Marketing Management Ch.

1 Defining marketing in 21st century Importance of marketing: - Building sufficient demand for products and services. Getting top line, to get bottom line financial success creating jobs CSR - Help introduce and gain acceptance of new products, innovate & enhance products - Building brand and customer loyalty The Scope of Marketing a. What is marketing? o The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customer, clients, partners, and society at large (AMA) o A societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. (Social definition) o Marketing management: the art and science of choosing target market and getting, keeping, and growing customer through creating, delivering, and communicating superior customer value. b. What is marketed? o Goods o Services o Events o Experiences o Persons o Places o Properties o Organizations o Information o Ideas c. Who Markets? o Marketers and prospects. Marketer is someone who seeks response. Prospects is the party who gives response. Marketers responsible for demand management. Eight demand dtates are possible: - Negative demand - Nonexistent demand - Latent demand - Declining demand

Irregular demand Full demand Overfull demand Unwholesome demand

Markets; collection of buyers and sellers who transact over a particular product or product class. Five basic market: - Resource market - Manufacturer market - Intermediary market - Consumer market - Government market Marketer use the term market to grouping the customer, ex: need market, product market, demographic market, geographic market, etc. Key Customer Markets - Consumer markets - Business markets - Global markets - Non provit and governmental markets Marketplaces (physical), marketspaces (digital), and Metamarkets (cluster of complementary products and services that closely related in the mind of consumer, but spread across diverse industries).

Core marketing Concepts - Needs (basic requirement), Wants (need of specific object), and Demands (wants+ability to pay). Five types of needs: Stated needs Real needs Unstated needs Delight needs Secret needs - Target markets, Positioning, and Segmentation - Offerings and Brands; value proposition (set of benefits that satisfy needs). Brand is offering from a known sorce. - Value and satisfaction; value = combination of quality, service, and price. Satisfaction= perceived performance >< expectation - Marketing channels; 3 kind: communication channel, distribution channel, service channel. - Supply chain; longer channel from raw material to finished products. - Competition; actual and potential rival offerings - Marketing environment; consist of task environment ( actors in producing, distribute, and promote) & broad environment (demographic, economic, socio-cultural, natural, technological, political-legal)

The New Marketing Realities a. Major societal forces o Network information technology o Globalization o Deregulation o Privatization o Heightened competition o Industry convergence o Retail transformation o Disintermediation o Consumer buying power o Consumer information o Consumer participation o Consumer resistance b. New company capabilities o Marketers can use the internet as a powerful information and sales channel o Marketers can collect fuller and richer information about markets, customer, prospects, and competitors o Marketers can tap into social media to amplify their brand message o Marketers can facilitate and speed external communication among customers o Marketers can send ads , coupon , samples, and information to customers who have requested them or given the company permission to send them o Marketers can reach consumers on the move with mobile marketing o Companies can make and sell individually differentiated goods o Companies can improve purchasing, recruiting, training, and internal and external communications o Companies can facilitate and speed up internal communication among their employees by using the internet as a private intranet o Companies can improve their cost efficiency by skillful use of the internet Company Orientation toward the Marketplace - The Production concept; producer concentrate on achieving high production efficiency, low cost, and mass distribution. Consumer prefer products that are widely available and inexpensive. - The product concept; consumer favor products offering the most quality, performance, and innovative features. - The selling concept; - The marketing concept; to achieve organizational objective is being more effective than competitor in creating, delivering, and communicating superior customer value to target market.

The holistic marketing concept; based on development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Four broad components characterizing holistic marketing: o Internal marketing; hiring, training, and motivating able employee. Require vertical alignment and horizontal alignment so everyone understands, appreciates, and supports the marketing efforts. o Integrated marketing; devise marketing activity and assemble marketing program to create, communicate, and deliver value for consumer. All company communication, and channel also must be integrated. o Performance marketing; understanding financial and non financial return to business and society from marketing activities and programs. Consider legal, ethic, social, environmental effect of marketing activities. Financial accountability and social responsibility. o Relationship marketing: Build long-term relationship among customers, employees, marketing partners, & Financial community. Outcome: marketing network.

