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Affirmer understands and acknowledges that Creative Commons is not a + party to this document and has no duty or obligation with respect to this + CC0 or use of the Work. + +For more information, please see + diff --git a/README.md b/README.md new file mode 100644 index 0000000..0ef32eb --- /dev/null +++ b/README.md @@ -0,0 +1,2 @@ +Intro-to-marketing-course-notes +=============================== diff --git a/Week1.md b/Week1.md new file mode 100644 index 0000000..98809f3 --- /dev/null +++ b/Week1.md @@ -0,0 +1,780 @@ +--- +title: "Introduction to marketing: Part 1" +author: "François Pelletier" +output: pdf_document +--- + +# Week 1: BRANDING: Marketing Strategy and Brand Positioning + +## 1.1: Building Strong brands + +What is marketing ? + + - Study of market exchange between two or more partners. + - This simpliest example is having one buyer and one seller. + +### Spectrum between two extremes: + +1. Seller's market: + - Customer have to come to the seller. + - There is a strong focus on products. + - Profit comes from volume + - Success is measured with market shares and economy of scale. + +2. Buyer's market: + - Seller have to meet the needs of the customer. + - Every customer wants something different, so the seller has to pick and choose customers + - Leads to segmentation. + - Profit comes from creating value and selling at a premium price, building loyalty over time + - Success is measured with customer share. + - Expensive to acquire customers but cheaper to keep them over time + - Use cross-sellong of complimentary products + +3. Connected community: + - Based on globalization and internet. + - Can get good and bad opinions widely spread fast. + - Notion of customer experience: + - customer value + - happens through the whole purchase process : before and after transaction + +4. Economic uncertainty + - Recession: people lose trust in market + - Sellers have to be + - authentic and deliver genuine services and value to keep trust over time + - disciplined + - adapting fast to changes + +### 4 Orientations of marketing + +1. Production: Persuade customer they want your product +2. Marketing: Persuade firm to offer what the cusomer wants +3. Experience: Manage entire experience with firm +4. Trust: Building a relationship of trust and discipline + +### Sources of value for the customer + +1. Generic +2. Differentiated product and services +3. Experiential value +4. Genuine value + +### Competitive advantage + +No. | Advantage | Measure +---|---|--- +1. | Lowest cost | Market share +2. | Quality and service: Customer knowledge and data | Customer share and loyalty +3. | Transformation: custoemr as co-creator of value | Buzz / Word of mouth / Referrals +4. | Trust: discipline | Reduced cost of acquisition of a customer + +### Three principles of marketing + +1. Customer value +2. Differentiation +3. Segmentation, targeting and positioning + +### 4 P's of marketing (marketing mix) + +Name | Refers to +---|--- +Product | Seller +Place | Distribution +Promotion | Advertisement +Price | Buyer + +## 1.2 Strategic marketing + +### Framework: Market-driven principles + +1. Know your markets + - What customers want + - How competitors react + - By doing market research +2. Customers have the final say + - Assume customers go through data in 3 bundles + 1. Price and functionality + 2. Product features and design + 3. Can be customized to meet needs + - Focus on one bundle and be satisfactory on the two others +3. Commit to being first in the markets you serve by looking at + - Structure + - Resources prioritization + - People you hire + +### Value map + +![Value map](file:///home/francois/Intro-to-marketing-course-notes/1_2_001_Value_Map.png) + +Provide a fair value for 2 of the 3 bundles. Provide superior value for 1 on the 3 bundles. + +### Strategies for leadership + +![Expectations](file:///home/francois/Intro-to-marketing-course-notes/1_2_001_Expectations.png) + +1. Product attributes -> Operational excellence -> Customization +2. What are customer expectations -> fair value +3. Where you are vs. your competitors + +Short term goals: Be at fair value for everything +Long term goals: Be the best at one of the bundles, be good at others + +### Examples + +1. Operational company + - Allocation of resources + - Prioritize IT +2. Performance superiority + - R&D company + - Innovative staff who doesn't like heavy hierarchy and structure +3. Customer intimacy + - Market research + - Customer comes first + +Mature products: High cost efficiency and high performance superiority +Personal services: High customer intimacy, low cost efficiency + +## 1.3 Segmentation and marketing + +### Segmentation, targeting and positioning framework (STP) + +1. Segmentation: + Variables that allows segments +2. Targeting: + Evaluate attractiveness of each segment and choose one +3. Positioning: + Concept for each target segment, select best and communicate it + +Market segment: + + - Dividing into subsets + - Marketing target + - Reach with a distinct marketing mix (4P) + +### How to divide market segments + +1. Characteristics of the customer + - Most common + - Age, richness, gender +2. Benefits sought +3. Systematic, product-related + - Purchasing behavior + - By channel + - Frequency + - Shopper vs loyal +4. Cohort analysis + - Generations + 1. Great depression + 2. World War II + 3. Post War + 4. Boomers + 5. Generation X + 6. Generation Y + - Likes: + 1. Free content + 2. Telecommunication + 3. Everything is social + 4. Wireless, right fit + - Dislikes: + 1. Anonymous mass market + 2. Beaten paths + 3. Restricted access + 7. Millenials + - Big shoppers: + 1. Co-purchase with parents + 2. Live or supported by parents + - Information is experienced electronically + 1. Multi-tasking + 2. Co-creator of content / products / medias + 3. Connected + 4. Socially responsible +5. Geographic segmentation + - Regional segmentation + - Zip clustering + - PRIZM algorithm + +### Select a target segment + +What makes a segment attractive ? + +1. Segment attractiveness vs capability +2. Monitoring if actual buyers match segment +3. Criteria + - Segment size + - Growth potential of segment + - Value + - Stability over time +4. Competitors within segment + - Number and strength of competitors + - Current company position + - Ease of entry + - Easy of competitive entry + +### Market targeting + +- Develop measures of segment attractiveness +- Select based on business capabilities + +| | *Segment attractiveness* | | +|----------------------|-------------------------|---------| +| *Competitive strength* | *Low* | *High* | +| Low | Stay away | Beware | +| High | Domination is essential | Perfect | + +## 1.4 Positioning + +A brand is a proprietary trademark: + + - An informal contract, a relationship: + - Promise + - Specific benefits + - Quality + - Value + - It is whatever the customer thinks it is, in a relationship mindset + +### Positioning: + +1. Target segment (for whom) +2. Point of difference (reason to but) +3. Frame of reference (points of parity) + +A positioning: + + - Make use of all of the elements in the marketing mix + - Focus on a few key benefits + - Must be defendable + - Require making choices, because you can't do everything + +A strategic idea: + + - Big picture: + - What products to sell + - Customers and competitors + - Tactical + - Messaging + - Strategic and technological + +### Points of parity + +What is shared with other brands: + + - Category: What is a grocery store (what it must have) + - Competitive: Negate competitors' points of difference + +### Points of difference + +Points of difference are what differentiate from other brands: + + - Strong, favorable, unique brand associations + - Similar to notion of USP (Unique selling proposition) + - SCA (Sustainable competitive advantage, long-term advantage) + - Performance attributes, benefits, imagery, design + +### Criteria: + +1. Desirable: + + - Relevant + - Distinctive + +2. Deliverable: + + - Feasibility: affordability, possibility + - Communicability + - Sustainability: internal commitment, difficult to attack + +## 1.5 Brand mantra (Elevator speech) + +Define a brand in 30 seconds + +Mental map: brand associations and responses for a target market. What comes to mind when you think about it ? Separate brand associations in categories. + +Core brand values: + + - Set of abstract concepts and phrases + - Select 5-10 most important for points of parity and points of difference + +Brand mantra: + + - Heart and soul + - Brand essence: core brand promise + - Function (nature, type of experience) + - Descriptive modifier (clarifies nature) + - Emotional modifier (how provide benefits) + - Communicate + - Simplify + - Inspire + +Use internally to guide decisions and what should/shouldn't be associated with. + +## 1.6 Experiential branding + +### Connected community + +Customer experience is: + + - Social, behavioral, emotional + - Triggered stimulations + +Process / Result / Living / Undergoing / Situations + + - Connect brand and company to customer lifestyle. + - Put actions and purchase occasions in a broader social context + +Traditional view | Experience view +---|--- +Differentiation | Experience +Promise | Relationship +Attributes | Personality +Static | Dynamic +Mass | Individual +Awareness | Relevance + +### Experiential brand positioning + +Experiential brand positioning is: + + - Multisensory + - Different from all competitors + +Brand value promise: describe what customers: + + - Gets, sense, feel, think, act, relate to, ... + - For all channels of distirubtion + +### Experiential components + +Experiential components are: (Schmitt 1999) + + - 5 senses: Across senses + - Emotions: Mild / Strong positive feeling + - Cognitive: appeal to intellect / creativity / surprise + - Behave: Experience / lifestyle / enrich / alternative + - Social: community, belonging, culture + +### Strong vs weak brands + +Strong | Weak +---|--- +Make clear promises kept over time | Vague promise that change +Rich unique brand equity | Very general equity +Strong thoughts and feelings | Low emotional commitment +Dependable, delivers consistently | Spatly reputation, create doubt +Loyal frachise | little loyalty, pricing based and short-term +Superior product and processes | Promotional incentives +Distinctive | Not distinctive +Alignment of internal and external commitment to the brand | No internal alignment +Stay relevant | Gets outdated + +# Week 2 - Customer Decision Making and the Role of Brand + +## 2.1 Shopper marketing + +How customers make decisions: shopping experience + + - Impulse purchase + - Habit, intuition, emotion + - What they see and what they miss + - Personal relevance + +Multi-staged / Multi-channeled process + +Simple stage models: + + - Customer behavior + - Marketing actions: + 1. Awareness of need + 2. Identification of products + 3. Information + 4. Evaluation + 5. Purchase + 6. Use + 7. Post-purchase evaluation + +Strategy: Sources of information axis and time of day axis: focus on each stage at each time + +## 2.2 Shopping process + +The shooping process consists of the following steps: + + - Recognise a need: Satisfy by buying a product + - Natural need: food, replace a product + - Create a need: + 1. Pay attention to product and brands + 2. Know the trigger events and when they occurs + 3. Create a new trigger event + - Shopping goals: + 1. Seasons and holidays (triggers in store and online) + 2. Exclusive offers (emails) + 3. Oil change (reminders) + 4. Haircut (notices) + - Create "news" for customers on website and social networks + +## 2.3 Information search stage + +The next stage after identifying a need: + +- Different products +- Consideration set: + 1. limited to 3-4 alternatives + 2. Evoked set (number of brands that you can remember) + 3. From all brands set, through: + - In store considerations + - Accidentally + - Found through search + - Evoked set + - Branding advertisement + - Unrecalled set + 4. Aim: The consideration set + +Online: + + - Interactive display + - Website search + - Online flagship store + +In store: + + - Flagship stores + - External search (what drives attention, goal for going in store) + - Social influences: social networks, salesperson, customer reviews + +Get customer's attention: + + - Capacity is limited + - Information can be too much: filters, cocktail party effects + - "get it" + - Color blocks / packaging + - Pack structures: different lines of quality / natural / flavours + +## 2.4 Choice overload + +Too much information = Choose not to choose + +Perceived variaty vs actual variety: reconciling the paradox + + - Assortment stage: Variety is good + - Choice stage: Variety can be complex + - Align the attributes (one shelf for a characteristic) + - Have an expert on-site + - Aligh products the way the customer thinks they should be + +## 2.5 Purchase