All can be tied to something all are linked by central concept of customer value.

Customer value whatever gives value to the customer is called customer value. Creating, delivering and communicating customer value. Customer value can include things that are positive like product value image value and negative things are monetary cost, time cost and energy cost. Maglev train is one of the fastest train in shanghai, Fare is no expensive but is of 8 dollars. Hongkong Airport Express sold more tickets as

Gourmet coffee, affordable luxury, third place of social gathering.IIn 80s there were no gourmet coffees..

Markets can be broken down into smaller groups which is called market segmentation. Doing so intelligently and strategically is important part of it

Customer value is defined on what the market is. Getting a handle on customer value.

Class 2 Market is not a verb is not exactly most clear thing as we will see how marketing includes a lot of stuff and thus market to someone is not meaningful. Incomplete definition of marketing process. What can we offer to market place before we go that we need to think about we have to ask who are we what can we do what are we capable of doing and what stuff we are good at. They are also referred to as core competencies as well. Knowing what company is good at offers shapes market opportunity. Choosing value<--- Providing value when we do this step we learnt how correct we were in initial guess that market opportunity was X or something else. This applies to all types of companies. Market determination: Everyone who skates. Then narrow down to smaller parts, Next group is segmentation of the markets.

Choosing which groups that we need to prioritize Recreational and fitness skaters are the biggest group.Buyer behavior is targeted and this is a next step Definition of position creating distinct place of product in minds of the target market in the mind. Designing the market mix: Advertisements in skating related magazines will help in promotions for the product and making them aware of the product . Sales literature.

Deciding how much to invest or to invest anything at all will help in determine a market quantitatively. Companies that are already in market and want to launch a new product will use the penetrating markets. This is something we will not go in to lot of details we talk about establish in potential market demand firms will also will interested ot know actual demand Upper bound no of people that drives prodyuctr is 31 million. How did we come up with this graph, buying power, consumer surveys, past sales. Input from sales force. Process and quantitative techniques that can help the process. Certain part of economics are doing, relative income distributions in economy. Credit, Changes in debt . Product value and image. Image tends to be very important . American apparel is not making their decision in isolation. Desert Sky mall was not doing good some years back. It was about to go out of business.They try to reposition themselves to Hispanic communities. They renamed mall to Hispanics and gave tenants Hispanic tenants. Natural Environment trends Bottled water became popular all of a sudden 20 yrs back and then it became cool to carry a bottle of water and now it has start to decline a little bit. It affects what you do once you enter the market. If you have lot of competitors or if your competitors are strong. Tablets are one of the example of competitive trends of the market opportunity.

External factors trends. Trends which have things that have durability with some which are fabs (example of American apparel). Something likes the car culture. Presece of a trend can make or increase viability of market opportunity but does not guarantee it as a market opportunity. Marketing research Gathering information for purpose of making a decision is called market research Most important slide is slide 2 When we try to figure out the figure out what is our general market opportunity is next step is about figuring about the market. First breakdown is primary data and secondary data which comes from a third party report like census. Spending in certain categories like gillete Indonesia. All these reports publish piece of information there are certain companies that give these data. Primary data is for specific purpose whereas secondary data is not specific. Qualitative and Quantitative data are two categories of primary data Qualitative methods :Observational research - Any process that gets qualititative info about consumers about how they beave in the world. In some cases just taking a step back to see how they go back to daily routines or certain tasks . It can before by interviewing or actually observing them. Instead of observing people bring people and watch them do. Hand them a product or ask them to try to use it or play around with them and may be ask questions later on. A focused group is also an example of primary data. Moderators jobs are very important as discussion goes smoothly in the focused groups. WayBasics ; what is your daily household routines like , what are the daily routines where you need the most help with, just asking an open ended question. Social groups we can have a lot of focused group. Quantitative Data: Scanner data is one type of quantitative type of data that marketers try to collect. On group of customer purchases over time panel data or certain geographic region or certain product across all regions. It can be administered by company Nielsen who is watching what in in what patterns

Quantitative primary data :Harrahs Qualitative methods are richer in terms of information which we dont get from quantitative methods. Revenue /transaction Cost if I t goes up. Cost of Serve 50,000/10,000 = $5 per customer whereas it is 16.66 for each customer in zone 7 Ticket prices and cost of serve. Run more trains. Having fewer customers spread same costs between no of the customers. CLV is positive continue to run caltrain. If lights are down then only the zone 6 customers will be cut. Lecture 5 Segmentation is done on variety of ways that we will walk you through. Niche is one level below it .Different product and different communication to each individual. Different product for everyone that is done by Dell. Mass marketing treating everyone the same giving same promotional message it is not the best approach. 50 yrs back his was the norm. Targeting the cohorts. Alice 97 targeted the early 20s people at that time Cohorts have same life experiences and thus Ads sometimes target cohorts

Amandas feel good fresh food. Closed down the business. Utensils were all environmental friendly ,compostable

Segmentation for consumer markets For some business customers geography is more important.. B2B concentration of business in certain markets. Targeting: how to chose which segments to go after. It cannot be only one winner always.

1st 3 does segment exists and last 3 is preferrability

People who like comedy cannot be easily differentiated,

Strategic considerations while doing targeting . Some targets right now and certain target after some time Second targets should be close to first target. Are they takig advantage of these segments in a way that is not beneficial o society. Identifier of a name of good and services it can be icon and image.As soon as you see logo you get feeling of type of properties it has. Carlyle is there for 1930s and has a history of staying there and thus is a landmark. Premium location .

