NSW MARK1012 Finals Notes

8/18/2019 NSW MARK1012 Finals Notes

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Understand themarketplace

and customerneed, wants,and demands

Design acustomer-

drivenmarketing

strategy

Construct anintegratedmarketing

program thatdelivers

superior value

Build proftablerelationshipsand createcustomerdelight

Capture valuerom customers

to createprofts andcustomer

equity

Chapter 1 – Marketing: Creating and Capturing Customer Value

What is marketing?- Marketing is an activity, a set of institutions and processes for creating,

communicating, delivering and exchanging oerings that have value forcustomers, clients, partners and society at large

- Marketing is a social and managerial process by which individuals andorganisations obtain what they need and want through creating andexchanging value with others.

- In a narrower business context, marketing involves building protable, value-laden exchange relationships with customers

- The goal of marketing is to attract new customers by promising superior value and to keep current customers by delivering satisfaction

- The marketing process

o y creating value for consumers, organisations in turn capture value

from consumers in the form of sales, prots and long-term customere!uity

Understanding the marketplace and customer needsCustomer needs, wants and demands

- eeds are states of felt deprivationo "an be physical, social or individual

- Wants are the form taken by human needs as they are shaped by culture andindividual personality

o #hen backed by buying power, wants !ecome demandso "onsumers view products as bundles of benets

- $arketers go to great lengths to learn about and understand their customerso "onduct "ualitati#e research to ascertain if there are unmet needs,

wants % demandso "onduct "uantitati#e research to ascertain magnitude of the unmet

needs, wants % demandso &eek customer insights when they examine their databases for hidden

patternso 'bserve % interview customers about their likes % dislikes

Market o$erings: %oods, ser#ices and e&periences- $arket oering is a product that is some combination of goods, services and

experiences that can be oered to a market to satisfy a need or wanto (nything that satises a need can be a producto $arketers distinguish between products that have physical form and

those that don)t using the terms goods and ser#ices'e&periences


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o "ould substitute terms satiser, resource, oer- &ellers make mistake of paying more attention to attributes rather than

benets of producto &ell product rather than solution to a needo &o taken with products that they only focus on existing wants and lose

sight of underlying customer needso *nown as marketing m(opia

- +roducts create !rand e&periences for customers

Customer #alue and satisfaction- Customer percei#ed #alue is the dierence between the values the customer

gains from owning and using a product and the costs of obtaining the producto "ustomers often udge products on perceived value

- Customer satisfaction depends on a product)s perceived performance indelivering value relative to a buyer)s expectations

o &atised customers make repeat purchaseso $ust match customer expectations with company performance

)&changes, transactions and relationships- )&change is the act of obtaining a desired obect from someone by oering

something in returno In the broadest sense, the marketer tries to bring about a response to

some market oeringo Is the core concept of marketing

- ( transaction consists of a trade of values between two partieso Is marketing)s unit of measurement

- $arketing consists of actions taken to !uild and maintain desira!le

e&change relationships with target audiences involving a product, service,idea or other obect

o $arketers aim to build strong relationships by consistently deliveringsuperior customer value

- xchange % transactions are interrelated core marketing conceptso &everal conditions must be satised for these to take place

(t least two parties must participate

ach must have something of value to the other

ach party must want to deal with the other party ach party must be free to accept or reect the other)s oer

ach party must be able to communicate and delivero These conditions make it possible, but occurrence depends on parties

coming to an agreement Therefore, act of exchange must make them better o

o Therefore, exchange creates value as it gives people more consumptionpossibilities

Markets- Market is the set of actual and potential buyers of a product- "onsumers do marketing when they obtain information to make their

purchases- Therefore, marketers must eectively deal with customer*managed

relationships


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- $arketing involves serving a market of +nal consumers in the face ofcompetitors

- (ll parties in the system are aected by maor en#ironmental forceso ach party in the system adds #alue for the next levelo Therefore, a company)s success at building protable relationships

depends not only on its own actions but also on how well the entiresystem serves the needs of nal consumers

-esigning a customer*dri#en marketing strateg( - Marketing management is the analysis, planning, implementation and

control of programs designed to create, communicate and deliver value tocustomers, and facilitate managing customer relationships in ways that enablethe organisation to meet its obectives and those of its stakeholders

o ./. art and science of choosing target markets and building protablerelationships with them

- To design a winning strategy, marketer must ask two important !uestionso What customers will we ser#e? 0who is our target market?o 2ow can we ser#e these customers !est? 0what is our #alue

proposition?3electing customers to ser#e

- ecessary to select the customers they can serve well and protably- (t times, may be necessary to seek fewer customers and reduce demand- $arketing management concerned with nding, increasing, as well as

changing or reducing demand- -emarketing is marketing where the task is to temporarily or permanently

reduce demand- -i$erent t(pes of demand

o egative demand /islike products0price paid to avoid it

o o demand "onsumers unaware0uninterested

o 1atent demand /emand for products that do not exist yet to satisfy wants0needs

o /eclining demand &elf explanatory

o Irregular demand /emand that varies on certain bases, such as seasonally

o 2ull demand


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'ccurs when organisations satised with volume of businesso 'verfull demand

#hen demand is higher than organisations can or want to handleo 3nwholesome demand

+roducts which attract organised eorts to discourage their

consumption- /emand comes from repeat and new customers

- +ast meant the leaky bucket approach could be used 4 keep getting newcustomers, dw about old oneso ew marketing realities based on demographics and market conditions

make it more important to retain customers- $arketers must ensure that there is an e&periential element 4 a sense of

e&citement associated with market oering0communication is usedo )&citement is customer engagement through experiential and emotional

involvement with sellerso the key to creating excitement is in#ol#ement and interacti#it(

Choosing a #alue proposition- 5ow will the organisation di$erentiate and position itself in the market6- The #alue proposition is the set of benets or values it promises to deliver to

consumers to satisfy their needsMarketing management orientations

- 7 concepts which organisations may conduct marketing activitieso 4roduction concept

5olds that consumers will favour products that are available and

highly aordable $anagement should focus on improving production and

distribution eiciency 3seful when

• -emand e&ceeds suppl( • Cost is too high and producti#it( needed to !ring it

downo 4roduct concept

5olds that consumers will favour products that oer the most

!uality, performance and innovative features $anagement should focus on making continuous product

improvements "an lead to marketing m(opia

o 3elling concept

5olds that consumers will not buy enough of the rm)s productsunless it undertakes a large-scale selling and promotion eort

Typically practised with unsought goods

Track down prospects and sell them on product benets

"arries high risks

• 2ocuses on transactions rather than relationshipso Marketing concept

5olds that achieving organisational goals depends on determining

the needs and wants of target markets and delivering the desiredsatisfaction more eectively and eiciently than competitors

&elling concept takes an inside-out perspective, but marketingconcept takes an outside-in perspective


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"ustomer driven companies research customers to learn about

their desires, gather new product and service ideas and testproposed product improvements

#hen customers do not know what they want, use customer-driving

marketing

• 3nderstanding customer needs better than they doo 3ocietal marketing concept

8uestions whether the pure marketing concept overlooks possiblecon9icts between short run wants and long run welfare

&hould improve both consumer and society)s wellbeing "alls for sustainable marketing 4 socially and environmentally

responsible marketing "ompanies should balance three considerations in marketing

strategies

• "ompany prots

• "onsumer wants

• &ociety)s interests

4reparing an integrated marketing plan and program- $arketing strategy outlines which customers will be served- 5ntegrated marketing program actually delivers the intended value to target

customerso uilds customer relationships by transforming the marketing strategy

into actiono "onsists of the rm)s marketing mi& , which is the set of marketing tools

the rm uses to implement its marketing strategy- The set of tools marketers employ have developed most recently from the

knowledge gained in business-to-business marketing and in marketing serviceso

These tools are the e&tended marketing mi& - To deliver on value proposition, needs to be a product, price, place andpromotion

6uilding customer relationshipsCustomer relationship management

- C7M is the overall process of building and maintaining protable customerrelationships by delivering superior customer value and satisfaction

o /eals with all aspects of ac!uiring, keeping and growing customers

7elationship !uilding !locks: Customer #alue and satisfaction- *ey to building lasting customer relationships is to create superior customer

