Introduction to Marketing

1. Segmentation
   1. indentify bases for segmenting the market
   2. develop profiles of resulting segments
2. Targeting
   1. identify segment attractiveness
   2. select the target segment(s)
3. Positioning
   1. develop positioning strategy for each target segment
   2. formulat the guidelindes for all marketing-mix activities

• Geographic (nations, states, regions,...)
• Socio-demographic (age, gender, religion, race, income,...) => largely available, but might be misleading (deomgraphic twins)
• psychographic (social class, lifestyle, personality characteristics, needs, wants, attitudes, preferences) => these are the underlying drivers of the buying and usage behavior, but hard to optain. socio-demographic as proxy.
• benefit (eg. price-conscious segment vs. brand-conscious segment vs. qualityconscious segment.)
• behavioural variables (user status, usage rate, loyalty status,...)

1. Evaluating market segments
   1. Conducting a five-forces analysis on segment-level, including CLV concept
   2. Determine CE (customer equity) of all segments, enrich and further develop with behavioral data etc.
2. Select targeting segments
   1. Undifferentiated targeting (mass marketing
   2. differentiated (mass marketing)
   3. Concentrated (niche marketing)
   4. Micromarketing (local or individual marketing)

+ low cost, reach a lot of people, you reach whom you want to reach

- privacy concerns, people tend to ignore web adds, ad-blockers, marketing material is avialable for anoyne to copy

Perceptual maps, also known as market maps, usually have two dimensions but can be multi-dimensional; they can be used to identify gaps in the market and potential partners or merger targets as well as to clarify perceptual problems with a company's product.

Segmenting - Targetin - Positioning: can be used for positioning.

• Advertising agencies
• Media
• Packaging
• Purchasing
• Publicity
• Sales
• Market research
• Fiscal
• Legal
• R&D
• Manufacturing and distribution

• Goods (tanigble)
• Services (intangible)
• Bundles (2 or more goods combined to one offer => price is lower)
• Hybrids (combination of goods and services (eg. iPod and iTunes))
• Solutions (Combination of integrated goods and/or services (and/or software) b. Individualized, customized, Implemented, Maintained) => price is higher

Line extension (existing brand within existing product lines, eg. New Model in the Mercedes C-Class)

Brand extension (existing brand with new product, eg. new nivea deo)

Multibranding (new brand within existing product line, eg. various beer brand of a brewery)

Development of new brands and lines (new brand and new product line, eg. Lexus of Toyota)

Individual brand (eg. brands of P&G like Ariel, Pampers, Bounty, ...)

Family brand (eg. Nivea, Ricola)

Branded house (eg. Apple, Sony)

House of brands (eg. P&G, UniLever)

Brand transfer (eg. Swatch)

Co-branding (Bonne Belle & Dr. Pepper: Flavored Lip Balm)

Incremental innovation (VW Golf 4 => Golf 5)

Market breakthrough (Selfie-sticks)

Technological break through (Seagway)

Radical innovation (www)

• Data

• Attention

• Network value

• Co-production

• Word-of-mouth

• (future) transactions or revenues

1. Cost based pricing: Product => Costs => Price => Value => Customers
2. Value-based pricing: Customers => Value => Price => Costs => Product
3. competition-base pricing

Skimming: Price starts at high levels an then decreases (eg. iPhone)

Penetration: Price starts at low level an then increases (eg. Adobe)

First degree: Individual price for each customer, Price equals each customer‘s willingness to pay, Perfect price discrimination with skimming the whole consumer‘s, surplus.

