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Business Markets
3. Global Markets
Marketing-about identifying and meeting human and 4. Nonprofit and Governmental Markets
social needs
-meeting needs profitably
-the activity, set of institutions, and processes for
crating, communicating, delivering and exchanging Metamarket-a cluster of complementary products and
offerings that have value for customers, clients, services closely related in the minds of consumers, but
partners and society at large spread across a diverse set of industries

Marketing Management-the art and science of Metamediaries

choosing target markets and getting, keeping and
Core Marketing Concepts
growing customers through creating, delivering and
communicating superior customer value 1. Needs, Wants, Demands
Needs-basic human requirement
-deliver a high standard of living
Wants when they are directed to specific
-the art of selling products objects that might satisfy the needs
Demands-wants for specific products backed
Marketers market 10 types of entities by an ability to pay

1. Goods 5 types of need:

2. Services 1. stated needs
3. Events 2. real needs
4. Experiences 3. unstated needs
5. Persons 4. delight needs
6. Places 5. secret needs
7. Properties
8. Organizations 2. Target markets, Positioning, Segmentation
9. Information 3. Offerings and Brands
10. Ideas Value proposition-a set of benefits that
satisfy those needs (intangible value
Marketer-someone who seeks a responseattention,
a purchase, a vote, a donation from another party, Brand-an offering from a known source
called the prospect 4. Value and Satisfaction
Customer value triad: quality, service and
8 demand states
price (qsp)
1. Negative demand-dislike the product and Marketing-the identification, creation,
may even pay to avoid it communication, delivery and monitoring of
2. Non-existent demand-may be unaware of or customer value
uninterested in the product Satisfaction-reflects a persons judgment of a
3. Latent demand-may share a strong need that products perceived performance in
cannot be satisfied by and existing product relationship to expectations
4. Declining demand-begin to buy the product 5. Marketing Channels
less frequently or not at all -communication channels, dialogue channels,
5. Irregular demand-purchases vary on distribution channels, service channels
seasonal, monthly, weekly, daily or even hourly 6. Supply Chain
basis -a longer channel stretching from raw materials
6. Full demand-adequately buying all products to components to finished products carried to
put into the marketplace final buyers
7. Overfull demand-more consumers would like 7. Competition
to buy the product that can be satisfied 8. Marketing Environment
8. Unwholesome demand-may be attracted to -task environment
products that have undesirable social -6 components broad environment:
1. demographic environment
2. economic environment
*they view sellers as constituting the industry and 3. social-cultural environment
buyers as constituting the market 4. natural environment
5. technological environment
(need markets, product markets, demographic 6. political-legal environment
markets, geographic markets, voter markets, labor
The New Marketing Realities
markets, donor markets)
1. Network Information Technology
Key Customer Markets
2. Globalization
1. Consumer Markets 3. Deregulation
4. Privatization
5. Heightened competition 4 broad components characterizing holistic marketing
6. Industry convergence
7. Retail transformation 1. Relationship Marketing-to build mutually
8. Disintermediation satisfying long-term relationships with key
9. Consumer buying power constituents in order to earn and retain their
10. Consumer Information business
11. Consumer Participation 4 key constituents for relationship marketing
12. Consumer resistance 1. customers
2. employees
New Company Capabilities 3. marketing partners
4. members of the financial community
1. Marketers can use the Internet as a powerful Marketing network-consisting of the
information and sales channel company and its supporting stakeholders with
2. Marketers can collect fuller and richer
whom it has built mutually profitable business
information about markets, customers,
prospects, and competitors (customer retention, customer relationship
3. Marketers can tap into social media to amplify
management (CRM), partner relationship
their brand message
management (PRM))
4. Marketers can facilitate and speed external
2. Integrated Marketing-occurs when the
communication among customers
marketer devises marketing activities and
5. Marketers can send ads, coupons, samples and
assembles marketing programs to create,
information to customers who have requested
communicate and deliver value for consumers
them or given the company permission to send
such that the whole is greater than the sum of
its parts
6. Marketers can reach consumers on the move
3. Internal Marketing-an element of holistic
with mobile marketing
marketing, the task of hiring, training, and
7. Companies can make and sell individually
motivating able employees who want to serve
differentiated goods
customers well
8. Companies can improve purchasing, recruiting,
4. Performance Marketing-requires
training and internal and external
understanding the financial and nonfinancial
returns to business and society from marketing
9. Companies can facilitate and speed up internal
activities and programs
communication among their employees by
-financial accountability
using the Internet as a private intranet
-social responsibility marketing
10. Companies can improve their cost efficiency by
skilful use of the internet Updating the 4 Ps
Marketing in Practice 1. Product
2. Price
*Turbulence is the new normal, punctuated by periodic
3. Place
and intermittent spurts of prosperity and downturn 4. Promotion
including extended downturns amounting to recession
or even depression Modern Marketing Realities:

