-Marketers must know what factors to consider in the phases of marketing execution. The Marketing
Framework includes the 5 C's, STP, and 4 P's. The 5 C's are customer, company, context, collaboration,
and competitors. STP stands for segmentation, targeting, and positioning. The 4 P's are product, price,
promotion, and place.
-Marketing is an exchange between a firm and its customers.
-Marketing is involved with educating the workplace.
-Due to the current customer-oriented environment, firms understand
the importance of their customers and creating and maintaining
relationships with them. Because of its importance, marketing has
evolved from a function to an organization-wide philosophy
- The marketing world is a truly customer-oriented and customer-
empowered world where the goal is to build and maintain relationships
with the customer.
- Basic Concepts in Marketing
The American Marketing Association defined marketing as “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.” Marketing is the theory and
practice of identifying needs and distributing goods in a competitive
society.
- The competitive marketing strategy involves product strategy, pricing
strategy, integrated marketing communications, channels, and
logistics strategy. It needs to offer value to the target market, that is
defined by marketing, so that the business may focus on those
selected markets.
- Start with a Situational Analysis Using the 5 C's by
Examining the External Environment
- Customers:'Who are they? What are they like? Do we want to draw
different customers?
Company:'What are our strengths and weaknesses? What customer
benefits can we provide?
Context:'What is happening in our industry that might reshape our
future business?
Collaborators: Can we address our customers’ needs while
strengthening our business to business (B2B) partnerships?
Competitors:'Who are the competitors we must consider? What are
their likely actions and reactions?
- The 5 C's are in flux, so marketers must consistently monitor and
adjust strategy accordingly. The 5 C's help marketers assess any
business problem or opportunity in terms of a general analysis of the
entire business situation.
- Proceed to Strategic Marketing Planning with STP
- Segmentation:'Customers aren’t all the same; they vary in their
preferences, needs, and resources.
Targeting:'Attracting some of those customers makes better sense
than going after others.
Positioning:'Communicate your benefits clearly to your intended
customers.
- When the different segments’ preferences are understood, then the
organization can identify the targeted segment and start marketing
efforts. A relationship is developed with that target segment by
positioning products in the marketplace via the 4 P's.
- Advance to Marketing Tactics with the 4 P's
- Product:'Will customers want what your company is prepared to
produce?
Price:'Will customers pay what you would like to charge?
Place:'Where and how will customers purchase your market offering?
Promotion:'What can you tell your customers, or do for them, to
entice them to purchase?
- Business to Consumer (B2C)
Examples:
Specialty purchases:"A new car, fashion shows, an expensive laptop
computer.
Shopping purchases:'Going online to Citysearch.com to find a
restaurant and make reservations when heading out of town.
Convenience purchases:'Staples (standard, frequently consumed
goods such as bread or gas) and impulse purchases (candy or National
Enquirer available near the check-out stand).
Business to Business (B2B)
Examples:
New buy:"Buying a new computer for a media developer and must
consider machine specs.
Modified rebuy:"Purchasing office supplies but consider cheaper
alternatives to the usual.
Straight rebuy:'Purchase the exact same equipment for a new hire
that has been purchased before.
Models of How Buyers Make Decisions
Lexicographic method:A customer compares brands by the most important attributes or
dimensions.
- Average method:'This method uses averages so one attribute can’t
make or break a brand.
- Use attribute importance:'Models can be made more complex by
bringing in weights to express how important the attributes are to the
customer.
Factors that Influence Customer Behavior
The factors influencing customer behavior fall into three categories:
External:'opinion leaders, family, culture, social class, reference
groups
Internal:'attitudes, motivations, learning, perceptions, lifestyle
Situational:"physical environment, purpose of purchase, time
constraints
Roles in Big, Complicated Business Purchases
Initiator
oExample: an administrative assistant who notices a printer
in the office frequently needs repairs.
User
oExample: every staff member who sends a job to that
printer.
Influencer
oExample: the IT person who knows Brand X is cheaper.
Buyer:
oExample: administrator who orders equipment and supplies.
Gatekeeper
oExample: accountant who controls the budget.
The Product Life Cycle
The Product Life Cycle consists of the following four distinct
stages:
Introduction: An organization attempts to establish itself as a
pioneer/market leader (especially if there are few competitors), and
product development costs are high.