Updating the 4 Ps a. Old 4 Ps Product Price Place Promotion b. New 4 Ps People; employees are critical to marketing success Processes; creativity, discipline,and structure brought to marketing management Programs; all the firms consumer-directed activities. Performance; capture the range of possible outcome measures that have financial and non financial implications, and implications beyond the company itself. Marketing management tasks Developing marketing strategies and plans Capturing marketing insights Connecting with customers Building strong brands Shaping the market offerings Delivering value Communicating value Creating successful long-term growth

Ch 2. Developing Marketing Strategies and Plans Marketing and Customer Value Value creation and delivery process: - Choosing the value; Perform STP. - Providing the value; determine specific product features, prices, and distirbution - Communicating the value; by utilizing sales force, internet, advertising, and any other communication tools to announce and promote product. The Value Chain A tool for identifying ways to create more customer value. The firms task is to examine costs and performance in each value-crating activity and look for ways to improve it. The value chain identifies 9 strategically relevant activities that create value and cost in specific business, which is: 1. Inbound logistics 2. Operations; convert material to final products Primary activities 3. Outbound logistics 4. Marketing; which include sales 5. Service 6. Procurement 7. Technology development Support activities 8. Human resource management 9. Firm infrastructure Managers needs to: benchmark, learn best practices, look for competitive advantages,create value delivery network. Core Business Process: - Market-sensing process - New-offering realization process - Customer acquisition process - Customer relationship management process - Fulfillment management process Core Competencies Core competencies has three characteristic: 1. It is a source of competitive advantage and makes a significant contribution to perceived customer benefits 2. It has applications in a wide variety of market 3. Difficult for competitors to imitate

To maximize core competencies, need business realignment. The steps are: 1. Redefining the business concept 2. Reshaping the business scope 3. Repositioning the companys brand identity Holistic marketing views in Customer value: Integrating the value exploration, value creation, and value delivery activities for building long term, mutually satisfying relationships among key stakeholders by expanding customer dhare, building customer loyalty, and capturing customer lifetime value. Marketing Plan: a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. a. Strategic marketing plan; lays out the target market, firms value proposition, based on an analysis of the best market opportunities b. Tactical marketing plan; specifies marketing tactics, including product features, promotion, merchandising, pricing, sales channel, and service. Corporate and Divison Strategic Planning Corporate HQ undertakes four planning activities: 1. Defining corporate mission Good mission statements have 5 major characteristic: a. Focus on limited number of goals b. Stress the companys major policies and values c. Define major competitive spheres within which the company will operate d. Take a long-term view e. Short, memorable, and meaningful 2. Establishing Strategic business unit Business = customer satisfying process 3 characteristics of SBU: o It is a single business, or a collection of related businesses, that can be planned separately from the rest of the company o Has its own sets of competitors o Has a manager for strategic planning and profit performance, who controls most of the factors affecting profit. 3. Assigning resources to each strategic business unit o Use GE Matrix analysis o BCG Growth-share matrix (dogs, cash cows, question marks, stars)

4. Assessing growth opportunity Includes planning new business, downsizing, and terminating older businesses. To fill in the strategic-planning gap, we can use 3 options: o Intensive growth; identify opportunities for growth within current businesses Review opportunities for improving existing businesses. Use Product-market expansion grid market penetration strategy, market development strategy, product development strategy, diversification strategy. o Integrative growth Business can increase sales and profits through backward, forward, or horizontal integration within its industry. o Diversification growth Expansion into another kind of business but still have a relation to its original business Business Unit Strategic Planning The process of SBU strategic planning are as follow: 1. Create business mission 2. Do SWOT analysis 3. Goal Formulation Objectives/goal must meet four criteria: a. Arranged hierarchically, from most to least important b. Should be quantitative whenever possible c. Should be realistic d. Must be consistent 4. Strategy formulation Porters generic strategies: o Overall cost leadership o Differentiation o Focus Strategic Alliances: - Product or service alliances - Promotional alliances - Logistics alliances - Pricing collaborations 5. Program formulation - ABC: Activity based costing - Nurture other stakeholders

Develop 7 elements of strategy: strategy, structure, systems, style, skills, staff, shared values.

6. Implementation 7. Feedback and control The key to organizational health is willingness to examie the changing environment and adopt new goals and behaviours.