1. Production Concept-holds that consumers prefer 1. People-employees, consumers

products that are widely available and inexpensive 2. Processes-refers all the creativity, discipline,
and structure brought to marketing
2. Product Concept-consumers favour products management
offering the most quality, performance, or innovative 3. Program-all the firms consumer-directed
feature activities
4. Performance
3. Selling Concept-consumers and businesses, if left
alone, wont buy enough of the organizations products Marketing Management Tasks
4. Marketing Concept-a customer-centered, sense- 1. Developing Marketing Strategies and plans
and-respond philosophy 2. Capturing marketing insights
3. Connecting with customers
-the job is to find the right customers for your products, 4. Building strong brands
but the right products for you customers 5. Shaping the market offerings
6. Delivering value
*selling focuses on the needs of the seller, marketing 7. Communicating value
on the needs of the buyer 8. Creating successful long-term growth
5. Holistic Marketing Concept-based on the CH. 2 DEVELOPING MARKETING STRATGIES AND PLANS
development, design, and implementation of marketing
programs, processes and activities that recognize their Value chain-a tool for identifying ways to create more
breadth and interdependencies customer value
5 primary activities Marketers must give priority to strategic planning in 3
key areas
1. Inbound logistics-bringing materials into the
business 1. Managing a companys businesses as an
2. Operations-converting materials into final investment portfolio
products 2. Assessing each businesss strength by
3. Outbound logistics-shipping out final considering the markets growth rate and the
products companys position and fit in that market
4. Marketing includes sales 3. Establishing a strategy
5. Service
4 organizational levels:
4 support activities
1. Corporate
1. procurement 2. Division
2. technology development 3. business unit
3. human resource management 4. Product
4. firm infrastructure
Marketing Plan-the central instrument for directing
Core business processes: and coordinating the marketing effort
1. Market-sensing process-all the activities in 2 levels:
gathering and acting upon information about
the market 1. Strategic marketing plan-lays out the target
2. New-offering realization process-all the markets and the firms value proposition, based
activities in researching, developing, and on n analysis of the best market opportunities
launching new high-quality offerings quickly 2. Tactical marketing plan-specifies the
and within budget marketing tactics, including product features,
3. Customer acquisition process-all the promotion, merchandising, pricing, sales
activities in defining target markets and channels and service
prospecting for new customers
4. Customer relationship management Corporate and Division Strategic Planning
process-all the activities in building deeper All corporate headquarters undertake 4 planning
understanding, relationships and offerings to activities:
individual customers
5. Fulfilment management process-all the 1. Defining the corporate mission
activities in receiving and approving orders, 2. Establishing strategic business units
shipping the goods on time and collecting 3. Assigning resources to each strategic business
payments unit
4. Assessing growth opportunities
Core competencies
Defining the corporate mission
3 characteristics:
5 major characteristics of good mission statements
1. It is a source of competitive advantage and
makes a significant contribution to perceived 1. They focus on a limited number of goals
customer benefits 2. They stress the companys major policies and
2. It has applications in a wide variety of markets values
3. It is difficult for competitors to imitate 3. They define the major competitive spheres
within which the company will operate
Business realignment 4. They take a long-term view
5. They are as short, memorable and meaningful
3 steps:
as possible
1. Redefining the business concept or big idea
Vertical sphere-the number of channel levels, from
2. Reshaping the business scope
raw material to final product and distribution, in which
3. Repositioning the companys brand identity
a company will participate
Holistic marketers address 3 key management
Establishing strategic business units
Market definitions-describe the business as a
1. Value exploration-how a company identifies
customer-satisfying process
new value opportunities
2. Value creation-how a company efficiently Target market definition-focus on selling a product
creates more promising new value offerings or service to a current market
3. Value delivery-how a company uses its
capabilities and infrastructure to deliver the Strategic market definition-focuses on the potential
new value offerings more efficiently market

The Central Role of Strategic Planning A business can define itself in terms of 3 dimensions
1. Customer groups Corporate culture-the shared experiences, stories,
2. Customer needs beliefs, and norms that characterize an organization
3. Technology

3 characteristics of strategic business units (SBUs)