Growth: Sales/revenues & profit margins rise as consumers buy the
product and competition increases, and due to shakeout, poor
performing firms may exit the market.
Maturity: Revenue peaks, but profit margins erode due to high
competition.
Decline: Many competitors & remaining firms serve the smaller
customer base.
Why Segment?
Marketers need to examine any given market for differences among customers. There
must be differences among the customer population for segmentation to be feasible.
'Noting that consumers have unique needs and desires should be at
the heart of segmentation efforts.
The ability to find smaller homogeneous markets within a larger
heterogeneous market is the foundation for segmentation.
Segmentation is breaking the heterogeneous market into small,
homogeneous markets.
demand can become less price elastic; consumers are willing to pay
more to get something that is closer to what they want. marketers deal
with customer variation through segmentation.
How Marketers Segment
Marketers segment markets by identifying variable(s) that help them determine whether
or not customers will like or connect with their product.
Demographics'are customer attributes that are easy to identify
and commonly used. Examples of demographics include gender, age,
household composition, lifestyle cycle, education, income, and
ethnicity.
Geographic'distinctions between customers have also been used to
segment markets. Examples include country, area of country, culture,
climate, and urban vs. rural.
Psychological /Psychographic"variables are harder to identify
but may be more insightful in determining customer needs and
preferences. Examples include attitudes, knowledge and awareness,
wants and needs, affiliations (political party), traits (extroversion),
expertise and involvement (hobbies), activities (fishing, surfing,
reading, no hobbies, Minecraft, stamp collecting) and brand attributes
sought.
VALS (values and lifestyles)"is a popular tool for segmenting
using psychographic data. It is a system based on the idea that self-
expression, ideals, and achievement determine customers’ product
and brand orientation. Examples include strivers who are trendy and
fashionable, achievers who are more family and work directed.
Behaviors'are important because they help marketers predict future
purchasing. Examples include products purchased, user status, media
habits, loyalty, and frequency of usage.
B2B Segmentation:
Demographics'include company size, account size, market share,
and number of employees.
Geographic"include country and sales force coverage.
Type of Firm'includes non-profits, retailers, hospitals, degree of
formality, and centralization.
Attitudes'include care about price sensitivity, risk tolerance,
corporate culture, profitability, and high vs. low maintenance accounts.
The primary distinction between segmenting businesses and
consumers is that the data sources tend to be different. No scanner
data are prevalent for businesses.'
Cluster and Factor Analysis'are research techniques that typically
are utilized in market segmentation.
Efficient and Effective Segmentation
Effective Segmentation:
Utilizes appropriate data.Canmarketersidentifymeaningfuldata?Can
marketersobtainandaffordaccesstothedata?
Allows access to customers. Canmarketersaccessthecustomerswho
meetdataspecificationsdirectly?Isthereadatabase?Canmarketers
accessthecustomersindirectly?Arethereactivitiescustomersparticipate
inormediacustomersfrequentlyuse?
Has profitability potential.Istheprofitabilitypotentialsufficient?How
frequentlydocustomerspurchase?Howpricesensitivearethey?How
deep($)istheirpurchase?Howmuchgrowthpotentialexists?Segmentsdo
nothavetobelargetobeprofitable.Marketersneedtobecarefultoavoid
definingsegmentstoonarrowly.Marketersalwaysneedtoaskifthe
segmentationcriteriaismeaningful.
Fits with corporate goals.Doesthesegmentalignwiththefirm’sstrengths
andmarketimage?Istherelimitedcompetitionforthesegment?Theideal
goalforthemarketeristofindanuntappedgroupofcustomerswhose
needscaneasilyandprofitablybemet.
Is actionable.Canmarketersdevelopanactionableplantoeffectively
targetthesegment?Canmarketersvisualizewhothesegmentis,where
theyare,andwhattheydo?
Competitive Positioning
Positioningis a marketing strategy, which aims to differentiate a brand in relation to
competing brands in order to gain market share. It is the act of designing and creating the
company's image and communicating the benefits of the company's products, so it gains a
distinct place in the market.
