural factors: by language, religions, values § Alternative: Intermarket segmentation = forming segment of consumer with similar needs and buying behaviour eventhough they are located in different countries o Requirements for effective segmentation To be useful, market segmentation must be: § Measurable: size, purchasing power … can be measured § Accessible: segment can be effectively reached and served § Substantial: segments are large or profitable enough to serve § Differentiable: segments are distinguishable and respond differently § Actionable: effective programs can be designed for serving the segment 3. MARKET TARGETING: Companies identify attractive market segments and choose a market-targeting strategy. o Evaluating Market Segments Targeting = determine attractiveness of segments and choice of segments to serve. 3 factors: o - Segment size and growth - Segment structural attractiveness à Porter’s 5 forcers - Company objectives and resources Selecting Target Market Segments A target market is a set of buyers who share common needs or characteristics that the company decides to serve. Different level of targeting § Undifferentiated (mass) marketing: o Targets whole market with one offer o Focuses on common needs 33 § § § Differentiated (segmented) marketing: o Targets several market segments and design separate offers for each o Goal= to achieve higher sales and stronger position o More expensive than undifferentiated Concentrated (niche) marketing: o Targets a large share of one or a few segments or niches o More effective and efficient Micromarketing (local or individual marketing): o Tailors their offers to suit the tastes of specific individuals and locations o Local marketing: tailor brands and promotion to the needs and wants of local customer segments § § Ex: Uber, BarFinder Individual marketing (mass customization): tailor product and marketing program to the needs and wants of individual customers (sometimes on a big scale) à customerization = customization + customer-driven § o Ex: Name on Nutella jar, custom function on website of Nike Choosing a targeting strategy depends on: - Company resources - Product variability - Product life-cycle stage - Market variability - Competitor’s marketing strategies 4. DIFFERENTIATION AND POSITIONING Company must decide on a value position – how it will create differentiated value for targeted customers and what position it wants to occupy Product position = the way the product is defined by consumers on important attributes – place it occupies in consumer’s mind compared to competing products Positioning = position the market offer in the minds of target consumers 34 ð Company must plan position that will give their products the greatest advantage and must design marketing mixes to create these planned positions Position maps: show consumers perception of marketer’s brands versus competing products on important buying dimensions (price and luxury performance). Size of the circle = brand’s market share in the segment. o Choosing a Differentiation and Positioning Strategy 1) Identifying a set of possible competitive advantages to build a position Comparative advantage = an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices 2) Choosing the right competitive advantages Which differences to promote? 1. Important: The difference delivers a highly valued benefit to target buyers. 2. Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. 3. Superior: The difference is superior to other ways that customers might obtain the same benefit. 4. Communicable: The difference is communicable and visible to buyers. 5. Preemptive: Competitors cannot easily copy the difference. 6. Affordable: Buyers can afford to pay for the difference. 7. Profitable: The company can introduce the difference profitable How many differences to promote? - 1 is easier to remember and more credible - If all competitors have same USP/ more than one company claiming it => more than one - With more benefits you can target more segments - Be careful with contradicting USP’s (ex: coca cola’s new coke was against tradition) 35 3) Selecting an overall positioning strategy Value proposition = the full mix of benefits upon which a brand positions – the full proposition of a brand à 5 possible value propositions 4) Developing a Position Statement Position statement = a statement that summarizes company or brand positioning using this form: To (target segment and need), our (brand) is (concept) that (point of difference) Ex: to busy multitaskers who need help remembering things, Evernote is a content management application that makes it easy to remember ideas from your everyday life using your computer, phone, … o Communicating and delivering the chosen position to the market - Choosing positioning is easier than implementing the position - Establishing a position/repositioning takes a long time - Maintaining position requires consistent performance and communication 36 37 CHAPTER 18: CREATING COMPETITIVE ADVANTAGE Learning objectives: 1. discuss the need to understand competitors as well as customers through competitor analysis 2. Explain the fundamentals of competitive marketing strategies based on creating value for customers 3. Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centred organization Competitive advantages require delivering more value and satisfaction to target consumers than competitors. Competitor analysis = the process of identifying, assessing and selecting key competitors. Competitive marketing strategies = how companies analyse their competitors and develop valuebased strategies for profitable customer relationships. à 3 steps 1. COMPETITOR ANALYSIS o Identifying Competitors Can include: - All firms marketing the same product or class of products - All firms marketing products that supply the same service - All firms competing for the same consumer dollars (ex for hotel company: cruise) Ø Companies must avoid competitor myopia: a company is more likely to be “buried” by its future competitors than by the current ones (ex: video-rental store loses to Netflix) Ø Companies can identify competitors from an - Industry point of view – e.g. for google => search engine providers as Bing - Market point of view – companies trying to satisfy same customer need/ build relationship with same customer group. E.g. for Google => serving needs for online and mobile access to digital world as Facebook/Microsoft o Assessing Competitors Ø Determining Competitors’ Objectives o Want to know competitors’ profitability, market share growth, cash flow, technological leadership and service leadership à revels how it might react to competitive action à enable anticipation Ø Identifying Competitors’ Strategies o Competitors can be sorted in strategic group = a group of firms in an industry following the same or a similar strategy. à the more similar the strategies, the more competition à if company enters strategic group, member of the group become key competitors à company need to develop strategic advantages over them Ø Assessing Competitors’ Strengths and Weaknesses 38 o Answer ‘what can our competitor do?’ (research, check websites, survey, …) o Try benchmarking = comparing the company’s products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance Ø Estimating Competitors’ Reactions o Answer ‘what will our competitor do?’ o Need a deep understanding of competitors’ mentality to anticipate the likely action and reactions to company moves. o Selecting Competitors to Attack and Avoid Strong or Weak Competitors - Easier to compete with weak competitors but gain little - Greater return from succeeding against stronger - Stronger competitors still have weaknesses Tool for assessing strength and weaknesses: - Customer value analysis = determines the benefits that target customer’s value and how customers rate the relative value of various competitors’ offers à first identifies major attributes valued by customers and their importance, then assesses its performance on those attributes against competitors o Good or Bad Competitors Industry contains - good competitors: help increase total demand, legitimize new technologies, share the cost of market/product development + play by the rules o bad competitors: break rules of industry Finding Uncontested Market Spaces - Blue-ocean strategy : seeking unoccupied positions in uncontested market spaces (with no direct competitors) 39 o Designing a Competitive Intelligence System The information gathered must be interpreted, distributed and used. Company must design a costeffective competitive intelligence system (gathering the info cost a lot) àwith the system, company managers receive timely reports and assessments about competitors 2. COMPETITIVE STRATEGIES à Design broad marketing strategies to gain competitive advantage o Approaches to Marketing Strategy Each company must find its strategy, sometimes even different strategies within company (for different businesses or products) It passes through 3 stages: - Entrepreneurial marketing § company starting by individual § involves visualizing an opportunity and constructing and implementing flexible strategies. - Formulated marketing § small company achieved success and move toward more-formulated marketing § - involves developing formal marketing strategies and following them closely Intrapreneurial marketing § large and mature company get stuck § involves the attempt to re-establish an internal entrepreneurial spirit and refresh marketing strategies and approaches. 