Marketing Innovation
1. It is a single business, or a collection of related
businesses, that can be planned separately *Senior management should identify and encourage
from the rest of the company fresh ideas from 3 underrepresented groups:
2. It has its own set of competitors
3. It has a manager responsible for strategic 1. employees with youthful or diverse perspectives
planning and profit performance, who controls 2. Employees far removed from company headquarters
most of the factors affecting profit
3. employees new to the industry
Assigning Resources to Each SBU
Scenario analysis-which develops plausible
*The GE/McKinsey Matrix classifies each SBU by the representations of a firms possible future using
extent of its competitive advantage and the assumptions about forces driving the market and
attractiveness of its industry different uncertainties
*BCGs Growth-Share Matrix uses relative market share The 12 Dimensions of Business Innovation
and annual rate of market growth as criteria to make
investment decisions, classifying SBUs as dogs, cash 1. Offerings (What)-develop innovative new
cows, question marks and stars products or services
2. Platform-use common components or building
Assessing Growth Opportunities blocks to create derivative offerings
3. Solutions-create integrated and customized
How can it fill the strategic-planning gap?
offerings that solve end-to-end customer
1. To identify opportunities for growth within problems
current businesses (intensive opportunities) 4. Customers (Who)-discover unmet customer
2. To identify opportunities to build or acquire needs or identify underserved customer
businesses related to current businesses segments
(integrative opportunities) 5. Customer Experience-redesign customer
3. To identify opportunities to add attractive interactions across all touch points and all
unrelated businesses (diversification moments of contact
opportunities) 6. Value Capture-redefine how company gets
paid or create innovative new revenue streams
INTENSIVE GROWTH 7. Process (HOW)-redesign core operating
processes to improve efficiency and
product-market expansion grid effectiveness
8. Organization-change form, function, or
1. Market-penetration strategy-
activity scope of the firm
whether it could gain more market
9. Supply Chain-think differently about sourcing
share with its current products in their
and fulfilment
current markets 10. Presence (Where)-create new distribution
2. Market-development strategy-
channels or innovative points of presence,
whether it can find or develop new
including the places where offerings can be
markets for its current products
bought or used by customers
3. Product-development strategy-
11. Networking-create network-centric intelligent
whether it can develop new products of
and integrated offerings
potential interest to its current market 12. Brand-leverage a brand into new domains
4. Diversification strategy-review
opportunities to develop new products Business Unit Strategic Planning Process
for new markets
1. Concentric strategy 2. SWOT ANALYSIS
2. Horizontal strategy 3. Goal Formulation
4. Strategy Formulation
BUSINESES 6. Implementation
7. Feedback and Control
Organization and Organizational Culture
SWOT Analysis
Organization-consists of its structures, policies and
corporate culture, all of which can become External Environment Opportunity and Threat Analysis
dysfunctional in a rapidly changing business
environment (macroenvironment forces, microenvironment forces)
Marketing opportunity-an area of buyer need and 2. Objectives should be quantitative whenever
interest that a company has a high probability of possible
profitably satisfying 3. Goals should be realistic
4. Objectives must be consistent
3 main sources of market opportunities
Strategic Formulation
1. Offer something that is in short supply
2. Supply an existing product or service in a new Strategy-a game plan for getting there
superior way
Ideal method-an ideal version of the product (marketing, technology, sourcing strategy)
or service
Porters Generic Strategies
Consumption chain method-asks them to
chart their steps in acquiring , using and 1. Overall cost leadership
disposing of a product 2. Differentiation
3. Totally new product or service 3. Focus
Marketers need to be good at spotting opportunities Strategic group-firms directing the same strategy to
the same target market
1. A company may benefit from converging
industry trends and introduce hybrid products Operationally effective-using benchmarking and
or services that are new to the market other tools
2. A company may make a buying process more
convenient or efficient Strategy-the creation of a unique and valuable
3. A company can meet the need for more position involving a different set of activities
information and advice
4. A company can customize a product or service -performs different activities from rivals or performs
5. A company can introduce a new capability similar activities in different ways
6. A company may be able to deliver a product or
4 major categories of strategic alliances (marketing
service faster
7. A company may be able to offer a product at a alliances)
much lower price 1. Product or service alliances-one company
Market Opportunity Analysis (MOA) licenses another to produce its product, or two
companies jointly market their complementary
1. Can we articulate the benefits convincingly to a products or a new product
defined target market 2. Promotional alliances-one company agrees
2. Can we locate the target market and reach to carry a promotion for another companys
them with cost-effective media and trade product or service
channels 3. Logistics alliances-one company offers
3. Does our company possess or have access to logistical services for another companys
the critical capabilities and resources we need product
to deliver the customer benefits 4. Pricing collaborations-one or more
4. Can we deliver the benefits better than any companies join in a special pricing
actual or potential competitors collaboration
5. Will the financial rate of return meet or exceed
our required threshold for investment Partner Relationship Management (PRM)-the
ability to form and manage partnerships as core skills
Environmental threat-a challenge posed by an
unfavourable trend or development that, in the Program Formulation and implementation
absence of defensive marketing action, would lead to
Hardware of success
lower sales or profit
1. Strategy
Internal Environment Strengths and Weaknesses 2. Structure
Analysis 3. systems
Goal Formulation Software of success
Goal formulation-developing specific goals for the 1. style-company employees share a common
planning period way of thinking and behaving
2. skills-employees have the skills needed to
Goals-objective that are specific with respect to
carry out the companys strategy
magnitude and time
3. staff-the company has hired able people,
Manages by objective (MBO) trained them well, and assigned them to the
right jobs
4 criteria the units objectives must meet 4. shared values-employees share the same
guiding values
1. They must be arranged hierarchically, from
most to least important Feedback and Control
Product Planning: The nature and Contents of a 4. Income
Marketing Plan 5. Generation
-Millennials/Gen Y
Marketing plan-a written document that summarizes -Gen X
what the marketer has learned about the marketplace -Baby Boomers
and indicates how the firm plans to reach its marketing -Silent Generation
Different approaches to persuade Gen Y
-contains tactical guidelines for the marketing 1. Online buzz
programs and financial allocations over the planning 2. Student ambassadors
period 3. Unconventional sports
4. Cool events
-provides direction and focus for a brand, product, or 5. Computer games
company 6. Videos
7. Street teams
-documents how the organization will achieve its 3. Race and Culture
strategic objectives through specific marketing Multicultural Marketing
strategies and tactics, with the customer as the 4. Psychographic Segmentation-the science of
starting point using psychology and demographics to better
understand consumers
A marketing plan usually contains the following -buyers are divided into different groups on the
sections basis of psychological/personality traits,
lifestyle or values
1. Executive summary and table of contents
The main dimensions of the VALS segmentation
2. Situation analysis
1. Consumer motivation (horizontal
3. Marketing Strategy
4. Financial projections dimension)
Risk analysis-we obtain 3 estimates 2. Consumer resources (vertical dimension)
(optimistic, pessimistic and most likely) for 3 primary motivation of consumers
each uncertain variable affecting profitability,
under an assumed marketing environment and 1. Ideals-guided by knowledge and principles
marketing strategy for the planning period 2. Achievement demonstrate success to their
5. Implementation controls peers
3. Self-expression-desire social or physical
activity, variety and risk