Strong Branding Name changes Consistent Quality- Greetings Training Collecting,sharing data

Soft Branding Sense of place philosophy Decoration out/in. Food/beverage Greetings Cost Uncertain

Loyalty Program will help in getting the data for each individual guest

Competition Manager Resistance

Try to avoid writing in a way in which you dont miss the company name Describe some more details on what you are referring to the firm some concrete details

Positioning Something you already have seen Second class we talked about this topic .This is the next step in process Another one of words which is noun and verb. Position as a noun is a place that a product has in the consumers mind sort of way tha consumers think about product. It is only in absolute terms and relevant to other companys prodct offerings

There is a fundamental tension. It is a goal and which can be entirely controlled .Despite best efforts there is no guarantee of the success for the product. There is ad diff between what consumers think about firm and what firm says about itself. When you try to come up with a position for a product then you may have to think about Position the offering is iterative. As expectations may not be met .

Building blocks of the position . 1. Attributes :concrete details. Train example 2. Benefits : What consumers actually get . Spin class and Tai Chai: Intense workout ,Mellow Workout World of customers can be divided based on benefits which is more relevant. Product that is based on delivering attributes has a more level of standout . Positioning based on Values : Rosewood analysis Customers value the part of the image. Other examples of values are the companies that establish for themselves. Values is harder to pull off. And Benefits is stronger than attributes. Points of Parity :Thinking a product in a context of some other category. When Iphone came people thought it to be a smartphone. Pontaic Aztek They try to establish it more or less like in SUV category.SUVS in growing market then why Pontiac Aztek. Because SUV name is familiar but Aztiac was unknown name. This can help to get product started Flip side is establishing the points of difference.They call it crossover category which has some advantages like more space small enough to park it easily. doesnt rollover. Iphone established points of parity but also established points of difference. Adidad lot of faces who were running tha what adidas is trying to position itself. They showed few diff countries ,every one seems united by concept that all run. Adidas have multiple lines of stores like fashionable gear stores.

Target Market: when firm tries to create a position it shall try for consistency. A good position shud be consistent with target market it shud appea to the market . A product and its attributes should be consistent with companies that is trying to establish them. Firm Capabilities it should be aligned with what a firm can also do. It is also important to service companies. How they can position themselves depending upon what their people can do herefore thoise things need to be in sync Value proposition: It is central thing in how you see yourself offering values to customers it needs to be consistent with itself. In terms of diff parts of value proposition be in line with each other and do not contradict each other.

Virgin Atlantic : Offers driver and car for 75 miles of radius. They position of high end of the service in a way right from when you start and leave the house and till when you get to your destination. Southwest if offers a VIP Lounge at LAX airport then it will be considered as inconsistent as they have differentiated themselves in terms of low cost fare airlines. The reason they are not going there is confusion on the positioning themselves on it. Perceptual Map: A position is what you want people to think of you but may not be what actually people think of you, It is also something can get away form you because of action of other companies and they can block you out. Positioning something is hard to do unless you define the product more. Rubber band are a commodity as lots of products are homogenous. Ethical concerns :Not misleading to the society .Truly position what is in there for products. Kashi example given as pesticides were found in their grains. Perceptual Maps: Multiple firms might have.

Walmart appealing to this crowd may not work.

Consumer Buying Behavior Segments of consumers are doing to select, obtain and segment the consumers. Our emphasis will be only on select that it is more manageable. Particularly steps consumers go through and if we can influence as marketers and consumers. It affects pretty much all of the process that I keep referring to Buyer behavior is not any step in the roadmap it is in part for all the steps as mentioned. Marketing mix and a mixture of four Ps. Stuff that can affect buyer behavior . There are few categories . Cultural factorsvalues,beliefs,preferences and tastes .Clture norms things that they value shapes buyer behavior. Also at sub-culture also affects like soccer moms and hipsters. Social class: Economic level also affects buyer behavior. Opinion Leader that can shapes buying behavior. Social Level refers to things that operate through things that we interact to. Reference group are the one we interact with . examples given are reading club, family and friends, co-workers People have different roles with in a group . Whether you are a leader or follower. Social Media is becoming much bigger factor as it is making social factors more important as it is called facebook effect. It makes it possible on a larger scale or broader scale and acts like a word of mouth. It is important that people trust the stuff which comes from their circle rather than the one tha comes from outside world. Personally Factors like demographic info influeces what you behave what are you interested in . Then it depends on your lifestyle.Examples of magazines was given as they depends or target the peoples hobbies and behaviors. They are also in response to similar messages and also reaches to media . Shim class and Tai chi. How lifestyle cut across demographic groups. Question asked whether magazines are enforce somoe norms .Reply was that to a certain extent When it comes to lifestyle and sub-cultures both seem to have some norms associated with them

Psychological behavior is most hard to know. Diff in terms of what motivate the people how you perceive the workd and how you response to different cues. If it comes directly relevant to markets then depending on how people response. Auditory vs Visual learners therefor psychology is important type of behavior.

Consumer Involvement; what process consumer goes through before buying some product or service. We will involve consumer, customer involvement as well. It refers to simply amount of thought someone puts into purchasing a product. This is called mental horse power. Also related is amount of thought they have stimulus related to product which leds people to think in some way. Low involvement products: Examples given gum, candy, stationary items. Awareness stage: They are aware of the brand or item Interest stage: They are also considering it and have it on radar screen Trial Stage: try at least once Repeat Stage: Regularly buying it. Sometimes marketers and firms get struck in initial stages. Interest but no trial. So that people can try free samples. It is a place where retailers. Offer through trying only you will consider it buying. For goods which are really inexpensive Model for low-involvement new products Firms can be different levels Razor blades are a very cmmon product. In western world purchase. Looking at Indonesia where they were planning to develop products in Indonesia things were more different . Only 80% men shave regularly. They shave only 5.5 times per month. Only 40% use blades and remaining 60% shave wth knives therefore they were way till level of awareness and interest level. Habit is the key to lot of low level products.Marketers have found a ways to capitalize on market behavior. Febreze example is given as P&G had a hard time as they were positioning to stinky home or clothing. People were not buying it often then marketing team re-positioned it as a reward at end of cleaning ritual and they started to catch on based on this one, Target were able to find a way as when people were pregnant. Ads were sent to some one from target for some baby products.