Market position"is an effort to influence consumer perception of a brand or
product relative to the perception of competing brands or products. 'Its
objective is to occupy a clear, unique, and advantageous'position'in the
consumer's mind.
Competitive positioning'is about defining how you'll differentiate your
offering and create value for your market. It's about carving out a spot in the
competitive landscape, putting your stake in the ground, and winning
mindshare in the marketplace – being known for a certain “something.”
Perceptual mapping'is a diagrammatic technique used by asset marketers
that attempts to visually display the perceptions of customers or potential
customers.
Strategies
Breadth Strategy: Reaching Multiple Markets
This company elects to market a single product to two or more segments.
Depth Strategy: Serving one Segment Well
This company focuses on a single segment and has multiple offerings for the
segment.
Tailoring Strategy: Customizing for Segments
This company serves multiple segments, marketing a different product to
each segment.
Distribution is how to get "stuff" to where consumers want to buy it.
WhatareDistributionChannels,Logistics,&SCM
Sellers prefer to produce large quantities of a limited number of goods,
but buyers prefer smaller quantities of a wider variety of goods.
Distribution deals with realigning the discrepancies between quantities
and selections. Breaking bulk means making goods available in smaller
batches.
- A'distribution channel'is a network of interconnected firms that
provides sellers a means of infusing the marketplace with their goods
and buyers a means of purchasing those goods as efficiently and
profitably as possible. Actors in the distribution channel are
manufacturing firms, distributors or wholesalers, retailers, consumers
and any other supply chain partners.
Activities in distribution channels are customer oriented (ordering,
handling, and shipping), product oriented (storage and display),
marketing-centric (promotion), financial oriented, and
logistics.'Logistics'is the coordination of the flow of all of the goods,
services, and information between channel members throughout the
channel.
Supply Chain Management (SCM)
The upstream partners that a company has to deal with are its suppliers; this is called the
supply chain and dealing with those firms is calledsupply chain management. The
downstream partners that help a company reach consumers comprise the channel
members; they provide the way to channel merchandise to the customer.
Designing Distribution Channels
Businesses determine the distribution intensity by deciding how many intermediaries will
be used. Then businesses must determine the push or pull strategy and how to deal with
conflict.
Intensive distribution'is used for widely distributed products in
drugstores, supermarkets, discount stores, and convenience stores. It
is used for simple, inexpensive, easily transported products like snack
food, shampoo, and newspapers. The pull strategy is used to promote
directly to end consumers in order to pull the goods from the
manufacturer to the consumer. Intensive distribution usually goes with
heavy promotion, lower prices, and average or lower quality products.
Selective distribution"is used for less widely distributed products. It
is usually used for complex and/or expensive products that require
assistance like cars, computers, and appliances. The push strategy is
used to provide incentives to the distribution partners to help push the
goods through the supply chain and into the hands of the buying
consumer. The manufacturer has more control due to fewer
relationships to manage.
Exclusive distribution"is used for the extreme case of selectivity.
Manufacturers have the most control, and it may become monopolistic.
Exclusive distribution usually goes with exclusive promotional efforts,
higher prices, and higher quality products.
Push and Pull Strategy
The terms push and pull refer to whether the manufacturer targets consumers or channel
partners with its marketing communications. Customers'pull'goods through the
channel, while intermediaries'push'the goods to consumers from the
manufacturer. Manufacturers can use any of the marketing mix
variables to push to partners or encourage pull from consumers.
Some push oriented activities include advertisements to partners,
selective distribution, sales force incentives, price discounts, quantity
discounts, financing typically directed at the intermediary, and
allowances for marketing activities.'
Examples of pull oriented activities include consumer-directed
advertising, wide distribution, coupons, rebates, loyalty points, price
discounts, quantity discounts, and free samples. Some activities can be
both push and pull strategies.
Channel Conflicts
Marketing channels assume financial risks such as international exchange rates and
inventory obsolescence, and they provide marketing communications (e.g., advertising
and sales promotion), physical distribution, inventory management, and market feedback
Types of channel conflicts:
Horizontal conflict is among partners at the same level.
Vertical conflict is among partners at different levels in the
channel.
Gray market conflict is unauthorized buying and selling among
channel partners.