The 4 groups with higher resources

1. Innovators
2. Thinkers
3. Achievers
4. Experiencers

CH. 8 IDENTIFYING MARKET SEGMENTS AND TARGETS The 4 groups with lower resources

Market Segment-consists of a group of customers 1. Believers

who share a similar set of needs and wants 2. Strivers
3. Makers
Task: to identify the appropriate number and nature of 4. Survivors
market segments and decide which one to target 5. Behavioral Segmentation
6 different benefit segments
Bases for Segmenting Consumer Markets 1. Enthusiast
2. Image seekers
1. Geographic Segmentation-divides the 3. Savvy shoppers
market into geographical units such as nations, 4. Traditionalist
states, regions, countries, cities or 5. Satisfied sippers
neighborhoods 6. Overwhelmed
Grassrooting marketing-activities
concentrate on getting as close and personally 5 roles in a buying decision
relevant to individual customers as possible 1. Initiator
2. Demographic Segmentation 2. Inflluencer
1. Age and Life-Cycle Stage 3. Decider
2. Life Stage-a persons major concerns, 4. Buyer
such as going through a divorce, going into 5. User
a second marriage, taking care of an older
parent, deciding to cohabit with another User and Usage---Real User and Usage-
person deciding to buy a new home Related Variables
3. Gender 1. User Status
-every product has its nonusers, ex- 5. Actionable-effective programs can be
users, potential users, first-time users formulate for attracting and serving the
and regular users segments
2. Usage Rate
-light, medium, and heavy product Steps in the Segmentation Process
3. Buyer-Readiness Stage 1. Needs-based segmentation-group
-unaware, aware, informed, interested, customers into segments based on similar
desire, intend to buy needs and benefits sought by customers in
4. Loyalty Status solving a particular consumption problem
1. Hard-core loyals-consumers who 2. Segment identification-for each needs-
buy only one brand all the time based segment, determine which
2. Split loyals-consumers who are demographics, lifestyles, and usage behaviors
loyal to 2 or 3 brands make the segment distinct and identifiable
3. Shifting loyals-consumers who (actionable)
shift loyalty from one brand to 3. Segment attractiveness-using
another predetermined segment attractiveness criteria
4. Switchers-consumers who show (such as market growth, competitive intensity
no loyalty to any brand and market access), determine the overall
5. Attitude-enthusiastic, positive, attractiveness of each segment
indifferent, negative and hostile 4. Segment profitability-determine segment
6. Multiple Bases profitability
-combining different behavioural bases 5. Segment positioning-for each segment,
can provide a more comprehensive and create a value proposition and product-price
cohesive view of a market and its positioning strategy based on that segments
segments unique customer needs and characteristics
6. Segment acid test-create segment
3 main types of New Luxury Products: storyboard to test the attractiveness of each
segment s positioning strategy
1. Accessible superpremium products 7. Marketing-mix strategy-expand segment
2. Old Luxury brand extensions
positioning strategy to include all aspects of
3. Masstige goods
the marketing mix: product, price, promotion
*Business marketers generally identify segments and place
through a sequential process
Michael Porter- 5 Forces that Determine the intrinsic
Flexible Market Offering long-run attractiveness of a market or a market
1. Naked Solution---containing the product and
service elements that all segment members 1. Threat of intense segment rivalry
value 2. Threat of new entrants
2. Discretionary Options---some segment 3. Threat of substitute products
members value 4. Threat of buyers growing bargaining power
-Buyers bargaining power grows when they
Major Segmentation Variables for Business Markets become more concentrated or organized, when
the product represents a significant fraction of
1. Demographic their costs, when the product is
2. Operating Variables undifferentiated, when buyers switching costs
3. Purchasing Approaches are low, when buyers are price-sensitive
4. Situational Factors because of low profits or when they can
5. Personal Characteristics
integrate upstream
Market Targeting 5. Threat of suppliers growing bargaining power

