Marketing

The activity, set of institutions, and processes for creating, communicating, delivering,
and exchanging offerings that have value for customers, clients, partners, and society at
large

1. Creating Value. The process of collaborating with suppliers and customers to

create offerings that have value.
2. Communicating Value. Broadly, describing those offerings, as well as learning
from customers.
3. Delivering Value. Getting those offerings to the consumer in a way that
optimizes value.
4. Exchanging Value. Trading value for those offerings.

Value
everything a customer gets for what they give up.
● Value = Benefits received - [price + non financial costs]
● It is a perception developed by customers from the marketing efforts of the brand
or company
● Value received from a product varies form consumer to consumer

Non financial costs:

● Time
● Mental and Physical effort

Marketing is composed of four activities centered on customer value:

● Creating
● Communicating
● Delivering
● Exchanging value

THE 4 P’s

1. Product/Service. Goods and services (creating offerings).

2. Promotion. Communication.
3. Place/Distribution. Getting the product to a point at which the customer can
purchase it (delivering).
4. Price. The monetary amount charged for the product (exchanging).

Market Oriented
Marketers seek to satisfy customer wants and needs
Production Oriented
The idea that good products would sell themselves to customers who wanted them
● Ford making cheaper cars affordable for everyone

Sales Oriented
The idea that it is necessary to push their products by heavily emphasizing aggressive
sales techniques
● Door to door selling

Product Oriented
The idea that a way to compete was to create products different from the competition
● My product is better than yours type shit

Value Orientation
Companies emphasizing the value of a product to consumer

● Marketing helps create value

● Marketing is about satisfying customer needs and wants
● Marketing always entails an exchange between parties
● Marketing requires marketing mix decisions
● Marketing can be performed by both companies and individuals
● Marketing occurs in many situations

CHAPTER 2

Strategic planning process:

Situation analysis, developing organization's mission statement, objectives, and
strategies. This is followed by the development of a segmentation, targeting and
positioning strategy and the implementation of the marketing mix to support the
strategy.

Planning phase:
Evaluate external and internal environment + Develop mission & Objectives

Implementation phase:
Identify opportunities:
 ● Segmentation
● Targeting
● Positioning

Then implement marketing mix

● Product
● Price
● Place
● Promotion

Control Phase
● Evaluate performance using marketing matrix

Micro environment (internal)

● Company
● Corporate partners
○ Do we have certain
alliances that might be of
benefit to us?
○ Does our competitor have
any partnerships that we
need to be aware of?
○ Just in Time Delivery
System (JIT) - minimizing
storage costs

Analyzing the Micro Environment

Company
● Resources
○ Financial capital
○ Personnel (knowledge)
○ Brand Reputation
○ Assets or Patents
○ Corporate Culture
● Capabilities
○ Manufacturing
○ Systems
○ Marketing
○ Product Development
Corporate partners
● Raw material suppliers
● Promotional suppliers
● Distribution partners
● Distribution reach
● Marketing partners

Macro environment
● Political
○ Legislations
○ Government regulations
● Economic
○ Employment levels
○ Minimum wage
○ Inflation
○ Cost of living
● Socio-cultural
○ Demographics
○ Social trends
○ Social norms
○ Consumer buying products
○ Education
○ Population shifts
● Technological
○ Ways of communication
○ The kind of tech in the country
○ Technological advancements
○ Where to advertise (mobile phones)
● Competitive
○ Competitive environment is considered as a whole. Not individual
companies
○ Potential New Entrants
○ Bargaining power of buyers
○ Substitutions
○ Bargaining power of suppliers
■ Can my firm enter the market?
■ Is there any room for growth?
■ How many players are in the market
○ Bargaining power of buyers
○ Potential new Entrants
 ○ Substitutes

● WHEN IDENTIFYING COMPETITORS, ALWAYS FOCUS ON THE NEED THAT

YOUR PRODUCT SATISFIES

SWOT Analysis
Strengths, Weakness, Opportunities and
Threats. It is a strategic planning
methodology developed out of Stanford
University in the 1960’s that is still widely
taught and used amongst business schools.
It helps to organize thoughts to develop
goals and strategies

Marketing plan matrix

● Market penetration strategies

focus on increasing a company’s
sales of its existing products to
its existing customers. Getting
existing customers to buy more,
more often or attract target
customers who haven’t
purchased before.

● Product development
strategies involve creating new
products for existing target customers. A new product can be a totally new
innovation, an improved product, or a product with enhanced value, such as one
with a new feature.