Product Planning : the Nature and Contents of a Marketing Plan What contained in a marketing plan?: - Executive summary - Situation analysis - Marketing strategy - Financial projections - Implementation controls

Ch 3. Collecting Information and Forecasting Demand Components of a modern Marketing Information System MIS consist of people, equipment, and procedures to gather, sort, analyze, evaluate, and distributed needed, timely, and accurate information to marketing decision maker. It relies on: internal company records, marketing intelligence activities, and marketing research. Internal Records - The Order-to-payment cycle; - Sales information systems - Databases, data warehousing, and data mining Marketing Intelligence - Marketing intelligence system; a set of procedures and sources that managers use to obtain everyday information about development in the marketing environment. To improve the quantity and quality of its marketing intelligence, a company should: o Train and motivate sales force to spot and report new developments o Motivate distributors, retailers, and other intermediaries to pass along important intelligence o Hire external experts to collect intelligence o Network internally and eksternally o Set up a customer advisory panel o Take advantage of government-related data resources

o Purchase information from outside research firms and vendors o Collecting marketing intelligence on the internet; five main ways to research competitors product strengths and weeknesses: Independent customer goods and service review forums Distributor or sales agent feedback sites Combo sites offering customer reviews and expert opinions Customer complaint sites Public blogs o Communicating and acting on marketing intelligence

Analyzing the macroenvironment Needs & Trends - Fad; unpredictable, short-lived without social economic and political significance. - Trend; a sequence of events with momentum and durability. more predictable and durable than a fad. - Megatrend; large social, economic, political, and technological change that is slow to form, and once in place, influence us for sometimes Major Forces in Macroenvironment: 1. Demographic environment a. Worldwide population growth b. Population age mix c. Ethnic and other markets d. Educational groups e. Household patterns 2. Economic environment a. Consumer psychology b. Income distribution c. Income, savings, debt, and credit 3. Sociocultural environment a. High persistence of core cultural values b. Existence of subculture (groups with shared values, beliefs, preferences, and behaviours emerging from their special life experiences or circumstances. 4. Natural environment Environmental issues needs to be integrated into firms strategic plans: a. Shortage of raw materials b. Increased cost of energy c. Increased pollution level d. Changing role of governments 5. Technological environment

a. Accelerating pace of change b. Unlimited opportunities for innovation c. Varying R&D budgets d. Increased regulation of technological change 6. Political-legal environment a. Increase in business legislation b. Growth of special-interest groups

Forecasting and Demand Measurement The measures of market demand Ways to breakdown the market; 1. Potential market; consumer with sufficient level of interest in a market offer 2. Available market; consumer who have interest, income, and access to a particular offer 3. Target market; qualified available market the company decided to pursue 4. Penetrated market; consumer who are buying the companys product Market Demand; Total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Market potential: The limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. Market forecast: Shows expected market demand. Company demand: Companys estimated share of market demand at alternative levels of company marketing effort in a given time period. Company sales forecast: Expected level of company sales based on a chosen marketing plan and an assumed marketing environment. Company sales potential: Sales limit approached by company demand as company marketing effort increases relative to that of competitors.

Ch 4. Conducting marketing Research

Ch 5. Creating Long term Loyalty Relationships Building customer value, satisfaction, and loyalty Customer Perceived Value The difference between the prospective customers evaluation of all the benefits and all the cost of an offering and the perceived alternatives. a. Total customer benefit; perceived monetary value of the bundle of economic, functional, and psychological benefits customer expect from a given market offering. consist of: Product benefit Services benefit Personnel benefit Image benefit b. Total customer cost; perceived bundle of costs customer ecpect to incur in evaluating, obtaining, using, and disposing, of the given market offering consist of: Monetary cost Time cost Energy cost Psychological cost Steps in customer value analysis: Identify the major attributes and benefits customers value Assess the quantitative importance of the different attributes and benefits Assess the company s and competitors performances on the different customer values against their rated importance Examine how customers in a specific segment rate the companys performance against a specific major competitor on an individual attribute or benefit basis Monitor customer values over time Delivering high customer value Loyalty = deeply held commitment to rebuy or repatronize a preffered product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. Value proposition = a promise about the experience a customer can expect from the companys market offering and their relationship with the supplier Value delivering system = includes all the experience the customer will have on the way to obtaining and using the offering

Total Customer Satisfaction Satisfaction: persons feelings of pleasure or disappointment that result from comparing a products perceived performance to expectation. Expectation result from past buying experience, friends and associates advice, and marketers and competitors information and promises. Monitoring Satisfaction Measurement techniques: - Periodic survey; measure repurchase intention and willingness to recommend - Monitor competitors performance; analyze customer loss rate, - Hire mystery shopper; to reports on strong and weak point in buying competitors product

Products and service quality Satisfaction depend on product and service quality. Quality = totality of features and characteristic of a products or a service that bear on its ability to satisfy stated or implied needs. - Conformance quality - Performance quality Impact of quality: High level of quality results in higher level of sustomer satisfaction, which support higher price and lower cost.