Effective Segmentation Criteria Evaluating and Selecting the Market Segments

1. Measurable-the size, purchasing power and (2 factors to look at: segments overall
characteristics of the segments can be attractiveness; companys objectives and resources
measured 1. Full Market Coverage-a firm attempts to
2. Substantial-the segments are large and
serve all customer groups with all the products
profitable enough to serve
they might need
3. Accessible-the segments can be effectively
Undifferentiated/mass marketing-the firm
reached and served
ignores segment differences and goes after the
4. Differentiable-segments are conceptually
whole market with one offer
distinguishable and respond differently to
-when consumers have roughly the same
different marketing-mix elements and
Differentiated marketing-the frim sells Reference groups-all the groups that
different products to all the different segments have a direct (face-to-face) or indirect
of the market influence on their attitudes or behavior
*Differentiated marketing typically creates Membership groups-groups having a
more total sales than undifferentiated direct influence
marketing (higher costs, higher sales) Primary groups-with whom the person
interacts fairly continuously and informally,
2. Multiple Segment Specialization such as family, friends, neighbors, and
Selective specialization-firm selects a subset coworkers
of all the possible segments, each objectively Secondary groups-religious, professional,
attractive and appropriate and trade-union groups, which tend to be
Supersegment-a set of segments sharing more formal and require less continuous
some exploitable similarity interaction
Product specialization-firm sells a certain Reference groups influence members in at
product to several different market segments least 3 ways
Market specialization-firm concentrates on 1. They expose an individual to new
serving many needs of a particular customer behaviors and lifestyles
group 2. They influence attitudes and self-
3. Single-Segment Concentration-the firm concept
markets to only one particular segment 3. They create pressures for conformity
-firm gains deep knowledge of the segments that may affect product and brand
needs and achieves a strong market presence, choices
enjoys operating economies by specializing its Aspirational groups-those a person
production, distribution and promotion hopes to join
Niche-a more narrowly defined customer group Dissociative groups-those whose values
seeking a distinctive mix of benefits within a or behavior an individual rejects
segment Opinion leader-the person who offers
4. Individual Marketing-segments of one, informal advice or information about a
customized marketing, one-to-one marketing specific product or product category, such
Customerization-combines operationally as which of several brands is best or how a
driven mass customization with customized particular product may be used
marketing in a way that empowers consumers 2. Family
to design the product and service offering of 2 families in the buyers life
their choice 1. Family of orientation-consists of
5. Ethical Choice of Market Targets parents and siblings
2. Family of procreation-the persons
spouse and children
CH. 6 ANALYZING CONSUMER MARKETS *Direct influence describes childrens hints
Aim of marketing: to meet and satisfy target *Indirect influence means that parents
customers needs and wants know the brands, product choices, and
preferences of their children without hints
What Influences Consumer Behavior?
or outright requests
Consumer behavior-the study of how individuals,
3. Roles and Status
groups, and organizations select, buy, use and dispose
Role-activities a person is expected to
of goods, services, ideas, or experiences to satisfy their
needs and wants Status-each role in turn connotes a status
1. Cultural Factors 3. Personal Factors
Culture-the fundamental determinant of a 1. Age and Stage in the Life Cycle
a. Family life cycle-the number, age
persons wants and behavior
Subculture-provide more specific and gender of people in the
identification and socialization for their household
b. Psychological life-cycle-passages,
-nationalities, religions, racial groups, transformations
c. Critical life events/transitions-
geographic regions
Social classes-relatively homogeneous and marriage, childbirth, illness,
enduring divisions in a society, hierarchically relocation, divorce, first job, career
ordered and with members who share similar change, retirement, death of a
values, interests, and behavior spouse
(lower lowers, upper lowers, working class, 2. Personality and Self Concept
Personality-a set of distinguishing human
middle class, upper middles, lower uppers,
psychological traits that lead to relatively
upper uppers)
2. Social Factors consistent and enduring responses to
1. Reference Groups
environmental stimuli (including buying c. Herzbergs Theory
behavior) -two-factor theory: dissatisfiers-
Brand personality-the specific mix of factors that cause dissatisfaction
human traits that we can attribute to a Satisfiers-factors that cause
particular brand satisfaction
1. Sincerity (down to earth, wholesome, *sellers should do their best to avoid
cheerful) dissatisfiers
2. Excitement (daring, spirited, *the seller should identify the major
imaginative and up to date) satisfiers or motivators of purchase in
3. Competence (reliable, intelligent and the market and then supply them
successful) 2. Perception
4. Sophistication (upperclass and *In marketing, perceptions are more important
charming) than reality, because perceptions affect
5. Ruggedness (outdoorsy and charming) consumers actual behavior
Perception-the process by which we select,
Consumers often choose and use brands organize and interpret information inputs to
with a brand personality consistent create a meaningful picture of the world
Attention-the allocation of processing
1. Actual self-concept-how we view
capacity to some stimulus
ourselves 3 perceptual processes
2. Ideal self-concept-how we would like a. Selective Attention-marketers must
to view ourselves work hard to attract consumers notice
3. Others self-concept-how we think -explain which stimuli people will notice
others see us 1. People are more likely to notice
3. Lifestyle and Values stimuli that relate to a current need
Lifestyle-a persons pattern of living in the 2. People are more likely to notice
world as expressed in activities, interests, stimuli they anticipate
and opinions 3. People are more likely to notice
-portrays the whole person interacting with stimuli whose deviations are large in
his or her environment relationship to the normal size of the
Core values-the belief systems that
underlie attitudes and behaviors
-go much deeper than behavior or attitude b. Selective Distortion-the tendency to
and determine, at a basic level, peoples interpret information in a way that fits
choices and desires over the long term our preconception
4 Key Psychological Processes
c. Selective Retention-were likely to
1. Motivation (Freud, Maslow, Herzberg) remember good points about a product
Biogenic-they arise from physiological states we like and forget good points about
of tension such as hunger, thirst, or discomfort competing products
Psychogenic-they arise from psychological
states of tension such as the need for Subliminal Perception
recognition, esteem or belonging 3. Learning
Motive-when it is aroused to a sufficient level Learning-induces changes in our behavior
of intensity to drive us to act arising from experience

