Introduction to Marketing

\(CE=\sum CLV\)

• 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

+

• Trade-off between characteristics
• Trade-off for price vs. quality
• Attitudes for each customer, good information for benefit segmentation

-

• Expertise needed in designing and analysing research project
• Cost-intensive

+

• Simple, easy to use
• A lot of information can be collected
• Relatively easy to analyse

-

• No trade-offs made
• Relative importance, if directly asked for, likely to be inflated (does not cost)

• Focus groups (more short-term, relevant for testing new products in early

stages)

• In-depth interviews (more short-term, relevant for developing new product

ideas)

• Delphi method (more long-term, relevant for understanding long-term

changes, often technology-induced)

• Weak-signal research (more long-term, relevant for predictions about

uncertain future developments)

• Exploratory research design:
  • generates first insight, deepen understanding of a problem, and clarifies issues from quantitative research
  • no statistical tests.
• Descriptive research design:
  • describes the population as it is, includes large set of variables
  • statistical tests
  • Cross-sectional (time-related change of different groups, eg. survey ofgraduate students) <=> longitudinal design (change within the same group over time).
• Experimental research design
  • measures causal effect of independent on dependent variables
  • statistical tests
  • Quasi-experiment: lack of random assignment of treatment group
  • Main characteristics: experimental manipulation, randomisation across treatment groups

1. X and Y must occur/vary together

2. time order: the causing event cannot occur after the effect

3. absence of other possible causing factors

A deeply held commitment to rebuy or repatronise a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behaviour.

Based on one single question:

How likely is it that you would recommend our company/product/service to a friend or colleague? Normally with a score from 0 to 10.

All of them can be measured Attitudinal (What you intend to do, eg. from Survey) or Behavioural (what I really do, Self-Reported in Survey, From Customer Database)

• Retention (no cancelling the contract, buying again)
• Purchase frequency
• Cross-buying (buying other products from the same supplier)
• Up-buying (upgrade your product, eg. business instead of economy class)
• Word-of-mouth (tell friends)
• Complaining

• forward looking, feature oriented (predictions are needed)
• customer retention directly or indirectly considered
• varying degree of customer cash-flow directly or indirectly considered
• customer relationship viewed as investment or asset (links marketing to finance)

Non-contractual: varying degree of cashflow directly, customer retention indirectly considered

Contractual: varying degree of cashflow indirectly considered, customer retention directly considered

• Customer Satisfaction, Attitude, Trust, Perceived Value
• Loyalty programs
• Loyalty management (satisfaction, trust, repurchase intention)

• Customer Satisfaction, Attitude, Trust, Perceived Value
• Cross-buying efforts (=> "next product to buy" models)

• Customer Satisfaction, Attitude, Trust, Perceived Value
• Increase purchase frequency or accelerate purchase
• Increase purchase value (stimulate upgrades)

• Migrate to self-service
• (selectively) charge service fee

• Market segmentation
  • Dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour, who might require separate products and Marketing-Mixes.
• Targeting
  • The process of identifying each market segment's attractiveness and selecting one or more segments to enter.
• Positioning
  • Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers.

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)