Maximizing Customer lifetime value Customer profitability Using Customer profitability Analysis (CPA) and activity based costing (ABC). Measuring customer lifetime value (CLV). CLV = net present value of the stream of future profits expected over the customers lifetime purchases. Company must substract the expected cost of attracting, selling, and servicing the account of that customer, from its expected revenue.

Cultivating customer relationships Customer Relationship Management CRM is the process of carefully managing detailed information about individual customer and all customer Touch points to maximize loyalty. Customer touch point is any occasion which a customer encounters the brand and product from actual experience to personal or mass communication to casual observation. Personalizing Marketing Making sure the brand and its marketing are as relevant as possible to as many customers as possible. Permission marketing; marketing to customer only after gaining their expressed permission. One-to-one marketing; has four steps framework: o Identify your prospect and customer o Differentiate customer in terms of their needs and their value to your company o Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships o Customize products, services, and messages to each customer. Participatory marketing; marketers and customer work together to find out how the firm can best satisfy customer.

Attracting and Retaining Customers Reducing defection o Define and measure it retention rate o Distinguish the causes of customer attrition and identify those that can be managed better o Compare the lost customers lifetime value to the costs of reducing the defection rate Retention Dynamics o Marketing funnel; identifies the percentage of the potential target market at each stage in the decision process, from merely aware to highly loyal. o By calculating conversion rates ( the percentage of customer at one stage who move to the next) the funnel allow marketers to identify any bottleneck stages or barrier to building a loyal customer franchise. Managing the customer base Key driver of shareholder value is the aggregate value of the customer base. To improve value, we can use strategies such as: o Reducing the rate of customer defection o Increasing the longevity of the customer relationship o Enhancing the growth potential of each customer through share of wallet, cross selling, and up-selling

o o

Making low profit customers more profitable or terminating them Focusing disproportionate effort on high-profit customers

Building Loyalty Types of marketing activities used to improve customer loyalty and retention; 1. Interacting with customers Listening to customers Be an advocate to customers Take the customers side and understand their point of view 2. Developing loyalty programs Reward customers who buy frequently and in substantial amounts Club membership programs 3. Creating institutional ties Supply customer with special equipment that helps them, so they feel hard to turn away 4. Win backs Discover customer satisfaction by using exit interview, lost-customer survey.

Customer databases and Database Marketing Customer database = an organized collection of comprehensive information about individual customers to prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships. Database marketing = is the process of building, maintaining, and using customer database and other databases (products, suppliers, resellers) to cantact, transact, and build customer relationships. Customer database Customer mailing lists Consumer past purchases Demographics Psychographics Mediagraphics Business database: Business customer past purchases (volume, price, profits) Buyer team member names Status of current contracts

Data Warehouse and Data Mining Data warehouse: to capture, query, and analyze inference of data to know customers needs and responses Data mining : extracting useful information about individuals, trends, and segments. Companies can use their database in 5 ways: 1. To identify prospects 2. To decide which customer should receive a particular offer 3. To deepen customer loyalty 4. To reactivate customer purchases 5. To avoid serious customer mistake The downside of database marketing and CRM Five main problems can prevent a firm from effectively using CRM: 1. Some situations are just not conducive to database management, such as: a. The product is once-in-a-lifetime purchase b. Low loyalty to brand c. The unit sale is very small d. Gathering information is costly e. There are no direct contact between the seller and ultimate buyer 2. Building and maintaining aa customer databases requires a large, well placed investment in computer hardware, database software, analytical programs, communication links, and skilled staff 3. Difficult to get everyone in the company to be a customer oriented and use the available information 4. Not all customers want a relationship with the company 5. The assumptions behind CRM may not always hold true