High involvement Purchases: Other side of continuum where lot of mental processing s involved before making a purchasing decision. Problem Recognition: Realizing there is a need for something external, internal stimulus kicks on, external stimulus comes from marketers.

Information Search : In process of doing so we have a big set of option and we will keep narrowing down to smaller and smaller sets.If you are a marketer working for a company Sources of information from where we can learn about stuff . is the next step in it.It can include commercial which comes form the company. Other id which comes form people in your reference group. Public is the one which comes from third party. Like Kelly book. Social Media is making personal and public as more influential and making .People trust hat information more there is a shift towards public and personal from other commercial and experimental. Expectancy Value method: Suppose you are buying a TV Set. TVs are good because they have attribute. Screen Quality, Sound Changes in attribute can affect your picture: If you increase attribute then Sensitivty analysis :Sony and Samsung are good on holidays sale.It is possible for Dynex to win on basis on really really strong on one attribute. Heurists car rules of thumbs that we take to make a decision :Like if we live in studio of SF then we cant buy big TV. Post-purchase behavior. There a lot of ways consumers express there satisfaction or unsatisfaction.

Product Strategy We will discuss how marketers define value ,capture value and let it in hands of the marketers. What product is product level and differentiation. We will talk how to add new product at once Then we will talk about new product development. Product is anything that can satisufy want or need is called product. Lot of things can fit this description. First one

is goods tangible forms and are visible and are different from some other things we will mention. Goods are most obvious to called as products Durable goods that are supposed to last for a while are called durable goods. Services are huge product of the universe.They are activity performed by someone is to satisfy the need. Example is Hotel Room. Other : Which are miscellaneous categories. Kim cart example was given for it.Politicians example was also given. Marketers are also trying to promote these individuals .They are trying to build up the image of individuals. Marketers have value if they turn individuals into icons,Organizations Place as a product like Hawaii, vegas ,ideas Consumer Products vs Industrial Products It depends from person to person Range of levels of involvements for target. Target example is given in which lower price values to high end products

Consumer Marketings is focus for this class. Products for businesses will be different as they will help businesses make their own product and services for other customers Industrial Products can include all these type pf products Now we are going to product levels : What marketers do when they ARE DESIGING THE PRODUCT. This is kind of a way to think of a product t be different sort of thing that each plays a different rule. More important is core benefit level. This has to do with what benefit it provides to the world , we said about positioning last time you are in stronger positioning if you are positioning on based on the attributes. Actual Product level talks about attributes and concrete details of the product point is that actual product related to things that support the core benefit. Specifications features,brand name ,quality level Car sticker example is given as this attribute suggests a benefit of having a high number for fuel milage which gives benefit of economic value. Other attribute is of quality . Chick-a-fillet example is given in which only two versions of chicken sandwich are given and quality can vary for the chicken. Contact lenses example was given and different opinions were given like right one is transparent.

Augmented product is about associated product and services that gets augmented with the product. Additional layer beyond this is called experiences. Question asked is about American girl place,Chicago.It sells dolls with lot of accessories. Experience talked about is that all dolls can be customized. Doll Hospital,Doll restaurant and Doll Theater examples are given. Image is also differentiated. REI membership is given then you will get dividends from the earnings. What they do at stores , they do classes, they give snacks or drinks to them members. You also get a mailer also we get discounts mailers and dividends.

Multiple Products: Most firms dont make decision about one product but of multiple products either a whole mix of product, what to do with product lines in terms of expanding or contracting it How to respond to competitors moves. Like D comes from ne company.They need to think about all where they are all positioned. New Product Development: Decisions marketers make for new product strategies. In some companies it is done by R n D product development. Idea Generation: Creativity and eternal vigilance. Firm needs to be conducive to the ideas .Firms that do well have a culture that creates creativity Step 2 s screening as which idea makes sense as which one to continue and which one to drop it is about basic thing like buyer behavior we talk about last week and whether there is a customer value in it. Capabilities of the firm : whether firm can really make it or not.

Marketing strategy development all strategies we talked about from day 1 till now. New product development is not with dev team but also may include people from other areas. Once you get passed through ll then we come to place when someone starts building the product.

Experimental mailings ; Qualified shopper panels recruit people who are willing to test the new products for test . Or you can do an in-store testing which is in a normal geographic area. Why do they d in store rather than Ohio has pretty good record of projecting the elections. Commercialization has lot of efforts to be taken. Changes in product that needs to be done. There is enough time to be involved for product Process can be opposite like not functioning smoothly in organization like getting lost in beaurucracy . If it is driven by engineers then it will be focused on attributes which is not good but should focus on core values. Way to reduce is that to have a portfolio of new products.

Branding part2 Brooklyn logo will sell out like crazy next year. We already mentioned branding when we discussed rosewood and last week as well We will talk about it in 2 ways a) Lessons related to creation of new brand b) Extending existing product into a new brand.

This definition is defined as a name sign,symbol and a design which is identified as a maker of a good or service . it is identified which identifies whether product is made of certain category There is imp part that makes a brand which is called associations which means seeing a brand identifier makes you think of a product attributes Positive brand equity which means positive brand associations. To brand something means any activities that marketers do, which is a marketing mix we talk about people product ,people and mix. Every product is brand equity in some extent , few products are diff to mention a branded. Lot more things in world can be branded like you think.