Second degree: Individual price for different customer segments, but customer decides in which segment he is (eg. SBB 1/2-Tax)

Third degree: Individual price for different customer segments, customer can not decide in which segment he is (Mensa)

1. Acquire the preference scores of products
2. Compute the average score for each attribute level (eg. 9+2+4=5 for 1GB, 1+4=2.5 for 10GB): \(AS_k= \frac {\sum U_i}{| M_K|}\)
3. Compute the part worh for each attribute level (normalize to [0,1]) \(PW_k=\frac{AS_k-minAS} {maxAS-minAS}\) max and min AS of ALL average scores!
4. Compute raw importance for each attribute \(RI_j=maxPW-minPW\) = span of the attribute level (eg. for data volume we have max 0.57 and min 0.27 => RI = 0.3
5. Compute the relative importance for each attribute: \(PI_j=\frac {RI_j}{\sum RI_p}\cdot 100percent\)

• Product
  • Product variety
  • Quality
  • Design
  • Features
  • Brand name
  • Packaging, Size
  • Services, Warranties, Returns
• Price
  • List price
  • Discounts, Allowances
  • Payment period
  • Credit terms
• Promotion
  • Advertisement
  • Personal selling
  • Sales promotion
  • Public relations
• Place
  • Channels
  • Coverage
  • Assortment
  • Locations
  • Inventory
  • Transportation
  • Logistics

• People
  • Employees
  • Customers
  • Communication calture and value
  • Employee research
• Physical Evidence
  • Facility Design
  • Equipment
  • Signage
  • Employee Dress
  • Other tangibles
• Processes
  • Flow of activities
  • Number of steps
  • Level of costumer involvement

«Customer relationship management (CRM) is the process of building and

maintaining profitable customer relationship by delivering superior customer value

and satisfaction.»

Recruitment/Relations, Retention, Referrals and Recovery

\(CLV_j=\displaystyle\sum^{T}_{t=0} \frac {v \cdot p} { (1+i)^t}\)

\(CE=\sum CLV\)

• Increase relationship length
  • o Loyalty programs
  • o Loyalty management (satisfaction, trust, repurchase intention)
  • o Create customer lock in (eg. Nespresso)
• Increase relationship breadth
  • o Cross-buying efforts (=> next product to buy models)
• Increase relationship depth
  • o Increase purchase frequency or accelerate purchase
  • o Increase purchase value (stimulate upgrades)
• Increase Word of Mouth
  • o Customer Satisfaction
  • o Customer Excitement, Customer Experience, Customer Involvement
  • o Abnormal campaigns, social media, communities
• Reduce per-customer costs
  • o Migrate to self-service
  • o (selectively) charge service fee (eg. SWISS)
  • o Customer service communities

Impulsive: low involvement (chocolate at check-out)

Habitual: low involvement (toilet paper)

Limited: medium involvement (restaurant selection)

Extensive high involvement (holidays)

High and low involvement decisions. High involvement goes via the central route, low via the peripheral route. 

For low involvement advertising, repetition is important. Short message,

easy to memorize. Consumers are not interested and willing to process

information actively.

› For high involvement advertising, people really thing about their decision,

processed actively, needs strong arguments. Consumers are interested

and willing to process advertising messages (as well as other information)

actively

Need recognition => Information search => Evaluation of alternatives => Purchase decisions => Postpurchase cognitions

An attitude is a lasting, general evaluation of people (including oneself), objects, advertisements, or issues

ABC Model:

Affect: how a consumer feels about an object
Behaviour refers to the consumer’s intentions to take action
Cognition what the consumer believes to be true about the attitude object

Attitudes are not always consistent with behaviour => Intention-behaviour gap.

• Behaviour
  • Depends on motivation (intention) and ability (behavioural control)
• Intention
  • Cognitive representation of a person's readiness to perform a given behaviour
  • Indicates how hard people are willing to try in order to perform the behaviour
  • Determined by attitude toward behaviour, subjective norms, perceived behavioural control

• Decompositional

• Price as product feature

• Statistical technique for transforming rankings into utility

• Experimental design

• Fill out a questionnaire

• Compositional

• Price typically disregarded

• Psychological theory behind attitude measurement

• Descriptive research design

• Importance of attributes could either be inferred by using statistical techniques, or directly asked for

• Give priorities