Ch 6. Analyzing Consumer Markets What Influences consumer behavior Consumer behavior study how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Influencing factors in consumer behavior are: 1. Cultural Factor Subcultures provide more specific identification and socialization for their members, includes: Nationalities Religions Racial groups Geographic regions Social classes relatively homogenous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests, and behavior. Classification could be: Lower-lower Upper-lower Working class Middle class Upper middles Lower uppers Upper uppers 2. Social factor Reference groups groups that have direct (membership groups) or indirect influence on their attitudes / behavior Membership groups consists of: Primary groups; interacts fairly continuosly and informally (family, friends, neighbors, coworker) Secondary groups; formal & Less continous interaction (religious, professional, and trade union groups) Reference groups can influence in 3 ways: Expose an individual to new behavior and lifestyles Influence attitudes and self-concept Create pressures for conformity Aspirational groups; persons hope to join Dissociative groups; those whose values or behavior an individual rejects

Opinion leader ; person who offers informal advice or information about a specific product or product category. Family Family of orientation ; parents and siblings Family of procreation ; spouse and children Roles & status Role ; consists of activities a person is expected to perform Status ;

3. Personal factor Age and stage in the life cycle Family life cycle and the number, age, and gender of people in the household at any point in time Psychological life cycle stages Critical live events or transitions Occupation and economic circumstances Personality and self concept Personality ; a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. Kind of traits: self confidence, dominance, autonomy, deference, sociability, defensiveness, adaptability. Brand personality ; specific mix of human traits that we can attribute to a particular brand. According to Jennifer Aaker, kinds of trait in brand personalities are: Sincerity Excitement Competence Sophistication Ruggedness Peacefulness Passion Passive likeableness ascendancy Self concept ; how we would like to view ourself Lifestyle and values Lifestyle ; a persons pattern of living in the world as expressed in activities, interests, and opinions. Lifestyle shaped by whether customer are: money constrained or time constrained. Core values ; beliefs systems that underlie attitudes and behaviors

Key psychological processes Motivation Kinds of needs ; biogenic needs and psychogenic needs Freuds theory ; psychological forces shaping peoples behavior are largely unconscious, and that a person cannot fully understand his or her own motivation. Maslows theory ; human needs are arranged in a hierarchy from most to least pressing pyshiological needs, safety needs, esteem needs, self actualization needs. Herzbergs theory ; developed a two-factor theory that distinguishes dissatisfiers from satisfiers.the absence of dissatisfiers is not enough to motivate a purchase, satisfiers must be present. Perception ; the process of how we select, organize, and interpret information inputs to create a meaningful picture of the world. Different perception on a same object can be caused by: Selective attention ;screen out most stimuli. Some findings related to it: People are more likely to notice stimuli that are relate to a current need People are more likely to notice stimuli they anticipate People are more likely to notice stimuli whose deviations are large in relationship to the normal size of stimuli. Selective distortion ; the tendency to interpret information in a way that fits our perceptions Selective retention ; retained information that supports our attitudes and beliefs Subliminal perception ; consumer are not consciously aware of them, yet they affect behavior Learning ; change in behavior arising from experience Drive ; strong internal stimulus impelling action Cues ; minor stimuli that determine when, where, and how a person responds Generalization Discrimination ; recognize differences in sets of similar stimuli and can adjust our responses accordingly Hedonic bias ; general tendency to attribute success to themselves and failure to external causes Emotions Memory Short term memory (STM) ; temporary and limited repository of information Long term memory (LTM) ; more permanent , essentially unlimited repository Memory process ; Memory encoding ; how and where information gets into memory Memory retrieval ; the way information gets out of memory. 3 facts about it: The presence of other product information in memory can produce interference effects and cause us to either overlook or confuse new data

 The time between exposure to information and encoding has been shown generally to produce only gradual decay Information may be available in memory but not accessible for recall without the proper retrieval cues or reminders.

The buying decision process: The five stage model 1. Problem recognition Internal stimuli External stimuli 2. Information search Levels of engagement in the search: o Heightened attention o Active information search Information sources: o Personal o Commercial o Public o experential Search dynamics Total set awareness setconsideration setchoice setdecision Market partitioning ; process of identifying the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. The hierarchy of attributes can reveal customer segments. Price/type/brand dominant. Each may have distinct demographies, psychographic, and media graphic, and different awareness, consideration and choice sets. 3. Evaluation of alternatives Consumer forming judgement largely on a conscious and rational basis. Basic concept: Consumer is trying to satisfy a need Looking for a certain benefit from the product solution Consumer sees each product as a bundle of attributes with varying abilities to deliver the benefits. Beliefs and attitudes Belief ; descriptive thought that a person hold about something Attitudes ; a persons enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea

 Expectancy value model ; consumer evaluate products and services by combining their brand beliefs according to importance. To stimulate greater interest, we can do: Redesign the product / real positioning Alter belief about the brand / psychological positioning Alter beliefs about competitors brand / competitive depositioning Alter the importance weights / Call attention to neglected attributes Shift the buyers ideal 4. Purchase decision Noncompensatory models of consumer choices ; positive and negative attributes considerations dont necessarily net out. Heuristics ; mental shortcuts. Rule of thumbs in decision process. Three choice heuristic: Conjunctive heuristic ; consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternatives that meet the minimum standard for all attributes Lexicographic heuristic ; consumer chooses best brand on the basis of its perceived most important attributes Elimination-by-aspect heuristic ; consumer compare brand on an attribute selected probabilistically Intervening factors Factors that can intervene between purchase intention and purchase decision: Attitudes of other, depends on: The intensity of the other persons negative attitude toward our preffered alternative Our motivation to comply to other persons wishes Unanticipated situational factors Factors influencing consumer decisions to modify, postpone, or avoid a purchase : Functional risk Physical risk Financial risk Social risk Psychological risk Time risk Degree of perceived risk vary according to: Amount of money at stake Amount of attribute uncertainty Level of consumer self confidence 5. Postpurchase behavior Postpurchase satisfaction

o Satisfaction = expected vs perceived o Satisfied, disappointed, delighted Postpurchase actions o Satisfied = repeated buy o Dissatisfied = abandon product o Public action ; complaining to the company, going to a lawyer, etc o Private action ; stop buying the product (exit option), warning friends (voice option). Postpurchase uses and disposal o A key driver of sales frequency is product consumption rate. Moderating effects on consumer decision making o Low involvement consumer decision making Elaboration likelihood model ; model of attitude formation and change. Two means of persuation: - Central route ; attitude formation or changes stimulate much thought and is based on consumer diligent, rational consideration, of te most important product information. - Peripheral route ; attitude formation or change provokes much less thought and result from the consumers association of a brand with either positive or negative peripheral cues. Techniques to convert low involvement products to high involvement : - Link the product to an engaging issue - Link the product to a personal situation - Design advertising to trigger strong emotion related to personal value or ego defense - Add an important feature o Variety-seeking buying behavior Brand switching occurs for the sake of variety, not dissatisfaction.

Behavioral decision theory and behavioral economics Decision heuristics o Availability heuristic ; consumer base their prediction on the quickness and ease with which a particular example of an outcome comes to mind. o Representativeness heuristic ; consumer base their prediction on how representative or similar the outcome is to other example. o The anchoring and adjustment heuristic ; consumer arrive at an initial judgement and the adjust it based on additional information. Framing ; the manner in which choices are presented to and seen by a decision maker. o Mental accounting ; the way consumers code, categorize, and evaluate financial outcomes of choices. the tendency to categorize funds or items of value even though there is no logical basis for the categorization.

Core principles of mental accounting: Consumers tends to segregate gains Consumer tends to integrate losses Consumer tends to integrate smaller losses with larger gains Consumer tends to segregate small gains from large losses. Prospect theory ; consumer frame their decision alternatives in terms of gain and losses according to a value function.

Ch 8. Identifying Market Segments and Targets Bases for segmenting consumer market Market segmentation divides market into a well defined slices Market segment consist of group of customer who share a similar set of needs and wants Two broad groups of variable to segment consumer market: descriptive characteristic & behavioral decision Geographic segmentation ; divide market into geographical units o Division by: nations, state, region, counties, cities, neighborhood o Operate in few areas, or in all areas but by considering local variations o Grassroot marketing ; getting close and personal to individual costumer possible o Marketing by zip code o Customer cloning ; assume best prospects live where most of the customers already come from o Some approach combine geographic data with demographic data Demographic segmentation o Age & lifecycle stage Consider also psychological age o Life stage Going through a divorce, marriage, taking care of old parent, etc o Gender Women communal minded, take in more of the data in their immediate environment, pick it up without prompting, relate to a product in amore personal level, have more control/influence in buying decision. Men more self-expressive, goal directed, need to be invited to touch the product, like to read product information, o Income Trading up Trading down Trading over switching spending from one category to another o Generation Influenced by the time in which it grows up music, movies, politics, etc. creating similar outlook and values. Millenials (Gen Y) ; 1979-1994 echo boomers, Wired, have a sense of entitlement, highly socially conscious, concerned about environmental issues, selective, confident, impatient, turn off by overt brandingpracticess & hard sell. Can be reach with this approaches; Online buzz Students ambassador Unconventional sports Cool events Computer games