stage + +1. Product must be in stock +2. Evaluate alternatives and pick a brand + - Fair price + - Increase accessible variety (multiple purchases) + +### Mindless shopping + +- Price awareness is 12 seconds +- 85% only chose the product they first handled +- 90% only look at onesize +- After putting in cart, 21% can't estimate price, 50% are right on price +- Price is evaluated relatively to a reference price. Context matters: + 1. Internal benchmark + 2. External benchmark: list price vs. sale price + 3. Competitors +- Discount too often : not a fair price +- How much variety: attractive names for flavors and colours + +## 2.6 Post-purchase + +Choose to repurchase or tell others + +Customer satisfaction: + + - Actual performance not really evaluated + - Perceived performance + - Expectations are reasonable: happy or unhappy in respect to expectation + +Positive | Negative +--- | --- +Repurchase | Switch to competitor +Positive word of mouth | Negative word of mouth +|| Complain to company (address complaint can result in positive) +|| Lawsuit + +- Customer reviews are effective. + +### Messages that catch on + +--- | --- | --- +S|ocial currency | Share what makes us look good +T|riggers | When reminded, one share +E|motion | Emotional messages are more powerful +P|ublic | Public is more catching +P|ractical value | Useful and informative +S|tories | Like to tell good stories (background of a product) + +# Week 3 - Effective Brand Communications Strategies and Repositioning Strategies + +## 3.1 Brand messaging and communication + +Perception: + + - Developing an interpretation of a stimulus + - Most crucial process: + - Affect actions + - Affect what is "true" + +Is constructive + + - Function of context + +Two major factors of bias: + +1. Actual stimulus exposure and attention. No occasion to change or collect data +2. Prior expectation and knowledge + +Two kind of attention: + +1. Involuntary : Collaect data without focus +2. Voluntary: Choose exposure + +Process: + +1. Sensory inputs +2. Exposure +3. Attention +4. Interpretation + - Stroop test: slowing interpretation. Can't block this effect + - Shape of product, optical illusion, proximity bias + - Brand <> Product + +## 3.2 Choosing a brand name + +Choosing a brand name: + + - Brand name, logo, symbol, character, packaging, slogan, colors + - They all work together to provide an identity + - What would they think about the product if they only see brand elements + +Criteria: + + - Memorable + - Easily recognised + - Easily recalled + - Meaningful + - Descriptive + - Persuasive + - Appealing + - Fun and interesting aesthetically + - Rich visual and verbal imagery + - Protectable + - Legally + - Competitively + - Adaptable + - Flexible + - Updateable + - Transferable + - Within / across categories + - Geographical boundaries and cultures + +Strength and weaknesses, strategically balance + +Element | Advantages | Disavantages +---|---|--- +Names | Anchor, Quick | Difficult to change, globalization +Logos / Symbols | Attention calling / Associative / Transferable | Outdated / Ambiguous +Characters | Rich meaning / Attention getting | Outdated / Globalization +Slogan / Jingle | Highly memorable / catchy / meaningful | Translation / music taste +Packages | Recognision / info / meaning | Production / Channel + +## 3.3 Color and taglines + +1. Color + +- Ultimate goal: Own a color (Tiffany, Mary Kay's) +- Separate product lines +- Strong perceptions +- Consistencty is difficult + +![](file:///home/francois/Intro-to-marketing-course-notes/3_3_001_Axes_Color.png) + +### Color table + +Color | Attributes +---|--- +Red | Appetite, love, excitement +Blue | Productive, men, curb appetite +Green | Tranquillity, health, money, nature, fertility +Brown | Reliable, boredom, practical +White | Purity, innocence, empty, spacious +Black | Evil, death, mourning, slim +Yellow | Bright, energy, eye fatigue +Orange | Excitement, enthusiasm, warmth, action +Lavender | Calm, relaxation +Purple | Royalty, waelth, success, wisdom +Pink | Girl, calming, warm + +### Color emotion guide (by The Logo Company) + +![](file:///home/francois/Intro-to-marketing-course-notes/color-emotion-guide-small.png) + +2. Symbols + - Communicate associations + - Multiple associations + - Positive feelings: liking + - Can get