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Business foundations (Course 1. Introduction to marketing (Week 3. GO TO…
Business foundations
Course 1. Introduction to marketing
Week 1. BRANDING: marketing strategy and brand positioning
Marketing 101: building strong bands
Part 1
Marketing
Studies of a market
Market
Exchange btw buyer and seller
Seller's market
Product focus market
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Buyer's market
Customer focus market
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Marketing orieantations
Product orientation
Persuade the customer to want the firm has
Focus: generic products
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Marketing orientation
Persuade the firm to offer what the customer wants
Focus: differentiated product/service
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Experience orientation
Not only think about the transaction, think about the transactions over time. Manage the customer's entire experience with the firm
Focus: experiential value
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Trust orientation
Prioritize building a relationship of trust and discipline
Focus: genuine value
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Part 2
3 principles of marketing
1 Principle of customer value
2 Principle of differentiation
Differentiate your offer
3 Principle of segmentation, targeting, and positioning
4 P's of marketing
Product
Seller puts product into the exchange
Place
Seller's method of distribution
Promotion
Seller communicates the benefits of the product to buyer
Price
Buyer puts price into the exchange
Strategic marketing
How to become a leader in market?
Framework (based on Market leadership book)
Assumptions
1 Know your markets
Market research
Know how competitors will react
2 Customers have the final say
Customer seeks:
1 Operations
Price, cost, delivery, reliability
2 Product features and design
3 Customize to meet personal needs
Customer choses the best 1 of the 3 aspects and the other two are good enough
3 Commit to being first in the markets you serve
4 Deliver total quality to guarantee customer satisfaction
Fair value
It's not constant, and depends upon the competition
The framework
Operational excellence
Performance superiority
Customer intimacy
For each, find the fair value in the market
Choose 1, and build your company organization based on that aspect
Segmentation and targeting
STP (segmentation, targeting and positioning)
Segmentation
Identify variables to allow one to segment the market
Segmentation methods
Characteristics of the customer
Demographics
Cohort analysis
Cohort analysis
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Geographic
Benefits sought
Systematic, product-related behaviors
Purchasing behavior
Targeting
Segment selection criteria
Atractiveness
Segment size
Growth of segment
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Capability of company
Current position
Ease of entry into segment
Competition
Ease of competitive entry into segment
Number and strength of competitors
Evaluate attractiveness of each segment and choose target segment
Positioning
Identify positioning for target segment
Brand positioning
Brand
A trademark
A contract from the company to its customer
A brand it's what consumer tell each other it is
Positioning
Positioning statement
Target segment
For whom
Point of difference
Reason to buy
Strong, favorable, unique brand associations
Frame of reference
Points of parity (shared with other brands), to fall in a category
4 P's (marketing mix)
Unique selling proposition
Focus on few key benefits
Must be defensible
Can't be copied easily
Brand mantra: The elevator speech
Define the brand in 30 seconds
3-5 word phrases
Ask customer: what comes to mind when you think about this brand?
Parts
Brand function
What brand provides
Descriptive modifier
Clarifies nature
Emotional modifier
How it provides
Core brand values
Set of concepts or phrases that characterize 5-10 most important dimensions of brand
Communicate
Simplify
Inspire
What brand is and what it is not
Experential branding
Expierence
Triggered stimulations to the sense, heart and mind
Connects brand with customer's lifestyle
Redefining what brand is
Differentiation
Experience
Promise
Relationship
Attributes
Personality
Static
Dinamic
Mass
Individual
Awareness
Relevance
Experiential brand positioning
Multisensory strategy
Sense, feel, think, act, relate
Experiential components
Five senses
Emotions (appeal to feelings)
Cognitive (appeal to intellect)
Behave (affect lifestyles)
Social (community or belonging)
Strength
Strong brands
Clear promises, kept over time
Strong thoughts and feelings
Dependable and deliver consistently
Loyal franchise
Superior products
Distinctive positioning
Alignment of internal and external commitment to the brand
Stay relevant
Weak brands
Vague promises, change
Low emotional commitment
Create doubt
Little loyalty
Week 2. CUSTOMER CENTRICITY: the limits of product-centric thinking and the opportunities and challenges of customer centricity
Product-centric approach
Maximize shareholder value
Profits: volume and cost reductions
KPI
Volume
Change in costs
Market share
Growth
Extending the product
New customers
Innovation
Product-oriented organizational structure
Advantage: product expertise
Operational superiority
Performance superiority
Cracks
Commoditization (shorter product lifecycles, products become obsolete quicker)
Smarter customer (more informed, more demanding)
Retail saturation (ease of deilvery)
Globalization
Changes in regulation
End-to-end solutions, may require multiple vendors
Customer knwoledge
Direct marketing
The individual customer is the target
Know who their customer are and what they buy
Determine marketing communication based on past purchases
Constantly determine individual customer value
Customer centricity
Alignment around current and future needs of selected customers, to maximize their long-term financial value of the firm
Requirements
Changes in organizational structure
Changes in performance metrics
Changes in employee/distributor incentive structures to focus in long-run value
Goal: maximize shareholder value
Embrace customer heterogeneity: distinguish profitable and not profitable customers
Focus on future profitability (customer lifetime value)
Customer acquisition, retention, and development
Customer-centric organization structure
Advantage: relationship expertise
Paradox of customer centricity: more focus on selected customer requires non-focal customers to stabilize the overall mix
Maybe use customer-centricity on selected customers, and product-centricity on the others
Barriers
Enormous data
Regulations
Culture
Week 3. GO TO MARKET STRATEGIES: Online-offline interaction and how to find lead users and facilitate influence and contagion
Online/offline competition
90% of what is sold to consumers is still sold offline
Reasons
Delivery times
Uncertainty about fit and feel of product
Cost of returns (time and money)
Competition btw online and offline is intense for popular products, but not for niche products
Frictions
Real world
1 Search friction: where to buy? best price? time lost
2 Geographic friction: limited by location where you live
Online world
1 Search is faster
2 Can buy from far locations
The long tail part 1
Concept
Products near 0 on x axis (head) would be bought on physical stores
Products on the far x axis (long tail) are so unpopular that it doesn't make sense to sell them on a physical store, but selling them online could add up to quite a lot.