 Videos Street teams Gen X ; 1964-1978 raised in more challenging times, parents working, economic uncertainty, social & racial diversity accepted, technology is rapidly changing, feel self sufficiency (able to handle any circumstances), pragmatic , individualistic. Baby boomers ; 1946-1964 wealthy target, power and controlling of the country wealth, influenced by boom-boom effect, Silent generation ; 1925-1945 o Race and culture Multicultural marketing ; recognizing different ethnic and cultural segments that have different needs and wants require targeted marketing activities Hispanic Americans ; suffered from greater unemployment, diminished disposable income, lower mortgage and credit card debt, two or more income earners, greater propensity to buy advertised brands, share strong family values, strong roots to origin country, need for respect, brand loyalty, keen interest in product quality, value oriented. African Americans ; proud of cultural heritage & respectful of family ties, fashion conscious, motivated by quality and selection, influence by children, Asian Americans ; brand conscious, least loyal to particular brand,care more about what other thinks, share core values of safety and education, affluent & well educated. Lesbian, gay, bisexual, & transgender (LGBT) ; Psychographic segmentation o Psychographic ; the science using psychology and demographics to better understand consumers. o Consumer are divided into different groups on the basis of psychological/personality traits, lifestyle, values. o VALS segmenting main dimensions are: consumer motivation ( ideals, achievement, self expression) & consumer resources (low resources, high resources) o Groups with higher resources: Innovators successful, sophisticated, active, high self-esteem upscale, niche oriented Thinkers mature, satisfied, reflective people. Motivated by ideals, value order, knowledge and responsibility durability, functionality, value Achievers successful, goal oriented, focus on career & family favor premium products that demonstrate success to peers Experiencers young, enthusiastic, impulsive, seek variety & excitement fashion, entertainment, socializing. o Groups with low resources: Believers conservative, conventional, traditional prefer familiar products, loyal to brands Strivers trendy and fun loving, resource constrained stylish product that emulate the purchase of those with greater material wealth Makers practical, down to earth, self sufficeient, like work with their hands seek practical or functional purpose products

Survivors elderly, passive, concern about change and loyal to favorite brand

Behavioral segmentation o Divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. o Needs and Benefit ; not everyone who buys a product has the same needs or wants the same benefits from it. o Decision roles Initiator Influencer Decider Buyer user o User and usage Occasions User status ; nonuser, ex user, first-time user, regular user, potential user, etc. Usage rate ; light, medium, heavy user Buyer-readiness stage ; unaware, aware, informed, interested, desired, intend to buy. employ a marketing funnel. See also loyalty status: Hard-core loyals ; buy only one brand all the time Split loyals ; loyal to two or three brand Shifting loyals ; shift loyalty from one brand to another Switchers ; no loyalty to any brand Attitude Enthusiastic Positive Indifferent Negative Hostile Multiple bases ; combining different behavioral bases Bases for segmenting business market Demographic o Industry o Company size o location Operating variables o Technology o User or non user status o Customer capabilities Purchasing approaches o Purchasing-function organization

o Power structure o Nature of existing relationship o General purchasing policies o Purchasing criteria Situational factors o Urgency o Specific application o Size or order Personal characteristic o Buyer-seller similarity o Attitude toward risk o loyalty Market targeting needs based market segmentation approach

effective segmentation criteria ; to be useful, market segments must rate favorably on five key area:

Porters Five forces that determine intrinsic long run attractiveness of a market or market segment: o threats of intense segment rivalry o threat of new entrance realted with barrier to entry condition o threat of substitute product o threat of buyers growing bargaining power o threat of supplier growing bargaining power evaluating and selecting market segment ; firm must look at 2 factors: segments overall attractiveness, companys objectives and resources. o full market coverage ; attempts to serve all customer groups with all products they might need. By using: mass marketing (undifferentiated) ignores segment differences, goes after the whole market with one offer create large potential, and lower cost unit differentiated marketing sell different product to different segment o multi segment specialization selective specialization firms select a subset of all the possible segment, each objectively attractive and appropriate. Supersegment a set of segment sharing some exploitable similarity Product specialization sell a certain product to several different market segment Market specialization serving many needs of a particular customer group o single-segment concentration firm markets to only one particular segment niche marketing o individual marketing customerization o ethical choice of market targets