#alue and satisfaction- Customer #alueo ( customer buys from the rm that oers the highest customer*

percei#ed #alue- Customer satisfaction

o Customer satisfaction depends on the product)s perceivedperformance relative to a buyer)s expectations

o &eek to deliver high customer satisfaction relative to competitors, but

not ma&imise it- Customer relationship le#els and tools

o "ompany with many low-margin customers seeks to develop !asic

relationships with themo "ompany with few customers and high margins involves creating full

partnerships


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o 8re"uenc( marketing programs reward customers who buy fre!uentlyor in large amounts

o Clu! marketing programs oer members special benets and createmember communities

The changing nature of customer relationships- "ompanies are now building more direct and lasting relationships with more

carefully selected customers

- 7elating with more carefull( selected customerso 2ew rms practise true mass marketing nowadays

o "ompanies target more protable customers as a part of selecti#e

relationship managemento "ompanies use customer pro+ta!ilit( anal(sis to weed out losing

customers and pamper winning ones- 7elating more deepl( and interacti#el(

o Customer*managed relationships are where customers empowered bytoday)s new digital technologies interact with companies % with eachother to shape their relationships with brands

o "ompanies can no longer rely on marketing by intrusiono $ust practise marketing by attractiono "reation of dialogues between marketers and consumers through online

social networkso (s opposed to intruding, companies are in#iting customers to play a

more active role in shaping brand messages and adso Consumer generated marketing involves brand exchanges created by

consumers themselves, both invited and uninvited, where consumers areplaying an increasing role in shaping their own brand experiences andthose of other consumers

4artner relationship management

- In addition to good ":$, need to have good partner relationshipmanagement

- 4artners inside the organisationo very functional area of organisations can interact with customers now,

especially electronically- 4artners outside the organisation

o The suppl( chain describes a channel stretching from raw materials tocomponents to nal products that are carried to nal buyers

o Through suppl( chain management, many companies today arestrengthening their connections all along the supply chain

Capturing #alue from customers- "reating customer value leads to customer loyalty and retention, growingshare of customer, building customer e!uity and building relationships with theright customers

- Creating customer lo(alt( and retentiono ":$ aims to create customer delight rather than ust customer

satisfactiono 2ocus on customer lifetime #alue, which is the value of the entire

stream of purchases that the customer would make over a lifetime ofpatronage

- %rowing share of customer o &hare of customer is the portion of the customer)s purchasing that a

company gets in its product categorieso 'er greater variety, cross-sell, up-sell and leverage relationships to

improve


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- 6uilding customer e"uit( o Customer e"uit( is the total combined customer lifetime values of all

the company)s customerso This is the ultimate aim of ":$

- 6uilding the right relationship with the right customerso 6utter9ies

5igh protability, short term customers

&trategy; promotional blit


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Defning the

companymission

etting company

ob!ectives andgoals

Designing the

businessportolio

"lanning

marketing andother unctionalstrategies

Chapter ;: Compan( and Marketing 3trateg(: 4artneringto 6uild Customer 7elationships

Compan(*wide strategic planning: -e+ning marketingsrole- 3trategic planning is the process of developing and maintaining a strategic

t between the organisation)s goals and capabilities and its changingmarketing opportunities

- 3ee the strategic planning process a!o#e-e+ning a market*oriented mission

- . mission statement is a statement of the organisation)s purpose 4 what itwants to accomplish in the larger environment

- $ission statements should be market*oriented and dened in terms ofsatisfying basic customer needs

o &hould focus on customers and the customer experience the organisationseeks to create

3etting compan( o!ecti#es and goals


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- 3trategic !usiness units 036Us are the key businesses that make up acompany

- a broad mission leads to a hierarchy of both business and marketing obectives

-esigning the !usiness portfolio- $anagement must plan its !usiness portfolio using the organisation)s

mission statement and obectives as a guideo The !usiness portfolio is the collection of businesses and products that

make up a companyo "ompany must analyse its current !usiness portfolio and decide which

businesses should receive more, less or no investment It must then shape the future portfolio by developing strategies

for growth and downsi


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"an invest ust enough to hold its share

"an har#est it to milk its short term cash 9ow regardless of long

term eect "an di#est it by selling0phasing it out and using the resources

elsewhereo 'ver time, &3s, change position in the matrix

&tart out as 8$s and become stars then ""s if successful

- 4ro!lems with matri& approacheso "entralised approaches >eg "=? can be diicult, time consuming and

costly to implement 2ocus on classifying &3s but provide little advice for future

planningo $any companies use more customised approaches that better suit

specic situations-e#eloping strategies for growth and downsi=ing

- The company)s obective is to manage pro+ta!le growth- Identifying growth opportunities can be through the product'market

e&pansion grid)&isting products ew 4roducts

)&isting markets $arket penetration +roduct developmentew markets $arket development /iversication

o "ompany can improve its market penetration through marketing miximprovements

This will lead to more sales without changing its original product

lineso "ompany can improve market de#elopment by identifying % developing

new markets for its products "ould review new demographic markets

o "ompany can improve product de#elopment by oering modied ornew products to current markets

o "ompany can improve di#ersi+cation by starting up or buyingbusinesses outside of its current products and markets

$ust be careful not to overextend the brand)s positioning

- /evelop strategies for both downsi=ing and growing business portfolios

4lanning marketing: 4artnering to !uild customerrelationships

- $arketing plays a key role in the company)s strategic planningo +rovides a guiding philosoph( – the marketing concept – which

suggests that company strategy should revolve around building protablerelationships with important consumer groups

o +rovides inputs to strategic planners to help identify attractive marketopportunities and by assessing the rm)s potential to take advantage ofthem

o +rovides strateg( designs for reaching individual business units)

obectives- In addition to ":$, must also practice partner relationship management in

order to form an eective internal #alue chain- $ust form a competitively superior e&ternal #alue deli#er( network


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4artnering with other compan( departments- ach company department is a link in the company)s internal #alue chain

o That is, each department carries out value creating-activities to design,produce, market, deliver and support the rm)s products

o ( value chain is only as strong as its weakest link - ( company)s departmental relations are often full of con9icts and

misunderstandings

4artnering with others in the marketing s(stem- 2irm needs to look beyond its own internal value chain and into that ofsuppliers, distributors % customers

- "ompanies therefore partner with other members of the supply chain toimprove the performance of the customer #alue deli#er( network

o This is the network made up of companies, suppliers, distributors, and

customers who partner with each other to improve the performance ofthe entire system

Marketing strateg( and the marketing mi& - The marketing strateg( is the marketing logic by which the company hopes

to create customer value and achieve protable relationshipso =uided by this strategy, company designs an integrated marketing mi&

consisting of factors under its control, including product, price, people,process, physical evidence, placement logistics and promotion

o To nd the best strategy0mix, company engages in marketing analysis,planning, implementation and control

Customer*dri#en marketing strateg( - Market segmentation

o Involves dividing a market into distinct groups of buyers who havedierent needs, characteristics or behaviours, and who might re!uireseparate products or marketing products

o ( market segment consists of consumers who respond in a similar wayto a given set of marketing eorts

- Market targetingo Involves evaluating each market segment)s attractiveness and selecting

one or more segments to entero &hould target segments which company can protably generate the

greatest customer value and sustain it over time- Market di$erentiation and positioning

o 4ositioning is arranging for a product to occupy a clear, distinctive anddesirable place relative to competing products in the minds of consumers

o

-i$erentiation is actually dierentiating the company)s marketoering so that it creates superior customer value-e#eloping an integrated marketing mi&

- xtended marketing mix and the @ +so 4roduct

The goods-and-services combination the company oers to the

target marketo 4rice

The amount of money customers must pay to obtain the product

o 4lacement logistics "ompany activities that make products available to target

customers and end-consumerso 4romotion

(ctivities that communicate the merits of the product and persuade

customers to buy it


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o 4eople The last three are the extended marketing mix, rst A are the

normal marketing mixo 4rocess

+rocess of engaging with the company

o 4h(sical e#idence /epends on the type of product in its necessity 4 can be very

eective- The +s might be better described in "s from the buyer)s perspective

o Customer solutiono Customer costo Con#enienceo Communication

Managing the marketing e$ort- This re!uires the four marketing management functions of anal(sis,

planning, implementation and controlMarketing anal(sis

- The marketer should conduct a 3W>T anal(sisMarketing planning

- Involves deciding on marketing strategies that will help the company attain itsoverall strategic obectives