Corporate vertical marketing systems, in which all channel members
are owned by/contracted to one company, provides control of conflict.
Channel power/leadership allows control of conflict by domination of
the channel by one partner.
A primary concern is that independent organizations within the
channel will act in their own best interest (self interest) and potentially
act opportunistically. Conflict may motivate parties to find alternative
solutions.
Coercive power'(the “bully”) is when one party can make
another party do something by taking away benefits or inflicting
punishment on the other party.'
Information power"(the “know-it-all”) 'is when one party gets
cooperation because it has information the other party seeks.'
Legitimate power'(“I’m a Great Dane, and you’re a
Chihuahua”) is when by size or expertise, one party can make
claims and threats that encourage the other party to conform.'
Referent power'(“I wanna be like you”) is when one party
cooperates with another because the former seeks affiliation with
the latter.'
Reward power'(“I have goodies for you”) is when one party has
the ability to provide good outcomes for the other party.
Dealing With Conflict
Power is usually defined by size and effectiveness. In the long term, power isn’t a
great way to resolve conflict because the less powerful player may feel resentful
and act accordingly.
Strategies for dealing with conflict include developing effective communication to
enhance trust and satisfaction and making sure that parties feel that they are being
heard and their needs are understood and being met. Channel experts speak of trust
as the willingness and ability to deliver on promises.
Channel members need to remember that the mutual goal is customer
satisfaction.
Transaction Cost Analysis And Revenue Sharing
Transaction Cost Analysis (TCA) is a model that considers the channel member’s
production and governance costs, both of which are ideally minimized. Using
intermediaries often reduces costs of producing and bringing products to market due to
economies of scope and scale
Channel conflict often comes down to revenue sharing. In a direct
channel, the manufacturer’s profit is a function of the customer’s price,
the manufacturing and selling (retailing) costs, and demand. Using an
intermediary, there is a second markup when the retailer makes the
product available to the consumer. Double marginalization is the
problem associated with determining what is a proper profit for the
manufacturer and retailer without increasing the price paid by the
consumer to the point where demand drops. A simple way to work on
the problem is to consider a direct-to-consumer channel and consider
the profit the manufacturer would make to be total channel profit and
allocate the total channel profit among the manufacturer and
intermediaries. This way the price to the customer does not increase.
Channel Integration
Integration refers to the back or buy decision that firms face when determining whether to
do a distribution function or have someone else undertake the activity. 'Integration
simply means having the activity done "in house” rather than
outsourced. Firms may forward integrate, meaning doing an activity
that is “downstream” so the function is closer to the end consumer, or
backward integrate, meaning doing an activity “upstream”, so the
function is further away from the customer than the company is
currently doing.
Horizontal competition is competition between retailers of different
types; vertical competition is when the manufacturer competes with its
partners.
Retailing
Retailing is often the most visible element of the channel and can impact image,
positioning, and brand equity.A trained, competent, motivated, and
enthusiastic sales staff is vital to retail success.'There is a strong
positive relationship between employee satisfaction and customer
satisfaction.
The three top complaints of salespeople by business-to-business
customers include the salesperson isn’t following my company’s
buying process, the salesperson doesn’t listen to my needs, and the
salesperson didn’t bother to follow up.
Distribution channels are networks of interconnected firms whose
activities enable products to be sold and consumers to have easier
access to those products. Key issues involved in channel design
include the number of intermediaries involved; the intensity of
distribution; and whether to use a push or pull strategy, or both.