Background
Before, hits would be the only thing bought, but now the variety is also sought
Old-new economics
Pareto says 80% of wealth is in 20% of products, but long tail says the percentages are closer
Key principles
Tyranny of locality (preference minorities)
The buyers must not be geographically close to have a big audience anymore, because of internet
Going from head to the long tail may decrease satisfaction of the user if he picks a random product, but it may increase if he choose what he likes
Main characteristics
Ratio of niche products to hits is changing
Distribution efficiency is increasing
Reviews allow an easier access to long thail
Collective value of niches > hits
A long tail is culture unfiltered by scarcity
The long tail part 2
Gini coefficient
The gini coefficient was more equal in internet sell channel than catalog channel
There are more long tail sales on the internet compared to the catalog and the reason is demand side can find easier the products on internet
The long tail can also be applied with geographical locations instead of products, so the sales in small towns can add up to large quantities
Critiques
Law of natural monopoly: hits attracts more light users
Law of double jeopardy: unfamiliar things are less well liked
Preference isolation
Buyer has preferences that differ from what local stores offer
Principle
Isolated prospects are worth pursuing
Research shows that preference isolation brings shoppers online
Online niche brands sales 125% higher on isolated market
How internet retailing startups grow
3 principles found in online and offline interactions (what matter most in internet retailing)
1 Customer acceptance of online retail depends on offline shopping costs
2 Sales evolution is structured and predictable (social contagion affects online demand evolution)
Sales tend to grow in areas that had customers before
Customer talks and observe each other
3 Migrating from good to great requires expansion to niche locations
Two distances: geographic and social (demographic)
Is important not only to target near locations of the warehouse, but to expand in far locations with similar social characteristics
Customers and digital marketing
Goals and tactics
Never pay more to acquire than you will recoup: Customer Lifetime Value > Acquire Customer
CLV needs to incorporate Referral Lifetime Value (encourage existing customer to referral other customers)
Existing customer may know more info of a new customer than the company (selection), with better CLV
Existing customer is a trusted source of the new customer, more than marketing campaigns (treatment)
Assets: spend on brand, customer and marketing itself
Influence and how information spreads
Networks
Normally exhibit homophily (objects alike stay together)
Influence can happen through conversation or observation
Six degrees of separation: there's probably no more than six persons between a person and other
There are 3 degrees of influence: influence spreading out from a person typically won't go more than about three steps
Pricing strategies 1: introduction
Price is critical for revenue, prob more than volume, cost, etc.
A price could be exhibited in certain ways to get the buyer's confidence
4 inputs to pricing
Willingness to pay
Marginal cost
Competitive pressures
Distributor margins
EVC Economic Value to the Customer
5Cs and pricing
Customer
Price sensitivity
Psychological issues
Odd numbered endings
Mental accounting
Prospect theory
Endowment effect
Company
Financial considerations (target margin or internal rate of return IRR)
Consistency in product line
Consistency in image
Collaborators
Collaborator incentives
Competitors
Competitor aggressiveness (response)
Willingness to respond on price
Competitor position: leaders initiate, followers imitate
Context
Pricing strategies 2: customer factors
Price sensitivity affected by
Ease of comparison
Expenditure
Large volume users tend to be more price sensitive
Buyers are more sensitive when the focal component is a large part of total costs
Shared expenses
Distance between user and payer can lessen price sensitivity
Price/quality inferences
Price sensitivity is lessened when quality differences exist but buyer can distinguish them
Measuring price sensitivity
Conjoint analysis, example: 4 prices, and see which of them has more acceptance
Surveys: ask indirectly: from 1 to 7 how are you willing to pay 5 dlls for this product
Regression analysis: compute price elasticity based on real sale prices
Psychological factors
9 endings usually indicate discount
The 7Ms
Markets (who should I talk to?)