- Typical marketing plan consists of o )&ecuti#e summar( o Current marketing situation

Market description

4roduct re#iew

7e#iew of competition

7e#iew of distri!utiono Threats and opportunities anal(siso >!ecti#es and issueso Marketing strateg( o .ction programso 6udgetso Controls

Marketing implementation- The process that turns marketing strategies and plans into marketing actions

in order to accomplish strategic marketing obectives- Important to both do things right >implementation? and do the right things

>strategy?Marketing department organisation

- The chief marketing o$icer >"$'? heads up the company)s entire marketingoperation

- $odern marketing departments can be arranged in several wayso 8unctional organisation

/ierent marketing activities are headed by a functional specialist

o %eographic organisation "ompany that sells across the country or internationally

&ales and marketing people are assigned specic countries, regions

and districtso 4roduct management organisation

'ften created by companies with many very dierent products or

brands


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+roduct manager develops and implements a complete strategy

and marketing program for a specic product or brando Market'customer management organisation

3sed by companies that sell one product line to many dierent

types of markets and have customers that have dierent needs andpreferences

$arket managers are responsible for developing marketing

strategies and plans for their specic markets or customerso Marketers usuall( emplo( a com!ination of these organisation

formsMarketing control

- The process of measuring and evaluating the results of marketing strategiesand plans and taking corrective action to ensure that obectives are achieved

- 5as four stepso 3et speci+c marketing goalso Measure performance in the marketplaceo )#aluate the causes of an( di$erences !etween e&pected and

actual performanceo Take correcti#e action to close gaps !etween goals and

performance- >perating control involves checking ongoing performance against the annual

plan and taking corrective action when necessaryo (ims to ensure the company achieves its goals set out in its annual plano (lso determines protability of certain dimensions

- 3trategic control involves looking at whether the company)s basic strategiesare well matched to its opportunities

Measuring and managing return on marketing

in#estment- $arketers are developing better measures of marketing :'Io Marketing 7>5 is the net return from a marketing investment divided

by the costs of the marketing investmento $easures the prots generated by investments in marketing activities

- $ain problem is guring out what specic measures to use and obtaining gooddata on these measures

- "ompany can assess return on marketing investment in terms of standardmarketing performance measures such as brand awareness, sales or marketshare

o "ompanies are assembling these measures into marketing dash!oards

- $arketers are using customer centred measures of marketing impactnowadays

o "apture both current and future marketing performance which resultfrom stronger customer relationships

Chapter – .nal(sing the Marketing )n#ironmentThe compan(s microen#ironmentThe compan(

- $arketing managers make decisions within the strategies and plans made bytop management

3uppliers- &uppliers are an important link in the company)s overall customer value

delivery system- &trong supplier relationships contribute signicantly to business performance

Marketing intermediaries


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- Marketing intermediaries help the company to promote, sell and distributeits products to nal buyers

o 7esellers are distribution channel rms that help the company ndcustomers or make sales to them

o 4h(sical distri!ution +rms help the company to stock and move goodsfrom their points of origin to their destinations

o Marketing ser#ices agencies are the marketing research rms,

advertising agencies, media rms and marketing consulting rms thathelp the company target and promote its products to the right marketso 8inancial intermediaries include banks, credit companies, insurance

companies and other businesses that help nance transactions or insureagainst the risks associated with the buying and selling of goods

- Work with intermediaries as partners rather than channelsCompetitors

- The marketing concept states that to be successful, a company must providegreater customer value and satisfaction than its competitors do

o $arketers must therefore gain strategic advantage by positioning theiroerings strongly against competitors) oerings in the minds of

consumers4u!lics

- ( pu!lic is any group that has an actual or potential interest in or impact onan organisation)s ability to achieve its obectives

- There are seven types of publicso 8inancial pu!lics

In9uences the company)s ability to obtain funds

o Media pu!lics

"arries news, features and editorial opinion

o %o#ernment pu!lics

/evelopments in regulations must be taken into accounto Citi=en*action pu!lics

/ecisions may be !uestioned by consumer organisations,

environmental groups, minority groups and otherso @ocal pu!lics

Includes local residents and community organisations

o %eneral pu!lic The public)s image of the company aects its buying

o 5nternal pu!lics Includes workers, managers, volunteers and the board of directors

• +ositive internal publics lead to positive external publicsCustomers

- "ustomers are the most important actors in the company)s microenvironment- The aim of the entire value delivery system is to serve target customers and

create strong relationships with them- 2ive types of customer markets

o Consumer markets "onsist of individuals that buy goods and services for personal

consumptiono 6usiness markets

uy goods and services for further processing or for use in theirproduction processo 7eseller markets

uy goods and services to resell at a prot

o %o#ernment markets


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$ade up of government agencies that buy goods and services to

produce public services or transfer the goods and services to thosewho really need them

o 5nternational markets "onsist of buyers in other coutnries

The compan(s macro en#ironment- "onsists of the broader forces that aect the actors in the microenvironment

- &ix main forces in a company)s macroenvironment-emographic en#ironment

- -emograph( is the study of human populations in terms of si


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+ercentage spent on food declines

+ercentage spent on housing remains about constant >except for

utilities, which decrease? +ercentage spend on most other categories and savings increase

o *nown as )ngels laws

atural en#ironment- The natural en#ironment involves the natural resources that are needed as

inputs by marketers or that are aected by marketing activities- $ust be aware of natural environment trendso %rowing shortages of raw materialso 5ncreased pollution

o 5ncreased go#ernment inter#ention in natural resource

management- nlightened companies now go beyond what government regulations dictate

and practice environmental sustainabilityo )n#ironmental sustaina!ilit( is developing strategies and practices

that create a world economy that the planet can support indenitelyTechnological en#ironment

- The technological en#ironment is the forces that create new technologies,creating new products and market opportunities

- ew technology replaces an older one 4 companies nd products outdated- Investment in :n/ will be crucial for companies to make prots in the future- $ake practical and aordable versions of the products 4 both commercial and

technical challenge4olitical and social en#ironment

- The political en#ironment consists of laws, government agencies andpressure groups that in9uence or limit various organisations and individuals ina given society

- @egislation regulating !usinesso =overnments can develop public policy to guide commerceo 5ncreasing legislation

+rotects companies from each other

+rotect consumers from unfair business practices

+rotect the interests of society against unrestrained business

behaviouro Changing go#ernment agenc( enforcement

"ompetition and "onsumer (ct FGHG

(""", (&I", 2&(

usiness executive must monitor these developments whenplanning their products and marketing programs

- 5ncreased emphasis on ethics and social responsi!le actionso 3ociall( responsi!le !eha#iour

&ocially responsible rms actively seek out ways to protect the

long-run interests of their consumers and the environment ((( >(ustralian (ssociation of ational (dvertisers? developed a

code to guide advertisers in the way they communicate withchildren

'nline pri#ac( issues

o Cause*related marketing "ompanies are now linking themselves to worthwile charities

5as become a primary form of corporate giving


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Jcause-exploitative) marketing 4 strategy for selling rather than

giving ective marketing tool, builds more positive public image

• =reater visibility and new sources of fundingCultural en#ironment

- The cultural en#ironment is made up of institutions and other forces thataect a society)s basic values, perceptions, preferences and behaviours

- 4ersistence of cultural #alueso "ore beliefs and values are passed on from parents to children,

reinforced by societyo &econdary beliefs and values are more open to change

$arketing seeks to change these

- 3hifts in secondar( cultural #alueso "ultural swings take place, used to spot new opportunities0threats

o 4eoples #iews of themsel#es +eople vary in their emphasis on serving themselves versus serving

others

&harers and oiners versus individualistsK personal pleasure versus self-realisationo 4eoples #iews of others

ew wave of cocooning or nesting 4 return to traditional values

o 4eoples #iews of organisations +eople are willing to work for organisations and expect them to

carry out society)s work o 4eoples #iews of societ(

+atriotism, etc 4 in9uence consumption patterns, level of savings,attitude to marketplace