a. Freuds Theory *most human behavior is learned, although

-assumed the psychological forces much learning is incidental
shaping peoples behavior are largely 2 popular approaches to learning
unconscious, and that a person cannot
fully understand his or her own 1. Classical conditioning
motivation 2. Operant (instrumental) conditioning
Laddering-trace a persons
motivations from the stated Drive a strong internal stimulus impelling
instrumental ones to the more terminal action
Cues-minor stimuli that determine when,
Projective techniques: word
where, and how a person responds
association, sentence completion,
picture interpretation, role playing Discrimination-we have learned to recognize
b. Maslows Theory differences in sets of similar stimuli and can
-sought to explain why people are
adjust our responses accordingly
driven by particular times
-physiological needs, safety needs, Hedonic bias-occurs when people have a
social needs,, esteem needs, self- general tendency to attribute success to
actualization needs themselves and failure to external causes
4. Emotions Market partitioning-the process of
5. Memory identifying the hierarchy of attributes
Short-term memory (STM)a temporary and that guide consumer decision making
limited repository of information in order to understand different
Long-term memory (LTM)-a more competitive forces and how these
permanent, essentially unlimited repository various sets get formed
Associative network memory model views
LTM as a set of nodes and links 1. Brand-dominant hierarchy
Nodes-stored information connected by links 2. Nation-dominant hierarchy
that vary in strength 3. Price dominant
Brand associations-consist of all brand- 4. Brand dominant
related thoughts, feelings, perceptions, images, 5. Type/price/brand-dominant
experiences, beliefs, attitudes and so on that consumers
become linked to the brand node 6. Quality/service/type buyers
Memory encoding-describes how and where
information gets into memory 3. Evaluation of Alternatives
Memory retrieval-the way information gets *the customer is trying to satisfy a
out of memory need
1. The presence of other product information *the consumer is looking for certain
in memory can produce interference effects benefits from the product solution
and cause us to either overlook or confuse *the consumer sees each product as a
new data bundle of attributes with varying
2. The time between exposure to information abilities to deliver the benefits
and encoding has been shown generally to
Belief-a descriptive thought that a
produce only gradual decay
3. Information may be available in memory person holds about something
Attitudes-a persons enduring
but not accessible for recall without the
favorable or unfavourable evaluations,
proper retrieval cues or reminders
emotional feelings, and action
6 traits that characterize all great ideas and tendencies toward some object or idea
used the acronym SUCCESS to organize them Expectancy-value model-attitude
formation posits that consumers
1. Simple evaluate products and services by
2. Unexpected combining their brand beliefs---the
3. Concrete positives and negatives---according to
4. Credibility importance
5. Emotion
6. Stories 1. Redesign the laptop computer real
The Buying Decision Process: The Five-Stage model
2. Alter beliefs about the brand
1. Problem Recognition psychological repositioning-
2. Information Search attempting to alter beliefs about
-2 levels of engagement in the search the brand
1. heightened attention-milder 3. Alter beliefs about competitors
search state, at this level a person brands competitive
simply becomes more receptive to depositioning-when buyers
information about a product mistakenly believe a competitors
2. Active information search-looking brand has more quality than it
for reading material, phoning friends, actually has
going online, visiting stores to learn 4. Alter the importance weights
about the product 5. Call attention to neglected
4 groups information sources 6. Shift the buyers ideals
1. Personal 4. Purchase Decision
2. Commercial Noncompensatory models of consumer choice
3. Public Heuristics-rules of thumb in the decision
4. Experiential process
1. Conjunctive heuristic-the consumer sets
Successive sets involved in consumer a minimum acceptable cutoff level for each
decision making attribute and chooses the first alternative
that meets the minimum standard for all
1. Total set
2. Awareness set
2. Lexicographic heuristic-the consumer
3. Consideration set
4. Choice set chooses the best brand on the basis of its
5. Decision set perceived most important attribute
3. Elimination-by-aspects heuristic-the Peripheral cues-celebrity
consumer compares brands on an attribute endorsements, credible source, or any
selected probabilisticallywhere the object that generates positive feelings
probability of choosing an attribute is *we have low involvement with the
positively related to its importanceand most low-cost, frequently purchased
eliminates brands that do not meet products
minimum acceptable cutoffs
4 techniques to try to convert a low-
Intervening factors involvement product into one of higher
2 general factors can intervene between the i. Link the product to an
purchase intention and the purchase decision engaging issue
ii. Link the product to a personal
1. Attitudes of others situation
a. The intensity of the other persons iii. Design advertising to trigger
negative attitude toward our strong emotion related to
preferred alternative personal values or ego defense
b. Our motivation to comply with the iv. Add an important feature
other persons wishes
2. Unanticipated situational factors 2. Variety-seeking Buying Behavior
-may erupt to change the purchase
intention Behavioral Decision Theory and Behavioral Economics