Ch 9. Creating Brand Equity Four main steps in strategic brand management process: Identifying and establishing brand positioning Planning and implementing brand marketing Measuring and interpreting brand performance Growing and sustaining brand value deals with brand positioning Brand: a name, term, sign, symbol, or design, or a combination of them intended to identify the goods or services of one seller or group of seller and to differentiate them from those of competitor. The differentiation may be functional, rational, or tangible (product) The differentiation may be symbolic, emotional, or intangible (abstract sense)

What is brand Equity Role of Brands o Identify the source or maker of a product o Simplify decision making and reduce risk (for consumer) o Simplify product handling or tracing o Legal protection for unique feature or aspects of the products o Signal a certain level of quality o Create a barrier to entry o Tools to secure competitive advantage o Strong brands result in better earnings and profit performance create greater value for shareholders Scope of branding o On physical goods o On services o On a store o On persons o On places o On organization o On ideas Defining brand equity

 The power of a brand lies in what customers have seen, read, heard, learned, thought, and felt about the brand over time. Customer based brand equity o Positive customer based brand equity react more favourably to a product and the way it is marketed when the brand is identified, than when it is not identified. o Negative customer based brand equity react less favourably to a product and the way it is marketed when the brand is identified, than when it is not identified. Three key ingredients of customer based equity: o BE arises from differences in consumer responses o Differences are result of consumers brand knowledge o BE is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand.

Brand equity models o Brandasset valuator ; four key components of brand equity are:

Brandz ; brand building follows a series of steps:

Brand resonance model ;

Building brand equity Marketers build brand equity by creating the right brand knowledge structures with the right consumers. Three main sets of brand equity drivers: The initial choices for the brand elements or identities making up the brand (brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and signage) The product and service and all accompanying marketing activities and supporting marketing programs. Other associations indirectly transferred to the brand linking it to some other entity (a person, place, or thing)

 Choosing brand element o Brand element: devices which can be trademarked, that identify and differentiate the brand o Brand element choice criteria: Memorable Meaningful Likable Transferable Adaptable protectable o Developing brand element Designing holistic marketing activities o Brand contact; any information-bearing experience, whether positive or negative, a customer or prospects has with the brand, its product category , or its market. o Integrated marketing; mixing and matching marketing activities to maximize their individual and collective effect Leveraging secondary associations o Create brand equity by linking the brand to other information in memory that conveys meaning to consumers o Secondary brand association can link the brand to sources such as: The company itself Countries or other geographical regions Channels of distribution Other brands Characters Spokespeople Sporting or cultural event Other third-party sources

 Internal branding o Consists of activities and processes that help inform and inspire employees about brand o Train and encourage distributors and dealers to serve their customers well o Brand bonding; when customers experience the company as delivering on its brand promise o Important principles for internal branding: Choose the right moment Link internal and external marketing Bring the brand alive for employees Brand communities o A specialized community of consumer and employees whose identification and activities focus around the brand o Three characteristic identify brand communities:

Measuring brand equity Indirect approach ; identify & tracking consumer brand knowledge structures Direct approach ; actual impact of brand knowledge on consumer response to different aspects of marketing

Managing brand equity Brand reinforcement Brand revitalization

Devising a brand strategy Branding decision o Individual or separate family brand names o Corporate umbrella or company brand name o Sub-brand name combine 2 or more of the corporate brand Brand portfolios ; set of all brand and brand lines a particular firm offers for sale in a particular category or market segment. Roles of brand as a part of a portofolio: o Flankers o Cash cows o Low-end entry level o High-end prestige Brand extension

Customer equity

Brand Equity Is the added value endowed on products and services and may be reflected in the way consumer think, feel, and act with respect to the brand. Customer-based brand equity is the differential effect brand knowledge has on consumer response to the marketing of that brand. Three key ingredients of customer based brand equity is: 1. Brand equity arises from differences in consumer response 2. Differences are result of consumers brand knowledge 3. Brand equity reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand.

Ch. 10 Craft the brand positioning Positioning statement: - Target market harus didefinisikan dengan jelas - Kategori dari merk harus jelas - Points of difference - Kelebihan dari produk - Reason to believe Brand identity:

Brand image: persepsi konsumen atas brand identity

Term Paper Maks 15 hal Originalitas Free topic Connect with marketing concept