Take care when responding to emotions

o 4eoples #iews of nature 1ove of natural things has created a Jlifestyles of health and

sustainability) >1'5(&? market, where consumers seek out greenproducts

o 4eoples #iews of the uni#erse

:eligious beliefs 4 searching for inner purpose

(ects consumers in everything they do, including what theybuy

7esponding to the marketing en#ironment

- +assive vs proactive stance towards the marketing environmento /o not change it vs take aggressive actions to aect publics and forces- $arketers cannot always control environmental forces

o &till better to be proactive than reactive

Chapter A – Managing Marketing 5nformation to %ainCustomer 5nsights

Marketing information and customer insights- "ompanies need fresh and deep insights into what customers need and want- $arketing managers are overloaded with data and overwhelmed by it

o /on)t need more information, they need better info and to make better

use of ito :eal value of marketing research0info lies in how it is used in the

customer insights it provides


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- Customer insights are fresh understandings of customers and themarketplace derived from marketing information that become the basis forcreating customer value and relationships

o .ssists company in creating more value for its customers

- "ompanies must be careful not to go too far and become customer controlledo /on)t satisfy all the wants, satisfy all the needs

- ( marketing information s(stem consists of people and procedures for

assessing information needs, developing the needed information, and helpingdecision makers to use the information to generate and validate actionablecustomer and market insights

o Interacts with end users to assess information needso It then interacts with marketing environment to develop needed

informationo It helps users analyse and use the information to develop customer

insights

.ssessing marketing information needs- ( good $I& balances the information users would like to have against what

they really need and what is feasi!le to oero Too much is as harmful as too little info- $I& must monitor the marketing environment in order to provide decision

makers with information- They should have in order to better understand customers and make key

marketing decisions

-e#eloping market information5nternal data

- $any companies build extensive internal data!ases which are electroniccollections of consumer and market information obtained from data sourceswithin the company network

o "an often be accessed more !uickly and cheaply than other informationsources

o &ince internal information was often collected for other purposes, it may

be incomplete or in the wrong form for making marketing decisionso /ata ages !uicklyo Information must be well integrated and readily accessible so that

managers can nd it easily and use it eectivelyCompetiti#e marketing intelligence

- Is the systematic collection and analysis of publicly available information aboutconsumers, competitors and developments in the marketing environment

- Its goal is to improve strategic decision making by understanding theconsumer environment, assessing and tracking competitors) actions andproviding early warnings of opportunities and threats

- Includes monitoring, observing, !ui


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Defning theproblem and

researchob!ectives

Developingthe research

plan orcollecting

inormation

#mplementingthe research

plan -collecting andanalysing the

data

#nterpretingand reportingthe fndings

-


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o Involves gathering primary data by observing relevantpeople, actions and situations

• thnographic researcho Involves sending trained observers to watch and

interact with consumers in their natural habitat

• &urvey researcho Involves asking people !uestions about their

knowledge, attitudes, preferences and buyingbehaviour

o est suited for descriptive information, and is very9exible

• xperimental researcho Involves selecting matched groups of subects, giving

them dierent treatments, controlling related factorsand checking for dierences in group responses

o est suited to causal information

Contact methods

•

$ail, telephone and personal interviewingo Telephone interviewing introduces interviewer biaso /ierent levels of 9exibilityo 3se of focus group inter#iewing personal

interviewing that involves inviting a small group togather for a few hours with a trained interviewer to talk about a product0service0organisation

o "an also use immersion groups >no group moderatorpresent?

• 'nline marketing researcho /one through internet surveys, online focus groups,

web-based experiments or tracking consumers) onlinebehaviour

o Internet especially well suited to !uantitative researcho "an also be used for !ualitative purposes, especially

recently g online focus groups

o Issues of consumer privacy 3ampling plan

• ( sample is a segment of the population selected formarketing research to represent the population as a whole

• /esigning the sample re!uires three decisionso #ho is to be studied6 >what sampling unit?o 5ow many people should be included6 >what sample

siwhat

sampling procedure? +robability vs nonprobability samples

7esearch instruments

• 8uestionnaireso "an used closed and open ended !uestionso 3seful in exploratory research

• $echanical instrumentso +eople meters, checkout scanners etco euromarketing


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o 5mplementing the research plan Involves collecting, processing and analysing information

&hould be watched to ensure it is implemented correctly

Isolate important information and insight

o 5nterpreting and reporting the +ndings Interpretation should not only be left to the researchers

• "an use marketing managers and others

• (void bias .nal(sing and using marketing informationC7M

- &mart companies capture information at every possible customer touch point- ":$ involves managing detailed information about individual customers and

carefully managing customer touch points in order to maximise customerloyalty

- ":$ consists of sophisticated software and analytical tools that integratecustomer information from all sources analyse it in depth, and apply the resultsto build stronger customer relationships

o +rovides a LMG view of customer relationships- ":$ analysts develop data warehouses and data mining techni!ues to unearth

riches in customer data- "ompanies can provide higher levels of customer service and develop deeper

customer relationships- ":$ is ust is a part of an eective overall customer relationship management

strategy-istri!uting and using marketing information

- Information distribution involves entering info into databases and making itavailable in a timely and user friendly manner

- "an use intranets or extranets

>ther marketing information considerationsMarketing research in small !usinesses and non*pro+t organisations

- &tart up businesses need information about their potential customers,industries, competitors, unlled needs, and reaction to new market oers

- "an obtain good marketing insights through observation or informal surveysusing small convenience samples

- $ust recognise biases

5nternational marketing research- Intnl marketers deal with diverse markets in many countries

- /iiculty of nding secondary data in certain countries- $ust collect own primary data- "ultural dierences from country to country cause problems for researchers 4

language barrierso (ttitudes towards marketing research 4 nonresponse problems

4u!lic polic( and ethics in marketing research- 5ntrusions on consumer pri#ac(

o "onsumers attitudes to marketing researcho &ocial media issues

- Codes of practiceo

International "hamber of "ommerce)s International "ode of $arketingand &ocial :esearch +ractice outline researchers) responsibilities torespondents and to the general public >3&?

o uropean International "ode of $arketing and &ocial :esearch regulatesprofessional activities of marketing researchers


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o "+' 4 chief privacy oicer exists in many companies

- Misuse of research +ndingso :esearch is little more than vehicles for pitching sponsor products

Chapter B – Understanding Consumer and 6usiness 6u(er 6eha#iour

- Consumer !u(er !eha#iour refers to the buying behaviour of nalconsumers

o (ll these nal consumers make up the consumer marketModel of consumer !eha#iour

- "onsumer buying decisions are the focal point of the marketers eort- "onsumers often do not know exactly what in9uences their purchases- 5ow do consumers respond to various marketing eorts6

o 2irst point of call is the stimulus*response model of buyer behaviouro $arketing and other stimuli enter the consumer)s black box and produce

certain responseso $arketers must gure out what is in the buyer)s black box

uyer)s characteristics in9uence how he or she perceives and

reacts to the stimuli uyer)s decision process aects the buyer)s behaviour

Characteristics a$ecting consumer - Cultural factors

o "ulture The basic cause of a person)s wants and behaviour

The set of basic values, perceptions, wants and behaviours learned

by a member of society from family and other important institutions $arketers are trying to spot cultural shifts to discover new

products that might be wanted

o "ultural group ( group of people with shared value systems based on common life

experiences and situations Targeting of mature consumers as they control large proportion of

wealtho &ocial class

:elatively permanent and ordered divisions in a society whose

members share similar values, interests and behaviours- 3ocial factors

o =roups and social networks ( group is two or more people who interact to accomplish

individual or mutual goals =roups that have a direct in9uence and to which a person belongs

are called mem!ership groups 7eference groups are direct or indirect points of comparison or

reference in forming a person)s attitudes or behaviour .spirational groups are those to which the individual wishes to

belong $arketers must gure out how to reach opinion leaders, who are

those within a reference group who, because of special skills,knowledge, personality or other characteristics, exert social

in9uence on others• In9uential or leading adopters

$arketers use !u== marketing by enlisting or creating opinion

leaders to serve as brand ambassadors


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>nline social networks are online communities where people

socialise or exchange information and opinions

• 3sers control the content though, so social media marketingattempts can easily backre

o 2amily The most important consumer0buying organisation in society

o :oles and status

( person)s position in each group can be dened in terms of boththeir role and status