Brand associations are related to core product and its benefits .Branding effects a marketing mix. Suppose BMW is about to launch a new car series , we hear that news, New innovation, better performance and good quality all that will come to the mind when BMW comes to mind. Other examples of branding given were Dove,Disney Land. B2B brand associations often involve Consistency of product Reliability and trustworthiness of service provider Reduction of risk Elements of Branding strategy: BP changed their logo in 200 and also changed their logo Starbucks changed ther brand because they want to differentiate into other products. Milliken also changed their brand and why they changed their brand. They changed their logo to human signature . They want to show the trust by changing the signature . Good product name should indirectly suggest product benefits. Fashion world for instance name could be more random and concept . Not necessarily every product category is indicative but t covergirl shows that you will look like a cover girl on the magazine. Some can argue that creative zen player is not a good name and it didnt do quite well with the name. Complicated logos :Simple logo is good as it can be customized Fedex created diff version of brand but we can still identify the difference Identifier can also include. When companies have to grow they want different logos It also has other grocery chains like Dominicks Genuardis ,VONS Randalls. Because people are associated with the brands. Safeway

Macys acquired regional deptt store chains they keep their names.One of things that they did was first expand macys to the names and later they removed the names so that people can get used to it.

Brand architecture Multiple brands that single company can have can still work together. When company launces a new product and what is branding for the new product There are range of things that it can do If company launches a new product with new product and connection between new brand and existing brand is secret that is called stuffed brand. For Example Hidden Valley is owned by chlolorx. Implicit owned brand Gap is Old Navy Endorsed Brand : Marriot Courtyard and Fairfield Inn example is given Sub-brand approach :Parent branding is stronger rather than the brand. Virgin brand family is an empire of sub-brands and example was given for this category Few example were given were of virgin America and virgin UK. Virgin is associated with a fashionable kind of image. If things go wrong they can hurt virgin Branded House : levis , nike Kodak. Companies go so much that brand name becomes similar to product like Kleenex There is always a tradeoff. Combine brands and their associations in Licensed brand approach if you as a marketer have a strong brand in your hands you can extend to other products but you cannot .e.e Porsche eye glasses was given They outsourced the eye glass business and it is called licensed brand approach. Private Label: When brand is outsource to some other example of Subways.

Gist of all of this stuff that we have mentioned what all ideally adds up to all companies with multiple brands. We can plot them in 2 different segments .they can reach with multiple products and brands.

Gap example like aby gap and gap kids wer given for market segments . These charts are meant to tell us the diff combinations of same and diff brands and fif routes to cover the whole world. We are gonna end with few longer examples : when undergrad class was taught Steinway corporation do we have any piano players here. A company has been around for over 150 years. They have huge facility in long island city they also have a little village around their production area as well, This company 20 yrs ago started feeling rough. They launched new lines of piaono like boston and essex It says boston desgined by Steinway and essex desgined by Steinway through they were built by steinwya. A cheaper kind of piano by getting best of both worlds. They wanted Steinway to help other type of pianos to take off. JCPenny an established company make an interesting move they had pretty interesting move in 2012. They are trying to place an image of having a fair price all the time. They are trying to show it make it more They are trying to highlight jcp in it. They are trying to change the JC Penny.

Tim Horton: they are enormous chains of coffee in Canada. There are twice as many tim hortons as mcdonalds Aad is trying to do with tim hortons brand Hocky is their game and tim Horton is trying to associate themselves with tim Horton Marketing is not about goods and services and there. Branding is also applied to public service companies. Truth campaigns stopped from 2002 -2010 as a massive settlement .They were PSAs Color around the ads they wer creating brand associations for public service messages. Product RED :A bunch of products whose proceeds to go Africa. They created a brand on charitable brand why did they do it as it stood on its own feet as a charitable brands.

Branding

There are ways that brands can be measured . There is some company which has ranked brand based on their professor.Interbrand does it based on three factors 1) Financial performance 2) Role of brand plays in peoples purchase decisions. 3) Brand strength: some algorithm which cannot be quantified 10th May 2012. Price is howmarketers capture value that thy provide to customers and economic benefit customers get It is important because dollars and strength how well company will do in nos and profit wise. How a product and marketing offering is thought of by consumers. Price is more at long term and strategic level. Because of that calculations that help you figure out price dont help you figure the price. Marketing applies to lot of different context that applies to bigger companies. Food trucks have become very good last couple of years. But since it takes lot of money thats why people start with food trucks . If it is a fish taco truck then we need t o find how will they set the price. How to set the price. 1 Cover your costs. Bare minimum a) Fixed Costs Not related to no of unit sold, :Maintenance b) Variable costs: 50 % of your selling price goes into your profits tis is what is called margin. Markup means how your margin compares to your costs

You might have a chain of more complicated products that may be sold. There might be another firm that sells ingredients to fish taco truck. Each business will have its own motivations and they will also be doing their own calculations. Lot of times or wholeseller are the ones that are involved most of the times You can have multiple manufactuers that sell to one customer, We ignore fixed costs for calculating break-even volume.

Suppose we get competitions from other SF trucks then what should happen. What our truck needs to do in order to stay in race. Contribution goes out to $0.25 Thus we need to sell 8000 /month to cover per-period fixed costs. Breakeven volume depends on contribution and thus if contribution goes down quite a bit. You need to consider lot of other factors before coming to no like this Whether these many units will sell, how many competitors we have , how much space and capcity you have in the truck. Caliber-Magazine: It is still going 3 yrs later even after getting introduced in the year 2009. It has done reasonable well. We will discuss how it calculates break-even value. Slightly diff things we need to think about in this example. Lot of student publications like magcloud .This technology let magaizes be printed on a computer With this new technology that it changed the game. You can print it in the small run However in printing press it wont print unless specific no of copes are printed. $2400 in fixed costs per issue. First thing is to set up the issue which means setting up one original copy. Remaining copies cost 1$ because they only include copying the issue and only paper is used. Now we will talk about revenue Price will be little more complicated here: It will be price for individual 1/ time or we can offer subscriptions guarantee the continues revenue. Ad sales revenue: More publications sell ads to magazines .Caliber is getting revenue from advertisers for having ad appear in the magazine. 4 pages of Ad will cost $200 per page We need to figure out break-even for magazine per issue. We will look at fixed revenues at costs and variable revenue and costs HP Setup Cost :$2400 Ad revenue :$200/page (fixed revenue) Net fixed cost: $1600 Variable costs and revenue

Revenue can be calculated using weighted average : $2.84 (average revenue per copy) HP Cost :$1 copy Contribution Margin : $1.84 Breakeven = 1600/1.84 = 870 This ends up the scenario 1

Scenario 2 Suppose caliber decide that they want to try the lower price HP stuff will not change and everything else gets changed from $2 copy From sdvertisers point of view : Value comes form people seeing the ads which depends upon how many copies are in circulation and thus more people seeing the ads the more value for advertisers and this advertisers will be ready to pay more for advertising Net fixed costs = $800 These magazines can be sold anywhere there is any time of activity or traffic is there.