Perceived risk *Many situations in which consumers make seemingly

1. Functional risk-the product does not irrational choices
perform to expectations
2. Physical risk-the product poses a 3 broad areas of behavioral economics
threat to the physical well-being or
1. Decision heuristics
health of the user or others
2. Framing
3. Financial risk-the product is not worth
3. Contextual effects
the price paid
4. Social risk-the product results in Decision Heuristics
embarrassment in front of others
5. Psychological risk-the product affects 1. Availability heuristics-consumers base their
the mental well-being of the user predictions on the quickness and ease with
6. Time risk-the failure of the product which a particular example of an outcome
results in an opportunity cost of finding comes to mind
another satisfactory product 2. Representativeness heuristics-consumers
5. Postpurhcase Behavior base their predictions on how representative or
1. Postpurchase Satisfaciton (disappointed, similar the outcome is to other examples
satisfied, delighted) 3. Anchoring and adjustment heuristics-
2. Postpurchase Actions (exit option, voice consumers arrive at an initial judgment and
option) then adjust It based on additional information
3. Postpurchase Uses and Disposal

Moderating Effects on Consumer Decision Making Decision framing-the manner in which choices are
presented to and seen by a decision maker
1. Low-involvement consumer Decision Making
Elaboration likelihood model-an influential Choice architecture-the environment in which
model of attitude formation and change, decisions are structure and buying choices are made
2 means of persuasion Mental accounting the way consumers code
a. Central route-in which attitude categorize and evaluate financial outcomes of choices
formation or change stimulates much
-the tendency to categorize funds or items of value
thought and is based on the
even though there is no logical basis for the
consumers diligent rational
consideration of the most important
product information Mental accounting is based on a set of core principles
b. Peripheral route-in which attitude
formation or change provokes much 1. Tend to segregate gains
less thought and results from the 2. Tend to integrate losses
consumers association of a brand with 3. Tend to integrate smaller losses with larger
either positive or negative peripheral gains cancellation principle
cues 4. Tend to segregate small gains from large losses
silver lining principle
Prospect theory-maintains that consumers frame Ethnographic research-a particular
their decision alternative in terms of gains and observational research approach that
losses according to a value function uses concepts and tools form
anthropology and other social science
disciplines to provide deep cultural
understanding of how people live and
Marketing insights-provide diagnostic information Goal: to immerse the researcher into
about how and why we observe certain effects in the consumers lives to uncover
marketplace, and what that means to marketers unarticulated desires that might not
surface in any other form of research
Marketing research-the systematic design, collection 2. Focus group research
analysis and reporting of data and findings relevant to Focus group-a gathering of 6 to 10
a specific marketing situation facing the company people carefully selected by
researchers based on certain
For small companies demographic, psychographic, or other
considerations and brought together to
1. Engaging students or professors to design and
discuss various topics of interest at
carry out projects
2. Using the internet
*useful exploratory step: but
3. Checking out rivals
4. Tapping into marketing partner expertise researchers must avoid generalizing
from focus-group participants to the
Marketing research firms fall into 3 categories whole market, because the sample size
is too small and the sample is not
1. Syndicated-service research firms-these drawn randomly
firms gather consumer and trade information, -allow marketers to observe how and
which they sell for a fee why consumers accept or reject
2. Custom marketing research firms-these concepts, ideas or any specific notion
firms are hired to carry out specific projects, -its still the most cost-effective,
they design the study and report the findings quickest, dirtiest way to get
3. Specialty-line marketing research firms- information in rapid time on an idea
these firms provide specialized research 3. Survey research
services, which sells field interviewing services 4. Behavioural research
to other firms -high income people dont necessarily
buy the more expensive brands,
The Marketing Research Process contrary to what they might state in
1. Define the Problem, the Decision Alternatives interviews, and many low-income
and the Research Objectives people buy some expensive brands
*not to define the problem too broadly or too 5. Experimental research
-designed to capture cause-and-effect
narrowly for the marketing researcher
*management should first spell out the relationships by eliminating competing
decisions it might face and then work backward explanations of the observed findings
*to set specific research objectives 3. Research Instruments
1. exploratory-its goal is to shed light on the Questionnaire-consists of a set of
real nature of the problem and to suggest questions presented to respondents
Closed-end questions-specify all the
possible solutions or new ideas
2. descriptive-it seeks to quantify demand possible answers and provide answers that
3. causal-its purpose is to test a cause-and- are easier to interpret and tabulate
effect relationship 1. Dichotomous-a question with 2
possible answers
2. Develop the Research Plan 2. Multiple choice-a question with 3 or
1. Data Sources more answers
Primary data-data freshly gathered for a 3. Likert scale-a statement with which
specific purpose or for a specific research the respondent shows the amount of
project agreement/disagreement
Secondary data-data that were collected 4. Sematic differential-a scale
for another purpose and already exist connecting 2 bipolar words; the
somewhere respondent selects the point that
*When the needed data dont exist or are represent his or her opinion
dated, inaccurate, incomplete or unreliable, 5. Importance scale-a scale that rates
the researcher will need to collect primary the importance of some attribute
data 6. Rating scale-a scale that rates some
2. Research Approaches attribute from poor to excellent
1. Observational research
7. Intention-to-buy scale-a scale that Tathiscope-flashes an ad to a subject
describes the respondents intention to with an exposure interval that may range from less
buy than one hundredth of a second to several seconds
Open-end questions-allow respondents
to answer in their own words and often 4. Sampling Plan
reveal more about how people think 3 dimensions:
1. Completely unstructured-a question 1. Sampling unit: Whom should we survey?
that respondents can answer in an 2. Sample size: How many people should
almost unlimited number of ways we survey?
2. Word association-words are 3. Sampling procedure: How should we
presented one at a time, and choose the respondents?
respondents mention the first word that
5. Contact Methods
comes to mind
1. Mail Contacts
3. Sentence completion-an incomplete
Mail questionnaire-one way to reach
sentence is presented and respondents
people who would not give personal
are asked to complete it
interviews or whose responses might
4. Story completion-an incomplete story
be biased or distorted by the
is presented, and respondents are
asked to complete it
-the response rate is usually low or
5. Picture-a picture of 2 characters is
presented, with one making a
2. Telephone Contacts
statement; respondents are asked to
Telephone interviewing-gathering
identify with the other and fill in the
information quickly, interviews must be
empty balloon
brief and not too personal
6. Thematic apperception test (TAT)-a
3. Personal Contacts
picture is presented and respondents Personal interviewing-the most
are asked to make up a story about versatile method
what they think is happening or may -the most expansive method is subject
happen in the picture to interviewer bias, and the requires
Qualitative research techniques-are more administrative planning and
relatively unstructured measurement supervision
approaches that permit a range of possible Arranged interviews-marketers
responses contact respondents for an
1. word association-ask subjects what appointment and often offer a small
words come to mind when they hear payment or incentive
the brands name Intercept interview-researchers stop
2. projective techniques-give people an people at a shopping mall or busy
incomplete stimulus and ask them to street corner and request an interview
complete it, or give them an on the spot; nonprobability samples
ambiguous stimulus and ask them to 4. Online Contacts
make sense of it Advantages
3. visualization-requires people to 1. Online research is inexpensive
create a collage from magazine photos 2. Online research is fast
or drawings to depict their perception 3. People tend to be honest and
4. brand personification-ask subjects thoughtful online
what kind of person they think of when 4. Online research is versatile
the brand is mentioned: If the brand Disadvantages
were to come alive as a person, what 1. Samples can be small and skewed
would it be like, what would it do, 2. Online panels and communities can
where would it live, what would it wear, suffer from excessive turnover
who would it talk to if it went to a party 3. Online market research can suffer
(and what would it talk about) from technological problems and
5. laddering-a series of increasingly inconsistencies
more specific why questions can 3. Collect the Information
reveal consumer motivation and *data collection phase of marketing research is
consumers deeper, more abstract generally the most expensive and the most
goals prone to error
-attribute, functional benefit, emotional 4 major problems arise in surveys
benefit, brand essence 1. Some respondents will be away from home
or otherwise inaccessible and must be
Technological devices contacted again or replaced
2. Other respondents will refuse to cooperate
Galvanometers-can measure the 3. Still others will give biased or dishonest
interest or emotions aroused by exposure to a specific answers
ad or picture
4. Some interviewers will be biased or -generally fails to incorporate metrics related to
dishonest competitors, the trade or the sales force
4. Analyze the Information
5. Present the Findings Marketing Dashboards
6. Make the Decision
Marketing dashboard-a summary set of
Personas-detailed profiles of one, or perhaps a few, relevant internal and external measures for
hypothetical target market consumers, imagined in synthesis and interpretation
terms of demographic psychographic, geographic, or
other descriptive attitudinal or behavioural -like the instrument panel in a car or plane,
visually displaying real-time indicators to
creativity information ensure proper functioning