( role consists of the activities people are expected to perform

according to the persons around them- 4ersonal factors

o (ge and life-cycle stage +eople change the g0s they buy over their lifetimes $arketers often dene their target markets in terms of life cycle

stage and develop appropriate products and marketing plans foreach stage

o

'ccupationo conomic situationo 1ifestyle

@ifest(le is a person)s pattern of living as expressed in his or her

activities, interests and opinions >psychographics? Involves measuring consumers maor (I' dimensions 4 above

"an help marketers understand changing consumer values and

how they aect buying behaviour

• "onsumers do not ust buy products, they buy the values andlifestyles those products represent

o +ersonality and self concept

4ersonalit( is the uni!ue psychological characteristics that

distinguish a person or group 6rand personalit( is a specic mix of human traits that may be

attributed to a particular brand

• &incerity, excitement, competence, sophistication andruggedness

$arketers use a person)s self concept, where people)s possessions

contribute to and re9ect their identities- 4s(chological factors

o $otivation

( moti#e is a need that is suiciently pressing to direct the personto seek satisfaction

&igmund 2reud assumed people are largely unaware of the real

psychological forces shaping their behaviour

• 5is theory suggests that a person)s buying decisions areaected by subconscious motives that even the buyer mightnot fully understand

$otivation research refers to !ualitative research to probe

consumers hidden subconscious motivations $arketers which use touchy feely approaches, sometimes called

interpreti#e consumer research $aslow)s hierarchy of needs

• +hysiological, safety, social, esteem and self-actualisationneeds


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• +eople try to satisfy the most important need that is notsatised yet

o +erception 4erception is the process by which people select, organise and

interpret information to form a meaningful picture of the world 2ow a person acts is in9uenced !( their perception of the

situation

Three perceptive processes aect perception• 3electi#e attention is the tendency for people to screen out

most of the information to which they are exposedo $arketers must work especially hard to attract

consumers

• 3electi#e distortion is the tendency for people to interpretinformation in a way that will support what they alreadybelieve

o $arketers must try and understand the mindsets ofconsumers

•

3electi#e retention is the tendency for consumers toremember good points made about a brand they favour andto forget good points made about competing brands

o xplains use of drama and repetition "onsumers worried about subliminal advertising

• :esearch has found little to no link between this andconsumer behaviour

o 1earning

@earning describes changes in an individual)s behaviour arising

from experience -ri#e is a strong internal stimulus that calls for action

( drive becomes a motive when it is directed towards a particular

stimulus o!ect Cues are minor stimuli that determine when where and how the

person responds 1earning theory means marketers can build demand for a product

by associating it with strong drives, using motivating cues andproviding positive reinforcement

o eliefs and attitudes

6elief is a descriptive thought that a person has about something

.ttitude describes a person)s relatively consistent evaluations,

feelings and tendencies towards an obect or idea

• /iicult to changeThe !u(er decision process

- eed recognitiono "an be triggered by internal or external stimuli

- 5nformation searcho If consumer)s drive is strong and satisfying product is near at hand,

consumer likely to buyo If not, the consumer may store the need in memory or undertake an

information searcho "an obtain info from various source

4ersonal, commercial, pu!lic and e&periential sources

o "ommercial sources usually inform, personal usually legitimise0evaluate

- )#aluation of alternati#es


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o "areful calculations, logical thinking, impulse, intuition

- 4urchase decisiono 2actors can come between purchase intention and decision

(ttitudes of others 3nexpected situational factors

- 4ost purchase !eha#iour o :elationship between expectations and perceived performance

o Cogniti#e dissonance is discomfort caused by post-purchase con9ict,and occurs after almost all maor purchases

very purchase involves compromiseo "ustomer satisfaction key to building protable relationships with

consumerso "ompany should measure customer satisfaction regularly as a result 4

encourage complaints- 7oles in the !u(ing process

o 5nitiator 'ne who rst suggests0thinks of idea to buy a particular product

o

5n9uencer &omeone whose views carry weight in making the buying decision

o -ecider +erson who ultimately makes a buying decision

o 6u(er +erson who makes the purchase

o User The person who consumes the product

The !u(er decision process for new products- ( new product is a good, service or idea that is perceived by some potential

customers as new- The adoption process is the mental process through which an individual

passes from rst learning about an innovation to nal adoptiono .doption is the decision by an individual to become a regular user of the

product- &tages of adoption process

o (warenesso Interesto valuationo Trialo (doption

- Individual dierences in innovativenesso 2ive groups of adopters have been identied

5nno#ators are venturesome - try new ideas at risk

• Tend to be younger, better educated, higher income, lessbrand loyal, take advantage of promotions

)arl( adopters are guided by respect 4 opinion leaders and adopt

new ideas early but carefully )arl( maorit( are deliberate 4 rarely leaders, adopt before

average person @ate maorit( are sceptical 4 adopt only when maority have tried

it @aggards are tradition bound 4 suspicious of changes, adopt when

it is a tradition- In9uence of product characteristics on rate of adoption


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o "haracteristics in9uencing an innovation)s rate of adoption

7elati#e ad#antage

• /egree to which innovation appears superior to existingproducts

Compati!ilit(

• /egree to which innovation ts the values % experiences ofpotential customers

Comple&it( • /egree to which innovation is diicult to understand or use

-i#isi!ilit(

• /egree to which innovation may be tried on a limited basis Communica!ilit(

• /egree to which the results of using innovation can beobserved0decribed

6usiness markets and !usiness !u(er !eha#iour - 6usiness !u(er !eha#iour refers to the buying behaviour of the

organisations that buy goods and services for use in the production of other

products and services that are sold, rented or supplied to others- In the !usiness !u(ing process, business buyers determine which products

and services their organisations need to purchase then nd, evaluate andchoose among alternative suppliers and brands

- F marketers must understand business markets and business buyerbehaviour

6usiness markets- $any business purchases are made for one set of consumer purchases- usiness marketing includes resellers and manufacturers- $ain dierences between business and consumer markets is market structure

and demand, nature of the buying unit and types of decisions and the decisionprocess involved- Market structure and demand

o usiness marketer normally deals with far fewer !ut far larger buyersthan the consumer marketer does

"reates great dependencies and relationships

o usiness demand is deri#ed demando $any business markets have inelastic demand

Total demand for many business products is not aected much by

price changes, especially in the short runo usiness markets have more 9uctuating demand

/emand for many business goods and services changes more

!uickly than for consumer &mall increase in consumer demand can cause large increases in

business demand- ature of the !u(ing unit

o usiness purchase usually involves more decision participants and

more professional purchasing e$orto $ore complex the purchase, more likely that more people in decision

making process- T(pes of decisions and the decision process

o usiness buyers face more complex buying decisions than consumerbuyers


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Involve large money amounts, complex technical and economic

considerations and interactions at many levels of the buyerorganisation

o $ore formalised decision processo usinesses often lease products

1essee; "onserves capital, get latest products, better service, tax

advantages

1essor; higher net income and deal with more customerso uyer and seller are much more dependent on each other

#ork closely with each other

&hort run, sales go to suppliers who meet buyers immediate

product and service needs 1ong run, F keep customers sales and create customer value by

meeting current needs and by partnering with customers to helpthem solve their problems

o +ractising supplier de#elopment &ystematic development of networks of supplier-partners to ensure

an appropriate and dependable supply of products and materialsfor use in making products or reselling them to others6usiness !u(er !eha#iour

- usiness activity consists of two main partso 6u(ing centre made up of all the people involved in the buying decisiono 6u(ing decision process