● Market development strategies focus on entering new markets with existing

products. For example, during the recent economic downturn, manufacturers of
high-end coffee makers began targeting customers who go to coffee shops.
Mcdonalds in India and china
 ● Diversification strategies involve entering new markets with new products or
doing something outside a company’s current businesses. Companies that have
little experience with different markets or different products often diversify their
product lines by acquiring other companies.

Sustainable competitive advantage

SCA is when a company develops an advantage over the competition that cannot easily
be copied and can be maintained over the long term.

4 Types of SCA:

● Locational excellence
○ is a form of SCA that is developed by creating an advantage for your
company through the number of locations a company has or through their
internet presence
■ This type of SCA is particularly important for retailers and service
providers

● Operational excellence
○ is often done by focusing on improving your company operations through
strong supplier relationships, supply chain management & efficient
operation, in order to be able to offer customers better pricing.
■ Efficient operations help to ensure that customers get the product
they want to purchase, when they want it, in the quantities they
want, at a lower delivered price than the competition

● Product excellence
○ is developed by having and offering customers products that have a high
perceived value and or effective branding & positioning. This can only be
achieved if your company’s offering is unique and competitors cannot
easily offer a similar product
■ A customer believes there is high perceived value from a product
when they feel like they are getting more from the purchase of a
product than what they must give up to purchase the product

● Customer excellence
○ is achieved by developing value-based strategies for retaining loyal
customers and providing them excellent customer service. It is about
creating strategies that help build customer loyalty.
 ■ Customer loyalty is not simply preferring one brand over another,
but it is more about the reluctance to shop with competitor
companies. Customer excellence can also be achieved by offering
superior customer service

Hierarchy of strategic plans

METRICS

Variable Costs:
- Costs of goods sold
- Changes in proportion to the activity of a business
 Fixed costs:
● Capital costs
○ Benefits expected to last more than 1 year
○ Kind of like a one time purchase
● Fixed operating costs
○ Benefits expected to last one year or less
○ Monthly cost
Chapter 3

Consumer behaviour
looks at the many reasons why people acquire products or services. The more you
understand how and why people buy products or services, the better your company can
create, produce, and deliver what they will buy.

The Consumer Purchase Decision Process

is used to describe purchase behaviour and acquisition behaviour.

Consumer Purchase Decision process

(1) Need recognition: realizing the need or want for something

(2) Search: searching for information
(3) Evaluation: evaluating different alternatives
(4) Choice: selecting a product and purchasing it
(5) Post Purchase Evaluation: using and evaluating the product

Evaluative criteria
are certain characteristics that are important to you such as the price of the backpack,
the size, the number of compartments, and color

Circular economy
Describes a business production model that at every stage in the process: takes out
waste and pollution; keep the products and materials they are made of in use for as
long as possible; protects and regenerates natural systems
 ● The ultimate goal of the circular economy is to avoid product purchase
altogether.

Involvement Buying Decisions

Low-involvement decisions (routine problem solving) usually pose a low risk to the
buyer if they make a mistake by purchasing them
● Consumers do not go through all the stages in the decision process for low
involvement products such as bread or rice because they don’t need to search
for information or evaluate alternatives.
● Low-involvement decisions are typically inexpensive (compared to income),
purchased regularly and pose low risk to buyers if they make a mistake or there
is a problem with them

Impulse buying
Unanticipated low-involvement purchases are made without planning or previous
thought.

Limited-involvement ( limited problem solving) products fall somewhere in between

Low and High involvement decisions
● Consumers engage in limited problem solving when they already have some
information about a good or service but continue to search for a little more
information.
● In some way, you shorten or limit your involvement in the decision making
process

High-involvement decisions (extended problem solving) carry a higher risk to

buyers if they fail, are complex, and/or have a high price.
● Buyers don’t engage in routine response behaviour when purchasing high-
involvement products. Instead, consumers engage in what’s called extended
problem solving, where they may spend time comparing different aspects such
as the features of the products, prices, and warranties.
● High-involvement decisions can cause buyers a great deal of post-purchase
dissonance (anxiety) if they are unsure about their purchases or if they had a
difficult time deciding between two alternatives.