7 characteristics of Good Marketing Research 2 key market-based score-cards that reflect

performance and provide possibly early
1. Scientific method warning signals
2. Research
3. Multiple methods 1. Customer-performance scorecard-
4. Interdependence of models and data records how well the company is doing
5. Value and cost of information year after year on such customer-based
6. Healthy scepticism measures
7. Ethical marketing 2. Stakeholder=performance scorecard-
tracks the satisfaction of various
Measuring Marketing Productivity
constituencies who have a critical interest
Marketing Metrics in and impact on the companys
performance: employees, suppliers, banks,
Marketing metrics-the set of measures that distributors, retailers and stockholders
helps them quantify, compare, and interpret
their marketing performance 4 common measurement pathways
marketers are pursuing today
1. Customer metrics pathway-looks at how
1. Short-term results-often reflect profit- prospects become customers, from
and-loss concerns as shown by sales awareness to preference to trial to repeat
turnover, shareholder value, or some purchase or some less linear model
combination of the two (customer experience)
2. Changes in brand equity-customer 2. Unit metrics pathway-reflects what
awareness, attitudes, and behaviors, marketers know about sales of
market share, relative price premium, product/service unitshow much is sold by
number of complaints, distribution and product line and/or by geography, the
availability, total number of customers, marketing cost per unit sold as an
perceived quality and loyalty and retention efficiency yardstick, and where and how
margin is optimized in terms of
Marketing-Mix Modeling characteristics of the product line or
Marketing accountability-means that distribution channel
3. cash-flow metrics pathway-focuses on
marketers must more precisely estimate the
how well marketing expenditures are
effects of different marketing investments
achieving short-term returns
Marketing-mix models-analyze data from a 4. brand metrics pathway-tracks the
variety of sources, such as retailer scanner development of the longer-term impact of
data, company shipment data, pricing, media marketing through brand equity measures
and promotion spending data, to understand that asses both the perceptual health of
more precisely the effects of specific marketing the brand from customer and prospective
activities customer perspectives as well as the
overall financial health of the brand
-focuses on incremental growth instead of
baseline sales or long-term effects