These two factors are in9uenced by internal organisational,

interpersonal and individual factors as well as externalenvironmental factors

- Main t(pes of !u(ing situationso 3traight re!u(

2airly routine decision uyer reorders something without any modications

ased on past buying satisfaction

o ew task $ay call for thorough research

( situation where the buyer purchases a product or service for the

rst timeo Modi+ed re!u(

$ay re!uire some research

uyer wants to modify product specications, prices, terms or

supplierso 3(stems'3olutions selling

#here business ceebs, prefer to buy a complete solution to a

problem from a single seller instead of buying separate productsfrom several suppliers and putting them together

(voids all separate decisions involved in a complex buying situation

- 4articipants in the !usiness !u(ing processo The decision making unit of a buying organisation is its !u(ing centre

This is all the individuals and units that play a role in the purchase

decision making process

ot a xed and formally identied unit within the buyingorganisation

• &et of buying roles assumed by di ppl for di purchases


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usiness marketer must therefore learn who participates in the

decision, their relative in9uence, and their evaluation criteriao $any business buying decisions result from the complex interactions of

ever changing buying centre participants- The main in9uences on !usiness !u(ers

o &ome assume main in9uences are economico $ost recognise emotion plays a role

o 1ittle basis for strictly rational choice 4 suppliers generally lead to samegoal #hen products are dierent, higher accountability

o 5eavily in9uenced by overall environmental factorso 'rganisational factors 4 organisational structure and compatibilityo Interpersonal factorso Individual factors

The !usiness !u(ing process- 4ro!lem recognition

o #hen someone in the company recognises a problem0need that can bemet by ac!uiring a specic product or service

- %eneral need descriptiono /escribes characteristics and !uantity of the needed items or solutions

- 4roduct speci+cationo Value anal(sis is the approach to cost reduction where the company

carefully analyses a product or service)s components to determine if theycan be redesigned and made more eectively and eiciently to providegreater value

/ecide on best characteristics and specify accordingly

- 3upplier searcho 3sed to nd the best vendors

- 4roposal solicitationo uyer invites !ualied suppliers to submit proposals

- 3upplier selectiono "onsider supplier attributes, relative importance, review proposals and

select suppliers- >rder routine speci+cation

o Includes nal order with chosen suppliero $any buyers have a #endor managed in#entor( , where they turn

ordering and inventory responsibilities over to suppliers- 4erformance re#iew

o uyer assesses supplier)s performance and provides feedback - .CTU.@ 47>C)33 U3U.@@ MUC2 M>7) C>M4@)D

o In modied rebuy or straight rebuy, some of these stages are compressedor skipped

o /ierent buying centre participants involved at dierent stages of theprocess

o &teps done out of order or repeatedo "ustomer relationship might involve many dierent types of purchases

ongoing at a given time at dierent stages of the buying process)*procurement: 6u(ing on the internet

- )*procurement is purchasing through electronic connections between buyersand sellers, usually online

- "an conduct re#erse auctions, where purchasing re!uests are put online andinvite suppliers to bid


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- "an engage in online trading e&changes where companies work collectivelyto facilitate trading process

- "an set up compan( !u(ing sites- "an create e&tranet links with key suppliers or partners- -procurement for F yields many benets

o :educes transaction costs, more eicient purchasingo :educes time between order and deliveryo

liminates paperwork, more organisation, resources freed up- +roblems with e-procuremento rodes old customer-supplier relationshipso "an create security disasters

Chapter E – Customer*-ri#en Marketing 3trateg(:Creating Value for Target Customers

Customer*dri#en marketing strateg( - $ove away from mass marketing and towards target marketing

o Identifying market segments, selecting one or more, and developingproducts and marketing programs tailored to each

- 2our main steps in customer driven marketing strategyo Market segmentation involves dividing a market into smaller segments

of buyers with distinct needs, characteristics or behaviours that mightre!uire separate marketing strategies or mixes

o Market targeting is evaluating each market segment)s attractivenessand selecting one or more market segments to enter

o -i$erentiation is dierentiating the rm)s market oering to createsuperior customer value

o 4ositioning consists of arranging for a market oering to occupy a cleardistinctive and desirable place relative to competing products in the

minds of target consumersMarket segmentation3egmenting consumer markets

- %eographic segmentationo /ividing the market into dierent geographical units such as nations,

regions, states, counties cities or neighbourhoodso 1ocalisation of products

- -emographic segmentationo /ividing the market into segments based on variables such as age,

gender, family si


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o +ersonality variables

- 6eha#ioural segmentationo /ivide buyers into segments based on their knowledge, attitudes, uses or

responses to a producto est starting point for building market segments

- >ccasionso /ividing the market into segments according to occasions when the

buyers get the idea to buy, actually purchase or use the purchased item- 6ene+ts soughto enet segmentation re!uires nding the main benets people look for

in the product class, the kinds of people who look for each benet, andthe main brands that deliver each benet

- User statuso &egment into nonusers, ex-users, potential users, rst-time users and

regular users of a producto :einforce0retain regulars, attract targeted nonusers, reinvigorate

relationships with ex users- Usage rate

o &egment into light, medium and heavy product users- @o(alt( status

o "onsumers can be completely, somewhat or not loyal

- Using multiple segmentation !aseso Ie segment within segments aka segmentception

3egmenting !usiness markets- usiness marketers use some additional variables to consumer marketers

o 'perating characteristics, purchasing approaches, situational factors,

personal characteristics

- $ost companies serve at least some business markets- $any companies set up separate systems for dealing with larger0multilocation

customers- #ith given target industry0customer si


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&egments are conceptually distinguishable and respond dierently

to dierent marketing mix elements and programso .ctiona!le

ective programs can be designed for attracting and serving the

segments

Market targeting)#aluating market segments

- $ust consider three factorso 3egment si=e and growth

:elative matter

o 3egment structural attracti#eness "onsider competitors, substitute products, power of buyers and

supplierso Compan( o!ecti#es and resources

"an dismiss segments that are not compatible with these

3electing target market segments- ( target market is a set of buyers sharing common needs or characteristics

that the company decides to serve- Undi$erentiated'mass marketing

o ( market-coverage strategy where a rm decides to ignore marketsegment dierences and go after the whole market with one oer

o 2ocuses on what consumers have in common rather than what isdierent

o &trong doubts about this strategy 4 trouble competing with focused rms

- -i$erentiated'segmented marketingo 2irm decides to target several market segments and designs separate

oers for eacho Increases costs of doing business

$ust weigh increased sales against increased costs

- Concentrated marketingo Instead of going after a small share of a large market, goes after large

share of one or few smaller segments or nicheso (chieves strong market position due to greater knowledge of consumer

needs in the niches it serves and the special reputation it ac!uireso iching lets smaller companies focus limited resources on serving

niches that may be unimportant or overlooked by larger competitorso (s markets develop, megamarketers develop niche products to create

sales growtho 1ow cost of set up on internet means easy to serve miniscule nicheso "an involve higher than normal risks

- Micromarketingo The practice of tailoring products and marketing programs to suit the

tastes >needs and wants? of specic individuals and locations >localcustomer segments?

o @ocal marketing Involves tailoring brands and promotions to the needs and wants of

local customer groups 4 cities, neighbourhoods and even specicstores

"an drive up costs and create logistic problems 4 fragmentedmarkets

o 5ndi#idual marketing


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Tailoring products and marketing programs to the needs and

preferences of individual customers 5as mad relationships more important 4 interactive marketing

- Choosing a targeting strateg( o "onsider various factors

"ompany resources

+roduct variability

+roduct)s life cycle stage $arket variability

"ompetitors) marketing strategies

3ociall( responsi!le target marketing- Issue of targeting vulnerable or disadvantaged consumers with controversial or

potentially harmful products- Issue is not who is targeted, but how and for what

-i$erentiation and positioning- "ompany must decide on the value proposition- ( products position is the way the product is dened by consumers on

important attributeso The place the product occupies in consumers) minds relative to

competing productso The complex set of perceptions, impressions and feelings that consumers

have for the product compared with competing products4ositioning maps

- +reparation of perceptual positioning maps, which show consumerperceptions of their brands versus competing products on important buyingdimensions

Choosing a di$erentiation and positioning strateg( - Three steps

o Identify a set of dierentiating competitive advantages upon which tobuild a position

o "hoose the right competitive advantageo &elect an overall positioning strategy

- 5dentif(ing possi!le #alue di$erences and competiti#e ad#antageso To the extent a company can dierentiate and position itself as providing

superior customer value, it gains competitive advantageso Through product dierentiation, brands can be dierentiated on

features, performance or style and designo "hannel dierentiation allows competitive advantage through the way

the channel)s coverage, expertise and performance is designedo 3se people dierentiation by hiring better peopleo Image dierentiation 4 perceive dierence based on the brand

- Choosing the right competiti#e ad#antageso 5ow many dierences to promote

&ome believe in development of uni!ue selling proposition

'thers say to position themselves on more than one dierentiator

o #hich dierences to promote The dierence must be

• Important• /istinctive

• &uperior

• "ommunicable


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• +reemptive >cannot easily copy the dierence?