● The level of involvement reflects how important or interested the consumer is in

the decision
Routine response behaviour
Not going through all the decision stages, making automatic purchase decisions based
on limited information or information they have gathered in the past

Factors that Influence Consumer Buying Behaviour

External factors
● Situational
○ Physical factors that companies can control, such as the layout of a store,
music played at stores, the lighting, temperature, and even the smells you
experience are called atmospherics.
○ Crowding is another situational factor
○ Rainy weather can be great for some companies, such as umbrella
manufacturers such as Totes, but a problem for others
● Social norms
○ Refers to expectations of what you should say or do in specific situations
based on the values of the social group or society. Today, some people
will judge you negatively for carrying a non-recyclable plastic bottle.
● Time
○ The time of day, time of year, and how much time consumers feel like they
have to shop affect what they buy.
○ Have you ever gone to the grocery store when you are hungry or after
getting paid when you have money to spend? When you are hungry or
have cash, you may purchase more than you would at other times.
● Reason for purchase
○ Are you making an emergency purchase? Are you shopping for a gift or
for a special occasion? Are you buying something to complete a task and
need it quickly?

Personal Factors
● Gender, Age, and Stage of Life
○ Depending on your stage of life, what you purchase will change.
○ If you’re single and working after graduation, you probably spend your
money differently than a newly married couple.
● Lifestyle, Activities, Interests and Opinions
 ○ Psychographics combine the lifestyle traits of consumers and their
personality styles with an analysis of their attitudes, activities, and values
to determine groups of consumers with similar characteristics.
○ Hobbies
○ Opinions
● Mood
○ Mood can impact buying patterns
● Personality and Self-Concept
○ The “Big Five” personality traits include
■ Openness or how open you are to new experiences,
■ Conscientiousness or how diligent you are,
■ extraversion or how outgoing or shy you are,
■ agreeableness or how easy you are to get along with
■ neuroticism or how prone you are to negative mental states

Psychological factors
● Motivation - Maslow's Hierarchy of needs
○ Maslow theorized that people have to fulfill their basic needs, food, water,
and sleep, before they can begin fulfilling higher-level needs.
● Perception
○ Selecting information from all that is received is called selective
exposure.
○ Selective attention is the process of filtering out information based on
how relevant it is to you
○ At other times, people ignore or forget information and this is called
selective retention
○ selective distortion- misinterpretation of the intended message.
● Learning
○ refers to the process by which consumers change their behaviour after
they gain information
○ Incentives for product trial
○ Classical conditioning- occurs by associating a conditioned stimulus
(CS) with an unconditioned stimulus (US) to get a particular response.
○ Instrumental Conditioning - Learning occurs through repetitive
behaviour that has positive or negative consequences.Rewarding
consumers with incentives, which causes consumers to want to repeat
their purchasing behaviors (e.g. Happy Meals with toys, redeeming points
etc.)
● Attitudes
○ Attitudes are “mental positions” or emotional feelings,
○ favorable or unfavorable evaluations
 ○ Long-lasting and difficult to change

Societal Factors
● Culture
○ refers to the shared beliefs, customs, behaviors, and attitudes that
characterize a society
● Subculture
○ a group of people within a culture who are different from the dominant
culture but have something in common with one another such as common
interests, vocations or jobs, religions, ethnic backgrounds, and geographic
locations
● Social Class
○ People of a similar level of mindset, education or income level
● Reference group
○ Group of people you want to identify with and want to join
● Opinion leaders
○ are people with expertise in certain areas.
● Family members
○ preferences impact other members

Formal and Informal Methods of Understanding the Customer

Marketing research
- is what a company uses to answer specific questions. The name you should give
your new product is an example

1. Define problem/ opportunity

2. Design research
Primary research
● Collected by you specifically for your Research question
● Qualitative, Quantitative, Causal (experiments)
Secondary research
● Collected by others, not specific to your Research question
Qualitative Research
● Used for open ended questions
● Depth interview
● Focus group
● Ethnography

Quantitative Research
● Descriptive research
 ● Non open ended questions
● Surveys
● Larger groups

Casual Research
● Cause and effect research
● What if?
● Experiment
● Test market - An experiment conducted in a natural setting such as a store

3. Design the data collection forms

● Asking the Right and understandable questions!

● Common template
1. Introduction and description
2. Instructions
3. Basic questions (warm-up)
4. In-depth questions about your research
5. Demographics and Thank you note

4. Specify Sample

1. Define your Population of interest - Current or potential customers or a specific

segment?
2. Sampling Frame – Where do I find them?
3. Number of People

5. Collect data

6. Analyze the data

Clean the data, organize the data and explore it to answer the Research question
7. Write research report and present its findings
Synthesize the findings and communicate in concise terms

Chapter 4

Characteristics of Business Markets

Market Characteristics
 ● Fewer customers, more geographically concentrated, and orders are larger
● Demand for business products Is DERIVED from consumer markets
● Demand is Inelastic

Product Characteristics
● Products technical in nature, purchased based on specifications
● Mainly raw and semi-finished goods
● More emphasis delivery time and Post-purchase Services

Buying Process Characteristics

● Buying decisions more complex
● Competitive bidding, negotiated pricing
● Qualified, professional buyers with buying criteria and objectives specified
● High number of decision makers in purchase decisions

Marketing Mix Characteristics

● Direct selling and physical distribution are often essential
● Advertising more technical
● Price often negotiated, affected by trade/quantity discounts
● Product can be customized

Fluctuating demand is another characteristic of B2B markets: a small change in

demand by consumers can have a big effect throughout the chain of businesses that
supply all the goods and services that produce it.

