Professional Documents
Culture Documents
Week 1:
Market Oriented Firm and Value Creation
Tools
1.
2.
3.
4.
5.
Costs
Benefits not product and service features but results delivered
1. Improved performance
2. Improved operating productivity
3. Improved asset productivity
4. Reduced risk
Product:
Support
services
Info
management
Relationship
management
Reliability
Distribution
Courtesy
Conformance
Installation
Packaging
Merchandising
Credibility
Responsivenes
s
Feature
Performance
Design
2
3
4
5
6
Training
maintenance
Consulting
Competence
Communication
Image
Company
reputation
Brand
reputation
Atmosphere
Promotion
Media/publicati
on
effort
Financing
Exit
Processing/ Product:
administrative 1. Replacem
cycle
2. Compatib
3. Upgradea
Deposits
Credit
Subsidies
Flexibility
Security
Contracts
Week 2:
Relationship marketing and customer loyalty
1. Recognition of market failure
a. Supplier:
i. Manufacturer idiosyncratic investments
b. Consumer:
i. Consumer switching costs
ii. Market is not well informed, there is high potential
for opportunistic behaviour
c. Small numbers of suppliers/manufacturer
2. Improved understanding of consumer behavior
a. Consumer are irrational never wrong, based on price
b. Consumer usually satisfice not maximize and optimize
utility only satisfy the minimum requirement to
achieve goal
c. Consumers have incompete and symmetric information
on alternatves
d. Trades are affected by external influences, not in
insolation
3. Improved understanding of the value chain
a. Understanding that other stakeholder affect the firms
ability to create value for buyers:
i. Suppliers
ii. Intermediaries
iii. Employees (internal market)
iv. Government
v. Competitors
Cooperation is usually more effective than competition
4. Economics of customer retention
5. Profitability over time due to:
a. Customer buys more of your products and services
(often at higher stuff)
b. Operating costs of servicing the customer
c. Reducing customer turnover
Recognizing the costs of customer defections
Relative
Attitude
Low
Spurious loyalty
(doesnt like our
brand but cannot
change, i.e.
contract, switching
cost, lazy looking
for alternatives)
Low
Latent loyalty (like our
brand but cannot use
them)
No loyalty
Summary:
1. Customers leave because attitude of indifference
2. Loyalty should be behavioural and attitudinal
3. Mere satisfaction will not lead to long-term customer loyalty
Week 3:
Purpose of Consumer Behaviour
1. Identify target markets and segments
Each individuals have different paradigm so different people
value the same product differently
2. Understand how consumers choose products
Decision-making, value other alternative, distinguish different
offerings
3. See how customers perceive brands and stores
Intangible asset/ideas, heart of loyalty
Use consumer behaviours to identify opportunities, what you
have and value and how you go for that value
4. Identify unmet (latent) needs needs below the surface that
is not met yet
5. Discover how attitudes can be changed
Using marketing strategies
Consumer Psychology
Marketing
+
Motivation
other
stimuli
1 Products and
services
2 Price
3 Distribution
Economic:
Bad/good
Technologic
al
Political
4 Communicatio
Cultural
Consumer
characterist
ic
Perception
Cultural
Learning
Social
Memory
(understandi
ng of ideas)
Interperson
al
Buying
purchase
decision
decision
Problem
recognition
Info search
Evaluation
of
alternatives
Post
Product choice
Brand choice
Dealer choice
Purchase
ns
5 Explanation why customers
6 are irrational
purchase
behaviour
amount
Purchase timing
Purchase
method
b. Social class
Week 4:
Market segmentation and targeting
Customer needs analysis
1. Existing needs satisfactory solutions already exist.
Opportunity for new products is limited
2. Latent nees unmet needs. Customer can articulate needs
via in-depth market research. There is opportunity for
innovation
3. Incipient needs unmet needs but costumer cannot
articulate the need for solution. This requires technological
breakthrough
Market segmentation = dividing large market into smaller target
markets, or customers with similar needs and/or desires who will
respondin a similar way to product offerings and marketing
initiatives. (how? Purchase frequency, degree of loyalty, price
sensitivity)
Benefits of segmentation:
1. Optimize resource allocation
2. Identify opportunities for repositioning deep/strong position
create 300 products (costly)
3. Identify opportunities for new products
Principles of effective segmentation characteristics
1. Homogenous (within segments) = different enough to be
segmented
2. Heterogeneous (between segments)
3. Profitable to serve this segment
4. Operational (measurable, actionable, accessible)
Criteria used for segmentation should be based on their ability to
identify segment that needs different strategies.