• (ordable

• +rotable- 3electing an o#erall positioning strateg(

o The #alue proposition is the full positioning of a brand 4 the full mix ofbenets upon which it is dierentiated and positioned

o #eigh benets 4 less, the same or more 4 against price 4 less, the same

or moreo &uccessful value propositions

More for more

More for the same

More for less

The same for less

@ess for much less

o -e#eloping a positioning statement 2ollow the form of

• To >target segment and need? our >brand? is >concept? that

>point of dierence?Communicating and deli#ering the chosen position

- To build a position, you must rst deliver it- 'ften easier to come up with a good positioning strategy rather than to

implement it

Chapter F – 4roducts, 3er#ices and 6rands: 6uildingCustomer Value

What is a product?- ( product is anything that can be oered to a market for attention,

ac!uisition, use or consumption that might satisfy a want or need- 3er#ices are a form of product that consists of activities, benets or

satisfactions oered for sale that are essentially intangible and do not result inthe ownership of anything

4roducts, ser#ices and e&periences- +roduct is a key element in the overall market oering

o The oering may be a pure tangible good or pure service, or acombination

o $any companies are moving to a new level though, to create and managecustomer experiences

@e#els of products and ser#ices

- Think about the levels which add customer value- The rst is core customer #alue- The second level is planning to turn the core benet into an actual

!ene+t'product- The product planners must nally build an augmented product by oering

additional services0benets4roduct and ser#ice classi+cations

- Consumer productso +roducts and services bought nal consumers for personal consumption

o Con#enience products are consumer products and services that

customers usually buy fre!uently, immediately and with a minimum ofcomparison and buying eorto 3hopping products are less fre!uently purchased consumer products

and services that customers compare carefully on suitability, !uality,price and style


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o 3pecialt( products are consumer products and services with uni!uecharacteristics or brand identication for which a signicant group ofbuyers is willing to make a special purchase eort

o Unsought products are consumer products that the consumer eitherdoes not know about or knows about but does not normally think ofbuying

- 5ndustrial productso

+roducts bought by individuals and organisations for further processingor for use in conducting a businesso Materials and parts include raw materials and manufactured materials

and partso Capital items are industrial products that aid in the buyer)s production

or operationso 3upplies and ser#ices are the convenience products of the industrial

eld >supplies? and services are often advisory- >rganisations, persons, places, e#ents and ideas

o >rganisation marketing consists of activities undertaken to create,maintain or change the attitudes and behaviour of target consumerstowards an organisation

o 4erson marketing OP towards particular people

o 4lace marketing OP towards particular places

o )#ents and e&periences marketing is often linked to other marketoerings

o 5deas can be marketed

3ocial marketing is the use of commercial marketing concepts

and tools in programs designed to in9uence individuals) behaviourto improve their well-being and that of society

4roduct and ser#ice decisions5ndi#idual product and ser#ice decisions

- 4roduct and ser#ice attri!uteso +roduct !uality

"haracteristics of a product or service that bear on its ability to

satisfy stated or implied customer needs Total "ualit( management is an approach where all the

company)s people are involved in constantly improving the !ualityof products, services and business processes

4erformance "ualit( is ability of product to perform its functions

Conformance "ualit( is freedom from defects and consistency of

performanceo +roduct featureso +roduct style and design

&tyle is simply the appearance of a product

/esign contributes to a product)s usefulness and looks

- 6randingo ( !rand is a name0term0sign0symbol0design or combination of these that

identies the maker or seller of a product or service- 4ackaging

o Involves designing and producing the container or wrapper for a product

o $ust attract attention, describe product, make the sale 4 product safetyconcerns too

- @a!ellingo Identies the product or brand


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o $ay describe the product or promote the brando 3se of unit pricing, open dating, nutritional labelling

- 4roduct support ser#iceso &urvey customers periodically to assess value of current serviceso Then take steps to x problems and add new services

4roduct line decisions- ( product line is a group of products that are closely related because they

function in a similar manner, are sold to the same customer groups, aremarketed through the same types of outlets, or fall within given price ranges- $ain product line decision involves product line length - the number of items

in the product line- 4roduct line +lling involves adding more items within the present range of

the line- 4roduct line stretching occurs when a company lengthens its product line

beyond its current rangeo Can stretch upward or downward

4roduct mi& decisions- ( product mi& is the set of all product lines and items that a particular seller

oers for saleo $ix width is the number of dierent product lines the company carrieso $ix length is the total number of items the company carries within its

product lineso $ix depth is the number of versions oered of each product in the lineo $ix consistenc( is how closely related the various product lines are in

some way

3er#ices marketingature and characteristics of a ser#ice

- &ervice intangi!ilit( means services cannot be seen0tasted0felt0heard0smelled

before they are boughto &ervice provider)s task to create tangibility to send signal about !uality 4

evidence management- &ervice insepara!ilit( means the services cannot be separated from their

providers- &ervice #aria!ilit( means the !uality of services depends on

who0how0when0where they are provided- &ervice perisha!ilit( means that services cannot be stored for later sale or

useThe ser#ice*pro+t chain

- 5as ve linkso 5nternal ser#ice "ualit( o 3atis+ed and producti#e ser#ice emplo(eeso %reater ser#ice #alueo 3atis+ed and lo(al customerso 2ealth( ser#ice pro+ts and growth

- &ervice marketing re!uireso 5nternal marketing, which is orienting and motivating customer-

contact employees and supporting service people to work as a team toprovide customer satisfaction

o 5nteracti#e marketing, which means that service !uality dependsheavily on the !uality of the buyer seller-interaction during the serviceencounter

Training service employees to interact with customers to satisfy

their needs


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Brandpositioning

$ttributes

Benefts

Belies andvalues

Brand nameselection

election

"rotection

Brandsponsorship

%anuacturer&sbrand

"rivate brand

'icensing

Co-branding

Branddevelopment

'ine e(tensions

Brand e(tensions

%ultibrands

)ew brands

- &ervice companies face three main marketing taskso Increase service dierentiation, service !uality, service productivity

Managing ser#ice di$erentiation- &olution to price competition is to develop a dierentiated oer, delivery and

image- Managing ser#ice "ualit(

o /ierentiate by delivering consistently higher !uality than its

competitors provideo 5ard to dene and udgeo &ervice recovery can turn angry customers into loyal ones

- Managing ser#ice producti#it( o (void pushing productivity so hard that it reduces !uality

6randing strateg(: 6uilding strong !rands6rand e"uit(

- ( powerful brand has high brand e!uityo 6rand e"uit( is the dierential eect that knowing the brand name has

on customer response to the product and its marketing

- oung and 7u!icams measures brand strength along four consumerperception dimensionso -i$erentiationo 7ele#anceo /nowledgeo )steem

- 6rand #aluation is the process of estimating the total nancial value of abrand

- Customer e"uit( is the fundamental asset underlying brand e!uityo This is the value of the customer relationships the brand creates

6uilding strong !rands

- rand name selectiono &hould suggest something about the product)s benets and !ualitieso asy to pronounce, recognise and remembero &hould be extendableo &hould be distinctiveo &hould translate easily into foreign languages

- rand sponsorshipo ational brand0manufacturer)s brand vs private0store0distributor0home

brando "reating licensed brands 4 using another)s brand for a feeo

Co!randing - practice of using established brand names of twocompanies on same product- rand development