Scenario 3 Consider selling it in different Suppose newsstand asks for 25%5 margin in return. But more buyers behavior needs to be considered. These people may not be probably interested in magazines. Also it depends on where exactly the newsstand is located near to Scenario 4 Partner with daily CAL and give out these magazines for free and get all revenues from Ad sales Daily Cal will say great they will also demand a cut in the revenue and thus they will also ask for more revenue what has to be happen in relative size .Therefor advertisers need to pay more in order to get to break-even. Last thing to ask before we wrap up What might affect you to know how many advertisers are ready How advertisers are treated by CAL newspaper.

Part 2 of Pricing Strategy We will talk about how to set the prices in this class. Things that affect price wars. Ways marketers approach the pricing decisions we will talk about that as well

How pricing decisions have changed. How it has become more complicated in last 1-2 decades. Google Checkout what it does? We look for product and see on the google product search . What would you have to get the information prior to that, we used to goto individual websites and/or stores previously. This lets comparision of process much easier. We also have affectrthat nature of internet has make it easier for customers to se the trend We also see it is easy to change the product information as well. Other things that going on are priceline or hotwire. 10 yrs ago Priceline was also in grocery business. Go to Priceline add shopping list and you could have got deals. What did you buy on groupon which otherwise you would not have purchased. What got your attention ? It was 90% discount . Not even groupon but livingsocial and facebook also do this. The way which pricing model sets price for something. They shift balance towards consumers from firm in other words they give consumers additional options so that they can capture value. Pricing objectives and diff parts of customer value: Obvious way it affects is monetary cost . How you can provide value by reducing monetary cost. Price effects image value. If price is compromised. Example of Energy drink made b Sobe experiment was conducted and it was offered to students at a sale to 2 groups one group got it at discounted price and others at regular value. There was diff opinions by two groups in terms of energy level Part 2 still offer product at diff prices and ask people to complete the word puzzle. Idea was if you think product work your energy level was up you were more confident in your answers and you got more right . and it was really that they were more confident by buying it at regular value Ways in which people are rational I basic economics in some unpredictable ways How price effects more in dollars and cents 1 Maximize dollars and cents (price high maximize revenue per unit)

Maximize no of units sold

3 Pricing as a message to the competition.

tHERE has to be a range of celing and price floors that we can talk about Upper bound depends partially on reservation price which is consumers willingness to pay on that product. Like paying $5 gallon is evil Then we have more imp idea that if we are offering something that is of more value that can shoot the price up and set upper bound. If desire is for market share then go for pricing lower. Competition keeps us to keep price down . Ability to differentiate How to know price ceiling and how big the range is ? Consumers willingness to pay? Statistical analysis Surveys: why they may not give accurate information. Giving misleading information. Wrong sample, people give answers in their comfort zone Conjoint analysis: Techniques of surveying in which questions we are asked for two products that vary on diff things one this process iteratively then you get s better picture of what you like or not. Other things that we can find out from all of this is a demand curve We can estimate and make an educated guess .

Price elasticity co-efficient: Change in demand/ Change in price for a given product. Which fish tacos they were considering lowering price form $1 if demand increases by 15% For certain goods this no is really low. Which means demands e.g cigarettes, insulin and electricity

Gasoline both elastic and inelastic.

Methods of setting price From low to high or Less than optimal to Optimal. Cost-based/value. Going rate :Target does this Ideally it should be based on consumer willingness to pay for the product One other level beyond it which is on relative value :If situation in which consumers say they are willingness to pay but benefits are beyond the one stated.It is harder to get the data for.

Methods of adapting price. There are lot of ways firms can offer discount which can include hiring people as well so that you can have relationship with customers and offer them a lot of deals. Doing this does have a benefit as it does good things .Something is always on sale people will buy later One situation in which it is acceptable when the product is new .Example is when Hotel is newly opened. Bundling is offering multiple items together as a package for one price. Reducing energy cost is big part of customer value. Zip Car is alternative to running a regular car. Bundling has value in making a decision of price easier. Combo Price :, Multiple type of insurance. They offer things just as a virtue of structuring prices. Caliber magazine was example of changing a structure of prices. Ways we can restructure prices and products We can do it through bundles and price discrimination First degree price discrimination not possible exception of price line Second level of price discrimination: Costco Creating diff versions of product and have diff meaningful names of each of them Consumers can differentiate themselves

Other ways of versioning of movies :watching them on AMC and watching them after 3 months Other ways are versioning . People who are willing to pay less might not even enter the market and we may lose the value. It needs to separate customers . We want people to separate themselves based on how we design different versions of product. When we raise price to avoid a backlash also try to improve the product value along with increased price. If competitor lowers price , keep price same either wait or improve quality If you lower price and you also do that then profits will be permanently limited. It happens when products are homogenous or industry has really matured and they have run out of ways of differentiated themselves We need to anticipate when it might happen Another thing we can do is a branding move rather than pricing move. Create a separate brand .Jet star is discount airlines created by Qantas and thus they created this brand name for discount airlines Saturn was created by GM to compete in price . Legal Issues : Price fixing : multiple firms collude on keeping price high.

Chapter 14 Distribution Strategy Because of Placement we have this class when we have to get product to public there are lot of details like how to setup a channel. To kind us rolling some examples : Borders goes bankrupt : 1. Because they did not take advantage of on-line business.