1. Benefit sought/usage behavior
2. Price sensitivity
3. Loyalty
4. In 1900s, we use: demographics, geographics, physiographics
and socio-economic variable)
Targeting = we evaluate segments for size and growth,
attractiveness and fit
Undifferentiated (mass)
Differentiated
Concentrated (niche)
Micro (segment of one) special order
Strategic considerations in targeting
1. stage of product life cycle where we are in product life cycle
2. segment interrelationships (compatibility) success in one
segment may provide a platform for entering another
segment
3. competitive marketing strategies consider segmentation
approach of competitors and markets not served by
competitors.
4. Degree of fit assessment of the companys understanding of
the segment and compatibility with capabilities.
Position and Branding
Positioning the perception of our brand in the market
Brand quity financial value of our brand
Brand impact can increase market capitalisation from 20% to 80%
Benefits of brand equity
1. Incremental attraction (i.e. sales growth)
a. Easier to attract new customers
Week 5:
Product life cycle
Product = means by which value is delivered to customers.
However, value differs for each individuals, thats why we augment
product
The Augmented Product
1. The core meeting minimal customer requirements (right to
compete)
Focus on generic category benefits first
2. Duration is determined by
a. Competition
b. Consumer behavior
Product adoption / diffusion
1. Innovators (2.5%)
2. Early adopters (13.5%)
CHASM takeoff (DIFFUSION OF INNOVATION) if cannot go through
chasm, decline sales overtime
3. Early majority (34%)
4. Late majority (34%)
5. Laggards (16%)
Factors influencing the rate of diffusion
1. Relative advantage (e.g., Groves 10x rule)
2. Compatibility (e.g., network effects)
3. Complexity
4. Divisibility
5. Communicability
Recap:
1. Products are dynamic; the features that create value for
customers are constantly evolving
2. The product life cycle has implications for marketing practice
3. Consider the factors that drive diffusion of an innovation
within the market
Product Development
Objective:
Minimize time to market (cycle time)
1. Amortise costs of development over life of the product
2. First over advantage
3. Increased chance of product being accepted as dominant
design
However, this may entail to high cost of initial R&D and high cost of
failure
How new is a new product?
1. Derivative projects =
a. Process change = incremental change, single
department upgrade
b. Product change = product enhancements
2. Platform projects =
a. Process change single department upgrade next
generation process
b. Product change = product enhancement, addition to
product family
3. Breakthrough projects
Week 6
Marketing Communication
Integrated Marketing Communication (IMC)
Developing and implementing various forms of persuasive
communications programs with customers and prospects over time
Consumers are influenced by all aspects of contacts with the
organization, i.e.:
1. Exposure to the brand
2. Sales person
3. TV advertisement
4. Retail store
Key elements of process:
1. Affecting purchase behavior sets behavior so ppl will
purchase
2. Using all forms of contacts
3. Beginning with the customer or prospect
4. Achieving synergy
Eliciting a favourable brand attitude should be considered an
intermediate step in achieving the ultimate objective of purchase.
True loyal: high behavioural and high attitudinal loyalty
Ultimate goal: some action Sets behavior as ultimate objective
Consider all possible contacts a customer or prospect has with the
brand or the organizations part of vision to develop favourable
attitude and migrate it to to loyalty.
Messages have to be consistent on all four contacts
IMC process begins with the customer and works back to determine
the most effective and persuasive communications for advertising
Avoid sales orientation
What is the segment and their value, affect how we
Observe customers work back to the organization how we best
communicate with this particular customer (better than some
method works for everybody)
Wrong campaign push pressure on sales person to sell the products
Points of contact between the customer and the firm. Everything
supports one another.
IMC implies a coordinated message across various media
Week 7:
Marketing Communications (Message content & budget
determination) (Promotion)
Purchase motivation and the role of information
1. Negative purchase motivation - have problem
Advertisement message should be informational (i.e., central
route to persuasion) can help determine content
2. Positive purchase motivation
Advertisement message should be transformational (e.g.
peripheral route to persuasion)
Week 8:
Pricing (strategies and objectives)
Some pricing objectives
1. Gain market share
2. Short-term profitability
3. Respond to competition
4. Entry deterrence
5. Product positioning
6. Exit strategy
Determining prices:
1. Cost-based approach (break even, cost-plus)
For when a firm has no blue
Perversely leads to over-pricing when demand is low and
underpricing when demand is high (due to scale economies)
2. Competition-based approach competitors pricing
Fro when a frim has no clue
Assumes there are no desperate competitors (but there
always are)
3. Customer-based approach customer willingness to pay
A firms costs are irrelevant to consumers, consumers pay for
value.