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o @ine e&tensions occur when a company extends existing brand names tonew forms, colours, si


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- &creening new product ideas in order to spot good ideas and drop poor ones (&(+

- :eal, win, worth it screening framework Concept de#elopment and testing

- (ttractive idea must be developed into a product concept- ( product idea is an idea for a possible product that the company can see

itself oering to the market- ( product concept is a detailed version of the idea stated in meaningful

consumer terms- ( product image is the way consumers perceive an actual or potential

product- Concept de#elopment

o /evelop a series of dierent concepts

- Concept testingo "alls for testing new product concepts with a group of target consumers

to nd out if the concepts have strong consumer appealo #ill help decide which concept has strongest appeal

Marketing strateg( de#elopment

- /esigning an initial marketing strategy for a new product based on the productconcept

- Marketing strateg( statement consists of three partso 2irst part describes target market, planned value proposition and sales,

market share and prot goals for the rst few yearso &econd part outlines the product)s planned price, distribution and

marketing budget for rst yearo Third part describes planned long run sales, prot goals and marketing

mix strategy6usiness anal(sis

- ( review of the sales, costs and prot proections for a new product to nd outwhether they satisfy the company)s obectiveso If they do, product can move to product development stageo stimate minimum and max sales to assess risk

4roduct de#elopment- If product concept passes the business test, it moves into product

de#elopmento This is a strategy for promoting company growth by oering modied or

new products to current market segments and developing the productconcept into a physical product to ensure that the product idea can beturned into a workable product

- :e!uires a large ump in investment- Testing involved 4 product must have re!uired functional features and also

convey they intended psychological characteristicsTest marketing

- If product passes concept and product tests, it is then test marketingo The stage of new product development in which the product and

marketing program are introduced into more realistic market settingso (llows company to test entire marketing program Q producto 'ccurs when the risks are high or high investment re!uired, or

marketing not sure of product

- "osts outweighed by probability of maor mistakeCommercialisation

- Introducing the new product into the market- "ompany will face high costs 4 may need to build manufacturing facility

o $ay need to market extensively


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- $ust decide on introduction timing

Managing new*product de#elopmentCustomer*centred new*product de#elopment

- 2ocuses on nding new ways to solve customer problems % create morecustomer satisfying experiences

- $ost successful products are dierentiated, solve maor consumer problems,have good value prop.

Team*!ased new*product de#elopment- The above described process is the se"uential product de#elopment

approacho )ach stage is completed !efore the ne&t

- In order to get new products to market more !uickly, companies use team*!ased new*product de#elopment approach

o (n approach where the company departments work together in cross-functional teams, overlapping the steps in the product developmentprocess to save time and increase eectiveness

o &imilar to agile development0waterfall in I2&HMGF

3(stematic new*product de#elopment- nsure that development process is holistic % systematic rather than

compartmentalised % hapha


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- ( company must choose a launch strategy consistent with intended productpositioning

%rowth stage- The stage in the +1" when a product)s sales start climbing !uickly- ew competitors enter the market- +rot increases, new market segments and distribution channels are entered

etc- Tradeo between high market share and high current prot

Maturit( stage- The stage in the +1" when sales growth slows or levels o - $ost products are in this stage - greater competition leads to lower prices- $arketers should consider modifying the market, product and marketing mix

o Modif( the market to increase consumption by nding new users andmarket segments for its brands

o Modif( the product by changing characteristics such as !uality,features, style or packaging to attract new users and to inspire moreusage

o Modif( the marketing mix by changing one or more of the marketing

mix elements to increase sales 4 lots of options, bs-ecline stage

- The stage in the +1" when a product)s sales decline- 'ccurs for many reasons 4 can be very costly to a rm- "ompanies must pay attention to their ageing products- "an maintain the brand without change and hope competitors leave the

industry- "an har#est the product by reducing various costs and hoping sales hold up- "an drop the product from the line

.dditional product and ser#ice considerations

4roduct decisions and social responsi!ilit( - $inimise monopolies- "omply with laws regarding !uality and safety- +roduct liability lawsuits have led to large product liability insurance premiums

5nternational product and ser#ices marketing- 2igure out what products to introduce in what countries- /ecide how to standardise or adapt products for world markets- &tandardisation lowers costs and helps develop consistent worldwide image

o 5owever, consumer markets dier markedly throughout the world- +ackaging challenges due to cultural dierences- &ervice industry issues

o 1anguages and geographical problemso (dvent of technology

- :etailers are among the latest service businesses to go globalo "lick and mortar style strategies

Chapter H – 4ricing to Capture Customer Value What is a price?

- 4rice is the amount of money charged for a product or serviceo Is also the sum of the values consumers exchange for the benets of

having or using the product or service

- The only element in the marketing mix that produces revenue 4 all otherelements represent costs- 'ne of the most 9exible marketing mix elements

Maor pricing strategies- The ceiling for prices is set by customer)s perception of the product)s value


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- The 9oor for prices is set by product costsCustomer #alue*!ased pricing

- 3ses buyers) perceptions of value rather than the sellers cost as the key topricing

- +rice is considered along with the other marketing mix elements !efore themarketing program is set

- "ost based pricing is often product dri#eno "ompany designs the product, adds the costs of making the product, sets

price that covers costs plus a target prot- Ralue based pricing involves assessing customer needs and value perceptions

rsto Target price is then set based on customer perceptions of value

- =ood value is not the same as low price- /iicult to measure the value customers attach to products- %ood*#alue pricing

o 'ering ust the right combination of !uality and good service thatcustomers want at a fair price

o )#er( da( low pricing involves charging a constant everyday low price

with few or no temporary price discountso 2igh*low pricing involves charging higher prices on an everyday basis

but running fre!uent promotions to lower prices temporarily on selecteditems

- Value*added pricingo "hallenge is to build the company)s pricing power 4 its power to escape

price competition and to ustify higher prices and marginso To do this, companies adopt #alue*added pricing strategies

:ather than cutting prices to match competitors, marketers

adopting this strategy attach value-added features and services to

dierentiate their oerings and this supports higher pricesCost*!ased pricing

- Involves setting prices based on the costs for producing, distributing andselling the product, plus a fair rate of return for its eort and risk

- T(pes of costso 8i&ed'o#erhead costs are costs that do not vary with production or

sales levelo Varia!le costs vary directly with the level of productiono Total costs are the sum of the xed and variable costs for any given level

of productiono "ompany is at competitive disadvantage if costs are high - prices will be

higher or prots smaller- Cost*plus pricing

o The simplest pricing method 4 adding a standard markup to the cost ofthe product

o $ethods that ignore consumer demand and competitor prices is notlikely to lead to best price

o +opular since &ellers are more certain about costs than demand

+rices tend to be similar when all rms use this method,

minimising price competition $any people feel that cost-plus pricing is fair to both buyers and

sellerso (nother cost oriented pricing approach is !reak*e#en pricing'target*

return pricing


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Involves setting the price to break even on the costs of making and

marketing a product or to make the desired prot 2ails to consider customer value and relationship between price

and demand

• +rice increases, demand decreasesCompetition*!ased pricing

- Involves setting prices based on competitors) strategies, costs, prices and

market oerings- "onsumers will evaluate value on the prices that competitors charge- enchmark costs and value against that of competitors and use as starting

point for own prices- #hen assessing competitor)s pricing strategies

o 5ow does the company)s market oering compare with competitors) incustomer value6

o 5ow strong are current competitors and what are their current pricingstrategies6

o 5ow does the competitive landscape in9uence customer price sensitivity6

>ther internal and e&ternal considerations a$ecting pricedecisions>#erall marketing strateg(, o!ecti#es and mi&

- ( rm can set prices to attract new customers or to protably retain existingones

- +rice decisions must be coordinated with product design, distribution andpromotion decisions to form a consistent and eective integrated marketingprogram

- Target costing reverses the usual process of rst designing a new product,determining its cost and then asking whether it can be sold at that price

o &tarts with an ideal selling price based on customer-value considerationsand then targets costs that will ensure that the price is met

- 'ther companies deemphasise price and create nonprice posit

Documents

NSW MARK1012 Finals Notes