Calyx Flowers: It was found about 15 yrs ago. Created a way to order flowers directly from places that grow them. But they also went bankrupt. We can also buy it from online. And they should be grown locally as only they are the ones that can be sold.

Calyx Flowers : They didnt have to lease the stores and that was the good cost cutting expenses. They are still existing because of distribution channel. It is not just an operational decision that we sit on excel sheet and can make a decision there are some other challenges also need to be taken into consideration. Channel consists of whole chain that consists of intermediary of chains. Value delivery model. There are a lot of things that can come a intermediary like merchants, stores, retailers an wholesailors. Amazon has a good warehouses that has got it be called as a merchant. Agents :Google search. Facilitators: Transportation companies If product is in miscellaneous category like events then it can be called as an intermediary. Product gets conveyed from people who make to people who get it Without intermediaries we will have lot of transactions and with intermediary we have only 8 transactions. It does other things as well like performing other value adding functions which all related to augmented product model. Stuff like publisher ships through UPS it is through things that UPS does that allows them to augmented product of it . We can talk about firms that act as intermediaries in the firm. Diff ways people shop and diff levels of service they provide. In person retailers can do more than website Stuff related to firm : if there r certain kind of products that firm is offering a certain intermediary is better in providing the service then they can use it We can analyze cost/benefit and economics benefit and some other things . Success factors for dealing with intermediaries Intermediaries have their own preferences . So we need to build a strong relationship. They did by getting dedicated fedex connections Channel Conflict: What can go wrong .No matters how well they are designed as interests of intermediaries do not co-incide.

If frys and other retailers send products at heavy discounts then channel conflicts then the stereo maker can pre-empt it by not extending contract with retailers or may be just sending the limited number of products on the shelf. ITunes replaced all physical music stores. McgrawHill : Hybrid channel: Multiple ways of reaching customers it is making product available via different channels because different buyer behavior and thus its book can still sell. Kohls has kiosk which yu can order via store How do we generate demand in sales organization from B2B behavior.How do we market xeror to diff organization. Also I have background on Forrestor research. How does technology affects business. I worked on best practices when technology intersects business. http://marketinggroup6.wikispaces.com/Mednet+Case+Analysis

Chapter 15 Here only marketers get creative. We only have three classes . How to plan overall marketing strategy including all of the above methods Communicating something to public something about value proposition especially in marketing. What is the message which we are communicating. How to get customer get interested in your product, some are easier to communicate with the customer and some are not. When are how often to say has to do with tactics and strategies. What consumers learn from promotion; There are lot of things some of them have to do with product, some with brand and others are how easy is to be try the product. Advertising is the most visible method of promotion and most high profile. Public Relations : Anything that exposes a product to mass audience. Sales Promotion: Short term method to get people to buy . Each is more like a pricing move .

Direct Marketing another casual terms :Reach customers on customized individual basis. We still see a lot of personal communication methods. When it comes to message there are cetain aspects of product we think. Promotion methods relate to things we have done to overall process. Things that are changing the landscape and affecting market during last 510 yrs media roles have become a lot more fragmented. Where do we get all our news from ? Now we have tons of channel that can give the news information. Greater ability of marketers to get the data. More direct marketing because we can reach people easily per mass media. Presidente beer example was given for more unconventional. P&G in Bangkok Nationwide Ad in Columbus of Ad All contacts are saying the same message in brand contact Showing on Truck Haooiness Global reach Customized coke Creating fun memory associated with coke, they sent a message that we care about you. They used facebook and kiosk they got the data for the young together. Same fonts,same colors and they were very consistent. Diff parts of promotional wing working together. Starting with objectives An overall campaign can have diff objectives in terms of goals. First of all it is a category need. Garmin had lot of Ads that convince people that you need a GPS. Category need Then you create brand awareness creating ability to recognize the brand.

For products in which people are already interested but have not purchased the product. But also for high involvement products. They create purchase intention Targeting simply for promotion: Message decisions: What overall message shuld be entire Ad campaign Informational message: Message subtle around state of facts,data and logical argument Image Value :Transformational Appeals: You can use promotions,humor and shock value. This often tries to speak to image value associated themselves to transformational campaign

Methods: There are choice between mass and personal methods as they reach lot of people very quickly. If you give super bown ads people will talk about youEspecially at godaddy.com .

Peronal communications is cheaper and customizable. Mass communication is very costly. Lot of people will take your message seriously as they are customized. Mass counnicatrion methods are generally B2C methods. Exceptions are B2B ads on weekends as managers are watching it They sold in grocery stores and small shops and they rely on these people to tell as what was being sold and what was not and it was difficult

Buyer readinesss stages: how effective certain strategies; you need to think how buyers actually behave. What parts of buyer behavior we need to see ? where do buyers get the info from

Push strategy :Using sales people to let them know new product pushing new products through partners.

Pull strategy ; People are already aware of the product.

How campaigns are different based on how they are diff based on stages . Single mass mailing Berkely main society fires few yrs ago they sent a mass mailing telling about homeless pets and asking people to donate It can get more complicated when single set has campaign in multiple stages ; Like emplpyers will come to us when we graduate from SCU. Goal is to have all methods supplement each other via media co-ordiantion, Measuring whether Ads work: Establishing is not that easy. We can say we ran a campaign and sales went up, as campaign is hard. We can do it little better from surveys. Ask questions from people whether are they really bough the product after seeing the ad. One part that can be nailed down is the google analytics. People show Ads on a page and based on where ads were placed and where people clicked most can help the tracking of the Ads. They were doing lot of promotion for car series but they came up with idea to promote the BMW brand in general. Unilever in brazil did something unconventional marketing in under developed areas.Product tram goto vilages and demo the laundry detergents Our coloring the wall with colors and symbols so that people can recognize the colors .