If firms cannot make profit at customers value
Break business fundamental rules, to provide value for
customers
ii.
Channel structure
Determinants of channel structure include:
1. Distribution functions
2. Economics of distribution function
3. Managements desire for distribution control
The shorter the channel structure, the higher the control
Opportunity to maintain brand image
When service component of offering is high (and is
important to customer perception of value)
Functions of the distribution channel
1. Research from retail stores, most contact with customers
2. Promotion
3. Contact physical and financing distribution
4. Negotiation
5. Physical distribution
6. Financing
7. Risk taking
8. Matching
Resolve discrepancies between consumers and producers
i. Quantity (buffer mass produced goods, breaking down
bulk to individual items)
ii.
Assortment (allow producers to focus while providing
customers selection)
iii.
Time (hold goods until ready)
iv.
Place (connect producers and consumers)
Economics of distribution functions
Specialization or division of labour
Transaction efficiency
A new multi-channel world
Consumers who shop across a number of channels physical stores,
the internet, and catalogs spend about 4x more annually than
those who shop in just one.
Multi-channel models drive firm performance
i. Low-cost access to new markets
ii.
Increased customer satisfaction and loyalty
iii.
Creation of a strategic (knowledge) advantage
Multichannel shopping process
Need recognition, pre-purchase search, alternative evaluation,
purchase decision, post-purchase
Major manufacturer system integrator using distribution strategy,
increase cost-effective and productive-effectiveness of firm. Getting
things according to schedule.
Week 9:
Distribution channels (conflict and context)
Channel behavior
1. Horizontal conflict = conflict between firms at the same level
of channel
knowledge
5. Consistency
5. Emotional
intelligence
iv.
Education centres set up
v. 95% of all soccer ball exports are child labour free
However
i. Female participation in industry drops from 50% to 20%
ii.
Commute to factories led to lower productivity
iii.
No longer supplement stitching income with agriculture
iv.
Less flexible
v. Sexual harassment
vi.
Education centres wound up in 2004
3. Johnson& Johnson Tylanol poisoned
a. Taken from the market
b. Ford did not, let firms be firm, doesnt have to be
socially just or concerned. Let government do their job.
The social responsibility of business to engage in socially
responsible behaviours
1. Business reasons (instrumental; enlightened sef-interest)
a. Opportunities/rewards
b. Risks/penalties
2. Moral reasons (normative)
a. Corporations cause social problems or have social
impacts
b. With power comes responsibility
c. Because governments fail to fix social problems
d. Corporations rely on resources from a broader set of
stakeholders than just shareholders, such as society
dissent, environment finite, , if I rely on stakeholders
why would I behave in opposite favour of these
stakeholders
Classifying stakeholders
Stakeholder power = ability to bring about desired outcomes
(despite resistance)
Stakeholder legitimacy = actions of an entity are desirable, proper
or appropriate
Stakeholder urgency = issues are time sensitive and of great
importance
Definitive stakeholder (power, legitimate, urgency) = urgent plan
how to affect things that are seen legitimate and have power. First
to be considered.
Dependent (legitimacy urgency) = we dont have power to change
it
de
In the brent spar case
1. Greenpeace, UK = demanding stakeholder
2. Greenpeace, Europe = dependent stakeholder, lobby Europe
government and consumer
3. European Governments = discretionary stakeholder
4. European Consumer = definitive stakeholder
Expectation
Return on investment, corporate
governance, conscience
protection
Value, quality, truthful
advertising
Benefits, safety, stimulation,
equal opportunities
Sustained relationship, payment
of bills, technology transfer,
reputation protection
Law abidance, tax contribution,
local economic impact
Charity, community investment,
sponsorship
Sustainable materials, water/air
emissions, energy efficiency,
waste management
Media releases, public relations
2. But there are good normative reasons and some evidence for
the instrumental case for ethical behavior
3. Exactly what Corporate Social Responsibility means for
business is not always certain, however, taking a broadened
view of organizational stakeholders is a good starting point.