Examples of Relevant Marketing Research
STP:
Cluster analysis for segmentation
Multidimensional scaling for perceptual mapping, targeting, and positioning
4P's:
Conjoint analysis for new products
Scanner data for pricing
Surveys to assess customer satisfaction with internet as a distribution option
Experiments to verify ad testing
5C's
Secondary data to understand context
Observational data to check on competitors
Networks to study collaborators
Interviews to study company's employees
Surveys for customer satisfaction
Marketing Research Process
1
1Define marketing and marketing research problem
2
2Try to answer questions with secondary data
3
3Design primary data collection
-Sample (e.g. random sample, stratified sample by segment)
-Technique
-Qualitative: interviews, focus groups, observations, ethnographies
-Quantitative: surveys, experiments, scanner data analysis
-Instruments (e.g. questionnaire, focus group moderator guide)
-Modality of administration (e.g. web survey, mail, personal interview)4
4Collect data
5
5Analyze data
6
6Communicate results (white paper, presentation, recommendations)
Secondary vs. Primary:
Secondary data'already exist (e.g. in the library, online); they're
quick and cheap to obtain
Primary data'requires that marketers design a study and collect
and analyze data; answers can be quite precise
Exploratory, Descriptive, and Causal:
Exploratory: Focus groups and interviews are used to formulate
marketing questions
Descriptive: Surveys and scanner data are used to obtain large-
scale statistics
Causal: Experiments are used to study the effects of
manipulated marketing mix variables on measures of sales and
customer attitudes
Seven Popular Marketing Research Techniques
1. Clusteranalysisforsegmentation
2. Perceptualmappingforpositioning
3. Focusgroupsforconcepttesting
4. Conjointanalysisfortestingattributes
5. Scannerdataforpricingandcouponexperimentsandbrand
switching
6. Surveysforcustomersatisfaction
7. Networkmethodstoidentifyopinionleadersinbuzzmarketing
Clustering methods use survey data to group observations (individuals)
that are most similar into a cluster (group). Two important issues in
clustering are how to determine what group to assign an observation
(individual) and determining how many groups there should be.
Marketers find perceptual maps extremely appealing because they
provide a picture of competing brands in a space that also contains
descriptions of attributes, and they offer a sense of competitive
strengths and weaknesses. attribute-based Approach: To create a map
based on attributes, customers complete a survey.
Multidimensional scaling (MDS) takes a different approach. It doesn’t
ask customers what’s important in a hotel. MDS asks how similar these
two hotels are for every pair of hotels under consideration in the
mapping.
Perceptual maps with ideal points, one point per customer, are
frequently used to identify opportunities.
Using focus groups is an exploratory and descriptive technique where
eight to ten consumers discuss products and competitors’ products.'
Information from conjoint analysis is used in new product design, brand
and line extensions, pricing, and branding or brand extension. There
are many variations to conjoint analysis (choice-based, traditional,
adaptive, pair-wise trade-off, full profile), all conjoint analysis studies
are run to understand how consumers make trade-offs among
attributes uncovering what combinations of attributes customers value
most
Scanner-experiment observation can manipulate something (price),
control everything else (assumption), monitor changes in sales
attributable to manipulation, and has high internal validity. Scanner-
naturalistic observation does not manipulate but constantly monitors,
is more difficult to attribute changes in sales to one action, and has
high external validity.'
Scanner data can be utilized to examine brand switching. What brand
did the customer buy this time? Is it the same as the brand the
customer bought last time? Scanner data can be used for field
experiments. Price, packaging, and ads can be tweaked in one market
or one store in one town. Subsequent sales are compared with those in
the control market or stores. Scanner data provides a clean test of the
return on marketing investment (ROMI) of a particular marketing mix
lever.
To conduct surveys, businesses write questions, pre-test them, and
then put the questions out to a sample of customers to take the
survey.
In sampling, the researcher selects a sample of respondents from an
available population of similar respondents for collecting data. The
various types of samples are as follows:
oProbability sample—Implies the probability of selecting any respondent
from the population into the sample is known
oSimple random sample—When every population element (e.g., a person)
has an equal chance of being included in the sample
oNonprobability sample—A sample drawn due to specific research
considerations and/or the researcher’s judgment (a shopping mall-intercept
survey)
Factor analysis examines the strong and weak correlations to identify
underlying factors common to the responses.'Marketers use factor
analysis to group the variables into factors and the cluster analysis to
group the customers into segments.
Social network methods can be used to study patterns of buzz.
Network methods are simple techniques used to study patterns of
interconnected “actors”. 'An actor is some agent, such as a consumer,
a firm, a department within a firm, or a partner in a supply chain.'
Marketing Strategic Planning Process
1
1Development of objectives (e.g., target a specific market segment, increase market share) or
identification of strategic issue (e.g., increased competition, decrease in sales)
2
2Situation analysis (e.g., internal factors such as strengths and weaknesses; external factors such
as opportunities and threats analysis)
3
3Development of strategic alternatives
4
4Evaluation of strategic alternatives along specific decision criteria
5
5Development of a strategic plan along with tactical plans for implementation
Strategic marketing activities could focus on current and/or future customers (markets) or current
and/or future/new products.