Burger King: It got stagnated in early 2000 as people were realizing that fast food are not the best food in industry. You get an e-mail if you get rid of friend and you get a whopper

Promotion: Mass communication We talked about personal communication methods already on Tuesday. Advertising :It is paid, it is mass customized one message for everyone and third is identified sponsor.

Political : Controversy over sponsor They reach a lot of people and have a mass reach to a lot of people as it is best way to do that and to reach lot of people. They change in a way you look at a brand even if it is subtle it is still important if you are marketer and lot of your success depends on your brand. In-House: Marketing or Sales division you can do the Ad agencies Or go through Ad agencies : they dont make a lt of percentage as they were in 60s. A lot of them evoleved into communications industry. Agency environment, lot of hard work but you learn a lot and it is very creative and very cool place to work. Kinds of goals advertisers shoot for 1. Informative advertising : Hey we exist. Letting public know that we exist. There are certain places it happens. You see lot of planes like GEICO in front of everyone. People relax in beach and thus planes are flying over beach. 2. Reminder Advertising :reminding ou a brand typically exists . Mcdonalds 3. Persuasive advertising : 4. Re-einforcement advertising : Existing buyers to remain loyal to your brand.

Challenging in an Ad : Medium there is a limitation. There is a rational approach in ads. One that is based on facts. Logic which is very facts based . Yacht Ad. Product very much defined on attributes and that is the reason that Ads like yacht are based more on facts. They are more like B2B customers. HITACHI Ad: Message Decisions: Balance between words and visual elements is the balance that we need to maintain.

Message Decisions : But highlightes ones . Samual Adams have been running the play of Samuel Adams Firms want to communicate their capabilities are.

Testimonials : Sources of information: Personal,Public, Corporate . There are few ads in which people are less biased. Jerry from subway that has been built on testimonials. Things not good Too busy Too much stuff going on How to process it Over promising. Reframing the brand : UCLA football. It creates value around the product and thus this ad is doing their job. JCPenny Ads are integrative : Diff promotional things are connected. Outdoor advertising : Times Square Ads: in Toronto Point of purchase: where you purchased product from Product placement IS different from BMW films.

Media Choices : What are your goals and what are your targets like trying to reach certain no of people and the impact, like what you want that message to do in terms of what you want that product to do. Most of times it is not what category but what other outlets we are going for . Like whether are we going to Toronto or more sub-urban type of campaign Most of its depend on buyer behavior. Once you make that decision there are other decision like how often you want too hit the people it helps in measuring effectiveness. You try to get some ideas by working through sales, goods and measures. Doing a survey like did you get it what is about if people say that it ad is about rabbits then that ad is not that clear therefore communication effectiveness can also be measured about the ads.

Public Relations:

This is a huge category that can use the random advertising. 20yrs back it was only Press releases. They all try to reach madss audience by doing all this like public events ,public appearances,community reach Why is it different from advertising in terms of what you put out versus PR. Ad we have a lot control but in PR we relay on other people carry the flag for you Both things are similar as they try to communicate about brand PR can be more effective for advertising in sense that communication can come from somewhere else like word of mouth like it was a real cool event and I really enjoyed it etc. Positive image coming from these sources is more effective. How much it is cost . can be cheap like running a media event at a lower cost. PR goal is to get people to stage of low involvement products. Trying to people to know the brand like TNT Ad did Key facts for PR this is PR needs to give something of value to public that is reason BMW movie was a good example. PR can fall into this trap if this event disrupts people Engage in some kind of activity that gives something in value . What is diff between long ad and thirty seconds commercial? Movie you have to pull information but with Ads information is pushed on you. Tree lighting (in San Francisco) is sponsored by Macys . Bay to breakers is an event about race and ING is behind this event. They are sponsoring this event. It is good if PR gives something good to people like good time and food event and whether you laernt something from the event. That is the positive thing and event can also get a positive attention also, Here is one other thing that can happen event that you genefrate should come back to firm by helping the firm If you goto maple leaves and you see air Canada will you be favorable to air Canada that depends . There are lot of debates in naming the stadium

One more form of PR : Community putting some event that runs charity. People will remember the event for ever and also remember the brand and the company behind it. This is major kind of thing to keep in mind. B2B Why B2B is different from B2C High level principles behind B2B buyer behavior. Why it is important is that what motivates people of companies to get interested in a companys product. One part is high involvement on part of both buyers and sellers that is the one part of the B2B definition. High involvement because high money is involved and also raw materials also contracts are also involved. There was a research done on forrestor research 20 yrs ago trade shows and PR were very popular in B2B marketing. Buyers have become more sophisticated. Previously Brand was communicated via sales force now buyers have become more sophisticated now . Key point is what motivates people you are trying to sel l to? The definition of B2B behavior is about highly considered sale in which one aspect is high involvement of both buyer and seller examples given were lot of money involved and consideration of raw meterials. 20 yrs back tools we use were like this Events :trade shows company shows and sponsor shows that we use to do. When we survey B2B marketor business to business companies then what are our top 5 challenges. Trouble reaching buyers as buyers have become more sophisticated. Previously company used to communicate the brand through sales force.Now it has turned to website,e-mail,social media all inds of things.In fact there is an organization called corporate executive board that looks at best practices.Per forrestor research most of buyers are through more than 50% of buying process when they call the sales person. It has changed a lot 20 yrs ago. It is hard to understand as where the marketing has an impact on business and thus tenure of CMO is only 24 months as compared to CEO which is 60 months.We need to know how buyers buy and how to influence this buying process. It demands more work through channels.We tend to rely more on channel partners and we tend to lose visibility on whats going on in the channel.