Derived demand is demand that springs from, or is derived from, a source other than
the primary buyer of a product.

Joint demand occurs when the demand for one product increases the demand for
another.

Factors that impact the buying process

The buying center

● Buying centers are groups of people within organizations who make purchasing
decisions.
- Initiators
- Initiators are the people within the organization who first see the need for
the product. They get the ball rolling
- Users
 - Users are the people and groups within the organization that actually use
the product. Frequently, one or more users serve as an initiator

- Influencers
- Influencers are people who may or may not use the product, but have
experience or expertise that can help improve the buying decision
- Gatekeepers
- gatekeepers, or people who will decide if and when you get access to
members of the buying center.
- Deciders
- a decider is the person who makes the final purchasing decision. The
decider might or might not be the purchasing manager
- Buyer
- Makes the purchase

B2B buying situation

1. A straight rebuy is a situation in which a purchaser buys the same product in

the same quantity from the same vendor. In other words, nothing about their
order changes
- Postpurchase evaluations are often skipped, unless the buyer notices an
unexpected change in the offering such as deterioration of its quality or
delivery time.

2. a new-buy situation occurs when a firm purchases a product for the first time.
Generally speaking, all the buying stages we described in the last section occur.
- The buying center will most likely go through its phases

3. modified rebuy occurs when a company wants to buy the same type of product
it has in the past, but make some modifications to it.
- A modified rebuy doesn’t necessarily have to be made with the same
seller
The Organizational buying culture
● Autocratic culture is one in which the buying center has multiple participants but
in the end only one person makes the decisions, typically the decider
● consultative culture, the buying center has one person who makes the decision,
however, the decider consults with the rest of the buying center members before
making the decision.
● democratic culture involves a group decision, where the majority of the
members of the buying center decide.
● consensus culture also involves a group decision, instead of a majority of the
buying center deciding, all members must agree with the decision.
Types of Buyers:
1. Producers
2. Resellers
3. Governments
4. Institutions

Week 5

Effective marketing requires

● Segmentation
○ Identify and profile distinct groups of buyers who differ in their needs and
preferences
● Targeting
○ Select one or more market segments to enter
● Positioning
○ Distinguish your product benefits to ur customers
 Market segment
- a group of customers who share a similar set of needs and wants
Market segmentation
- Process of categorizing the overall market into groups of customers with similar
interests

Market - a group of buyers

Market segment - subgroup of buyers in the market that have a common need

Mass marketing
- all customers offered the same product, promotion, price, at the same location

Targeted marketing
- Customers grouped into smaller segments based on unifying a need
- Each segment is offered a unique product, promotion, price, and place

Primary data collection

- In house data collecting, such as loyalty cards
Secondary data collection
- Using data outside of the company; government agencies, population, economic
information

Steps in One-to-one marketing

1. Establish short term metrics to evaluate consequences of efforts
2. Identify your customers
3. Differentiate among customers
4. Interact with your customers targeting the “best” ones
5. Customize your marketing mix to meet your customers’ needs

Steps in segmentation process

1. Need based segmentation
2. Segment identification
3. Segment attractiveness
4. Segment profitability
5. Segment positioning
6. Marketing-Mix Strategy

Geographic segmentation
- Needs vary depending on where the consumers live
 Psychographic Segmentation - who I am as a person
- Personality and interests
- Lifestyle
- Motives
- Attitudes and values

Behavioral segmentation - what benefit do I seek from the product

● Differentiating good consumers from not so good consumers
● First time users, light users, medium users, heavy users
● Occasion-based purchasing segmentation
○ 20% of your customers make 80% of your revenue

Metric #4

Contribution Margin = price - variable cost

price=3.55

Variable cost= 0.55

contribution margin = 3.00

- contribution margin helps to tell you when firm will break even
- It will tell you when you reach your target income
- It tells you whether to add or remove products from you product line
- It will help with pricing decisions
- It can even help with sales commission decisions