Portfolio Assessment Tool
The Boston Consulting Group (BCG) Matrix is used in portfolio analysis and classifies
brands or products according to whether each has a strong or weak market share and a
slow or growing market.
Dog: products in low growth markets and with low relative market
share (optimize or hold) ' ' ''
Star: products in high growth markets with high relative market share
(minimize or divest) ' ' ' ''
Cash cow: products in low growth markets but with high relative
market share (milk)
Question mark or problem child: products in high growth markets but
having low market 'share (products in development, new technologies,
uncertain markets)
' '
Leader versus follower: "Leader" has several meanings
including having the largest market share, being first to bring
new products to market (which may or may not be beneficial
because adoption can be slow), being quick to innovate and
improving upon what is in the market, or through great customer
service (quick followers can learn from leaders’ mistakes).
Roles include leaders, quick followers, followers, also-rans, and
barely-in-the-games. The roles that firms play in the marketplace
can evolve. A company rarely behaves the same way for every
product at all times. A company may be a leader for some of its
brands/products and not others. A company may be offensive and
defensive to vary its portfolio. A company’s products’ life cycles
may influence its identity.
Marketing Metrics
Companies need to measure what matters. Marketing strategy is the link between
corporate goals and operational tactics. Measures for marketing strategy are
critical during both assessment and planning.
Firms can increase profits by decreasing costs. Firms can also increase
profits by increasing revenue. Revenue can be increased by changing
price or through an increase in volume. Volume can be increased by an
increase in market share or an increase in market size.
Dashboard
Marketers refer to a “dashboard” as an analogy for the many indicators of performance
that should be monitored, much like an instrument panel in an automobile. The
dashboard is an indicator of a company’s success. Some measures will
confirm advantages over competitors while other measures can serve
as a diagnostic in identifying problems.
Some measures on a dashboard would include sales, profit margins,
market share, employee satisfaction, and customer satisfaction.
Dashboards, scorecards, or graphic representation of metrics can take
any form ranging from line charts, pie charts, and bar charts.
Four Classes of Goals
Let’s make more money: A company can state sales objectives in terms of currency;
market share; units; change from last year or quarter; region; and investments made
toward current sales – the philosophy underlying return on investment (ROI), return on
marketing (ROM), or return on quality initiatives (ROQ).
Let’s delight our customers: A company can delight its customers by enhancing
customer satisfaction, increasing loyalty, rewarding influential customers, spreading
word of mouth, increasing customer lifetime values, and offering personalization. Many
attempts at one-to-one marketing have been cost ineffective.
Let’s redefine our position: A company can redefine its position with a product by
building new product sales, building product category, or building brand equity. Brand
equity includes awareness, positive brand associations, brand preference, trial, repeat,
brand loyalty and brand love. Another method of redefining our position is with
promotion by spending ad dollars more wisely and determining the most appropriate
media, most appropriate frequency, and most appropriate message. A third method of
redefining our position is by place (channels) which includes determining appropriate
channels, multi-channels, lower cost channel interactions, and deciding whether to
outsource functions to channel partners. Price is the final method to redefine our position,
by determining which identity serves the company best: high price or low price, with
correlated quality implications. Tweaks in the 4 P's may change our core business.
Let’s achieve broader social goals: Goals that go beyond marketing are human
resource, finance, production and distribution manufacturing, and research and
development. Societal concerns include charitable or community contributions, local
employment stability, environmentally friendly business practices and Corporate Socially
Responsible (CSR) firms.
Marketing strategy links goals and tactics. Whether sales goals or
profit goals, most companies have basic growth goals. How these goals
are met through expanding the business(es) is the key issue.
The first strategy to achieve sales goals is to do nothing and let the
brand sink or swim on its own with no infusion of marketing budget. A
second strategy is to do nothing differently from the status quo and
maintain business as usual offering the same product at the same
pricing with the same amount of marketing support. The third strategy
is do something differently and take action because marketers do have
control over STP and the 4 P's.