How do we provide value and understanding potential clients prospect . Why it is important to understand buyer behavior. What is the buyer doing is the first P (People) POST is an acronym It is easy on B2B to go from segmentation to targeting to positioning in which sellers talk about themselves and their products. Buyers dont care about you hey care about themselves. You as a marketer have to talk about in a language that can grab attention of a prospective buyer . Personal helps us understand as what we goona say to them to get their understand it helps us understand psychology of the buyers. Persona is a collection of lot of persons segmented based on ethnographic and their behavior etc. We find about heuristics of buyers and start grouping them based on some broad categories. It will be good if we have a narrative that talks about what this person does on a daily basis.Other key things are like what are his goals. When he is on our site what we want back from him.Focus more on what is the psychology of the buyer. How you define the cohorts of the people and how to define. How top sales performers vary from bottom sales performers. How do buyers engage in social media . Keeping relationships oing over time is an integral part of B2B process. Taking an industry approach as opposed to here are our products and this is what we can do for our products and services. You have to demonstrate that you understand their industry and how you can solve their problems . Xerox marketed its products like we solve your business problems we dont do only printing , also insurance industry were given webinars and out of registration few talked prior to webinar as well and that segment was recorded to understand the buyer behavior much better. Also we need to show that we care about sustainability as well. Before buyers decide that we need to do something they need to hear the message few times A good number is 6 from marketing and 2 from sales persons.

Class 18 Promotion personal communication We are talking about communication that is customized in this case. Personal Selling and Direct Marketing It uses real employees to go out to customers. Personal Sales : Allow customization you can customize what you say if you are using sales people. Also creates actual personal relationship. You cant say No to sales person rather than ignoring an e-mail Cost of sales call compared to cost of brochure. There is a training involved in sales force for personal sales advertisers. Besides this it is costly for hire and fire and thus it is more expensive. CRM :Process of using tech,info,data to manage all your interactions with customers. Collecting through anywhere you connect to customer like loyalty programs. Sales force is a great way to collect the information a lot of this is through promotion camps. They are trying to use sales force to get information by going through trade shows. Invisalign is alternative to braces. It is better than braces. Sales representatives need to teach them and convince the customers.

5th of the five methods that we use Direct Marketing : Personalized customized promotion. It is sometimes used in misleading way it often used to refer to distribution and customizing product. It should be used to determine promotion. Less Costly, Greater customization of messages . Direct mail front page we see the image and then under page we see the facts. It often based on couple other things we mentioned whole quarter. We talked about analyzing customer data. Direct mail is a personalized version. CLV plays role as it tells which customer we are trying to reach. Catalogs have been a long. They are more integrated with websites. Customization they are not mass marketing as you can customized locations like location of the nearest stores. Article gives some value to the public and thats the reason they accomplish the role of good avertisers. E-mail has more advantages :More customizable.

Websites have common as mass communication as well as personalized content. People are resistant to cellphone because they dont like clutter on the small screen. C2C Promotion: They are game changing factors. A more evolved form of word of mouth Getting someone to bog your event is completely free when they may not have a lot of budget to promote with. How to do this well C2C promotion effectively : It should make people happy rather than making them angry or frustrated with you .

Twitter :In a lot of ways C2C .It facilitates direct communications with individuals . Live chats, Promoting contests and give aways. Blogs: You can have more and deeper content. Thye convey though leadership to show they are at fore-front of development in areas they are in. Google blog is huge Another friends blog experience. Knock knock is small company that makes gifts and stationary .It always have small resources Friends got hired to focus on blog outreach she was in-charge to say something about blog like knock-knock and it was very grass root promotion Looking as picture you can see small pictures of which you have not heard. Lot of these have very small audiences. Warnings: If you are doing something bad in terms of product and service C2C promotion takes away from you as customers will give bad reviews. It takes time to build relationship and it takes some time :Just getting on facebook is not a good strategy Viral Promotion :Creating something so cool that it spreads between people in a very short time. Viral should be very interested else people will not be interested to see it.

Competitive Strategy and Ethics:

Direct marketing and Personal Communications : Advantages and Disadvantages of using online and offline methods. Online marketing is easier to customize the marketing. Drawbacks of online reach

Competition is involved in all phases of marketing. Competition can allow for collaborations to happen and occur. Companies that can have lobbying efforts like aut,tobacco, gasoline etc. Benefits consumers pull .e.g given is Airlines example Few things that need to ne considered: Knowing where you stand wrt competitors Tim Hortons : 62% share and Starbucks share is 7% . A follower : DHL It depends on how unique are you and how easily your technologies can be copied and are you protected by copyright etc. Exit barriers mean that it is difficult to drive the company out as they are already occupying the market share. Entry Barriers : You have to think how it might merge We can group them based on over all marketing strategy. Few choices wrt price, product and distribution and promotion. Actionable is little bit different when it comes to the needs of the competitors. GE planning grid tells which markets can we enter Harvest means to make as much as profit and slowly get out of the market. What can you do If you are Leader : Expand the size of the pie or increase your share at the expense of others by going to brand new people or exist customers get to use product more. Gillette if doing business in Indonesia can go for increased usage Increase market share : Expanding by doing loyalty programs, attacking your rivals share by doing some sales promotion. Increase market share only if you cannot expand the total market.

When there is lot of room for growth then increase market share has more significance. Follower you may chose not to imitate the leader Someone is leader : you have loyal customer base else you have a very tough and rough time ahead. If you are a follower you have a little latitude. Niche player :Someone is going for smaller niche segment. Less competition you can specialize in something. Danger is you might not have minimal competition for long. Companies with more resources may crush you if they have more resources. Eco-tourism: if it gets too big then it may not deliver profits as if more marketers enter it then it may disturb the eco-system. Except Fun image all leads to efficiency One of the competitors was Uniteds launch of Ted. There tag line was Meet Ted. Southwest doesnt have individual TV remaining have something. Southwest doesnt have dedicated seats. Virgin and Jet Blue have a good lounge and make people upscale feeling. Southwest are trying to go international also. Ethics : No right or wrong answer in ethics For profit Company has mandate to increase profits for shareholders. Both of them have chances of environmental damage then we can have thumbs down. Responsibility for social welfare :