Message content (what should I tell?)
Mission (What it is intended to achieve?)
Message design (how should I say it?)
Media strategy (how do I reach them?)
Money (how much do I need to spend?)
Measurement (Was it worth it?)
Week 4. BRANDING: Effective brand communications strategies and repositioning strategies
Brand messaging and communications
Perception
Perhaps the most crucial process in customer behavior
What customer perceive affects their actions
What is perceived is not necessarily true
Perception: an interpretation of a stimulus
Process of perception
Perception is a construction of people interpretations
Inherently biased
Stages
1 and 2. Exposure and attention: the stimulus or event. These are selective when they are voluntary
Interpretation, which is subject to what we already believe
Brand name and color affects perception and this effect can't be blocked
Bias
Shape
Visual illusions
Perceptual organization
Proximity
Similarity
Brand elements: choosing a brand name
Brand elements
Brand elements if chosen right can enhance brand awareness or facilitate strong and favorable associations
Brand name, logo, symbol, character, packaging, slogan, color
Think of how brand elements work together?
Think of customers' perception of the product through brand elements
Choice criteria
Memorable (easily recognized and recalled)
Meaningful (descriptive, persuasive)
Appealing (fun and interesting, aesthetically, rich visual and verbal imagery)
Protectable; legally and that combined elements are hard to copy
Adaptable; flexible, updateable to stay modern
Transferable, to use on different products, and use it across cultures
Advantages and disadvantages
Effects of brand names
Consumer
Affects likelihood of purchase
Employees
Affects morale and productivity
Firm
Can limit opportunities
Investors
Cause subconscious judgement about the company
Types of names
New business invent words because most recognizable URLs have already been taken
Think in Chinese translation
Brand elements: color and taglines
Color
Rules
Ultimate goal is to own a color
Color can separate product lines (e.g., different qualities)
Different viewers experience color differently
Ensuring consistency of color across platforms/media is difficult
Colors can create very strong perceptions
Luxury colors: gold, silver, black, white
Gender: blue, pink
Two axes
Arousal axis (how stimulating is)
Affect axis (how much people like it or don't like it)
Colors
Red: stimulates appetite; love (passion), excitement
Blue: preferred my men, productive, curbs appetite
Green: tranquility, health, money, nature, fertility
Brown: reliability, boredom practicality, earth
White: purity, innocence, empty, spacious
Black: evil, death, mourning, slimming
Yellow: bright, energy, makes baby cry, cause eye fatigue
Orange: excitement, enthusiasm, warmth, caution
Lavender: calms the nerves, relaxation
Purple: royalty, wealth, success, wisdom
Pink: girl's color, calming, warm
Symbols
Can communicate associations
Positive feelings
Slogans/taglines
For a positioning strategy
Can remove some ambiguity
Can generate its own equity/emotion
Can reinforce the name or symbol
Basics
Must be short
Must be different
Must be unique
Must be easy to say
Can't have negative connotations
Can be protected and trademarked
Evokes an emotional response
Types
Imperative (Just do it)
Descriptive
Superlative
Provocative
Clever
Brand elements: packaging
Can influence the purchase
Can influence consumption
Multiple objectives: identification, information (descriptive, persuasive), protect and allow transportation, aid consumption
Package aesthetics and function are bot important
Brand elements: persuasion
Elaboration likelihood model
Two routes of persuasion
Systematic (central)
Used when motivatation, opportunity and ability to process marketing messages are high
Focus mainly "central cues" in the message
Superficial (peripheral)
Used when motivation, opportunity and ability are low
Focus on peripheral,automatic cues in the message
Peripheral cues
Classical conditioning
Reciprocity: you owe me. Give customer a small gift so later he thinks he owe you
Consistency: we've always done it that way
Social proof: everybody's doing it
Liking: if you like me, you like my ideas
Authority: just because I say so
Scarcity: quick, before they're all gone
Persuasion: an active attempt to change belief and attitude
Celebrity endorser
Celebrity/audience fit
Celebrity/brand fit
Social network
Transfer of meaning
Transfer the characteristics of a celebrity to the product
Source models
Source credibility
Source attractiveness
Familiarity
Likability
Repositioning a brand
Managing brands over time
Brand equity must be actively managed over time
A brand can evolve gradually
Symbols: can update without changing meaning
Brand name: can change to reflect evolving identity
Slogans: easier to change than the name
New products
Brand meaning must be reinforced or adjusted
5 reasons for brand change
1 The identity/execution was poorly conceived
2 The target for identity/execution is limited (change to reach a broader market)
3 Identity/execution has become out of date
4 The identity/execution lost its edge, becomes old-fashioned
5 The identity/execution has become tired
When repostitioning a brand, think of CONSISTENCY
Butterfly effect: a change that is not so extreme to think is not part of brand but that it's notable