40 o Basic Competitive Strategies (Typology of Porter) Four basic competitive positioning strategies companies can follow à 3 winning, 1 losing - Overall cost leadership strategy § Achieves the lowest production and distribution cost and allows it to lower its prices and gain market share - Differentiation strategy § Concentrates on creating a highly differentiated product line and marketing program, so it comes across as an industry class leader - Focus strategy § Focus its effort on serving few market segments well rather than going after the whole market o Middle of the road: losing one => no clear strategy Basic Competitive Strategies (Tracy and Wiersema à T&W) Tracy and Wiersema suggest companies can gain leadership positions by delivering superior value to their customers in 3 more strategies or “value discipline”: à3 more customer-centred classification of competitive marketing strategies - Operational excellence (best total cost) § refers to company providing value by reducing cost, customers want reliable, good-quality products that are cheap. - Product leadership (best product) § Tailoring its product to exactly match customer needs, who is willing to pay more. Focus on building long-term customer loyalty and capture customer lifetime value - Customer intimacy (best total solution) § Offering continuous stream of leading-edge product. Customer are regardless of the cost (in price or inconvenience) ð Company should focus on excelling in one strategy while meeting industry standard in the 2 others, otherwise it will end up being best at none 41 o Competitive Position Examine competitive strategy based on the roles firms play in the target market: o Market leader è the firm with largest market share in an industry (40% of the market in its hand) o Market challenger è runner-up firms that are fighting hard to increase its market share in an industry (30%) o Market follower è a runner-up that wants to hold it share in an industry without rocking the boat (20%) o Market nicher è serves small segments not being perused by other firms à specific marketing strategies available for them: o Market Leader Strategies Leader can take any of the 3 action: - - - o Find ways to expand total demand => expand total market by developing: § New users – market development § New uses – market penetration § More usage – market penetration Protect current market share with defensive and offensive actions by: § Fixing or preventing weaknesses that provide opportunities to competitors § Maintaining consistent prices that provide value § Keeping strong customer relationships § Promoting continuous innovation Try to expand their market share even if market size remains constant by: § Producing high-quality products § Creating good service experiences § Building close relationships Market Challenger Strategies - Challenge the market leader § In an aggressive bid for more market shares or to take leadership § Frontal attack the leader by attacking the competitor’s strength instead of weaknesses 42 à If challenger has fewer resources than leader => indirect attack on weaknesses - Second mover advantage § o Challenger observes what made the leader successful and improves on it Market Follower Strategies Firms can prefer to not challenge if they don’t have the resources - Copy or improve on the leader’s products with less investment à won’t overtake leader but will be as profitable - Play along and not rock the boat - Keep costs and prices low or quality and services high (because targeted by challengers) à following >< being passive : must know how to hold current customer and win share of new ones à find balance between following closely to gain customer and not to closely to avoid retaliation o Market Nicher Strategies - Ideal market niche is big enough to be profitable with high growth potential and has little interest for competitors - Specialization (target subsegment) = Key idea of market niching à profitable bc able to meet needs of customer better à added value so can charge higher cost (high margins instead of high volume) - Can specialize along: § Market § Customer § Product § Marketing mix lines 3. BALANCING CUSTOMER ANC COMPETITOR ORIENTATIONS Company must constantly adapt its strategies to fast-changing competition. /!\ A company can become so competitor-centred that it loses focus on maintaining profitable customer relationship 43 o Competitor-centred company = Tracks competitors’ moves and market shares and try to find ways to counter then - Advantage: company is a fighter (watches for weaknesses) - Disadvantage: company is too reactive (bases moves on competitors rather than customers) o Customer-centred company = focuses on customer-development in designing strategies. Better position than competitor to identify opportunities and build customer relationship o Market-centred company = focuses on both competitor and customer development in designing strategies 44 CHAPTER 5: CONSUMER MARKETS AND BUYER BEHAVIOUR Learning objectives: 1. Define the consumer market and construct a simple model of consumer buying behaviour 2. Name the four major factors that influence consumer buyer behaviour 3. List and define the major types of buying decision behaviour and the stages in the buyer decision process 4. Describe the adoption and diffusion process for new product § Consumer buying behaviour = the buying behaviour of final consumers – individuals and households that goods and services for personal consumption à >< business markets and business behaviour § Consumer market = all the individuals and households that buy or acquire goods and services for personal consumption § Similarities = structure of consumer behaviour and purchase decision making § Differences = characteristics affe