outdated + +3. Slogans + - Positioning strategy + - Remove ambiguity + - Create equity and emotion + - Reinforce the name and symbol + +Basics: + + - Short + - Differentiated from competition + - Unique + - Easy to say and remember + - Cannt have any connotation + - Protect and trademark + - Emotion + +Types: + + - Imperative + - Descriptive + - Superlative + - Provocative + - Clever + +## 3.4 Brand elements: Packaging + +1930's packaging research: self-service supermarkets + +Detergent in two boxes: Circle better than triangle for some products + +Aesthetic and function: Grab attention and work well + +Distribution channels: + + - Retailers + - Changing channels + - Which Retailer like which package + +Colors: + + - See preceding section + +Shape: + + - excuse for a new product + - Really strong brand image + +## 3.5 Brand elements: Persuasion + +Objective: Changing people's attitude + +Elaboration likelihood model: Celebrity spokesperson + +Difficult ! Interpret what they already believe + +### 2 routes to persuasion + +1. Central route: + - Motivation (involvment), opportunity and ability to process marketing messages is high + - central cues in messages + +2. Peripheral route: + - Motivation is low + - Peripheral cues in messages + - Heuristic way: + 1. Classical conditioning (associations) + 2. Social proof: everybody is doing it + 3. Reciprocity: You owe me something + 4. Consistency: Always done it that way + 5. Liking: Like me, like my ideas + 6. Authority: Because I say so + 7. Scarcity: Quick, before they are all gone + +### Celebrity endorser + +A good celebrity endorser is: + + - Expert: Information + - Peripheral: Attractive + +1. Considerations: + - Audience fit + - Brand fit + - Attractiveness + - Cost / Exposure / Risk + - Social networks +2. High Q-Rating: + - Appealing to those who do know them + - Ratio of popularity / familiarity + - Marketing evaluations Inc. +3. Transfer of meaning model: + - Appropriate symbolic properties + - Derive from celebrity to product + - Mode brain activity +4. Source models: + - Source credibility: + - Expertise + - Trustworthyness + - Attraactiveness: + - Familiarity + - Likability + - Similarity + +Why some companies kept Tiger Woods and others not ? + +### Use of celebrity + +---|--- +Explicit| Endorse product +Implicit| Use product +Imperative| Should use product +Co-present| Appears with product + +Exposure to marketing cues: + - Motivation to elaborate + ability -> Central route + - Else -> Peripheral route + +## 3.6 Repositioning a brand + +Brand equity must be actively managed over time: must be reinforced + +### 5 rationale for brand change + +---|--- +Initial identity and execution was poorly conceived | Consumer interest, brand association, sales +Target for identity and execution is limited | Reach a broader market +Identity and execution is out of date | keep up to date +Identity and execution loses its edge | old fashioned +Identity and execution just became tired | Change generate "news" + +**Consistency** + +Cognitive drive to maintain consistency (Oldsmobile = Dad) + +1. Evolving brand associations: + - Symbols: Update without changing meaning + - Brand name: Hard to change + - Slogans: Easier to change than name + - New products: Add a modern element +2. Small noticeable differences (Ivory soap) +3. Butterfly effect + - Not so extreme but really noticeable (Green giant) +4. Change the brand name: + - Boston chicken -> Boston market + - Weather channel -> Weather companies + - Starbucks -> (logo only) +5. Evolving brand image of BMW: + - Unpratical + - Wasteful (money) + - Stodgy (German) + - Stuffy (Boomers) + +Important that people believe changes + +Major points: + + - Consistency is valuable for strong brands + - All elements works in harmony + - Change is sometimes necessary but be cautious + - Understand sources of equity: Point of parity / Points of differentiation diff --git a/Week2.md b/Week2.md new file mode 100644 index 0000000..93cb621 --- /dev/null +++ b/Week2.md @@ -0,0 +1,326 @@ +--- +title: "Introduction to marketing: Part 2" +author: "François Pelletier" +output: pdf_document +--- + +# Week 4: Customer centricity + +## 4.1 From product-centric to customer-centric management + +Three axis of marketing + + - Performance superiority: Having the best products + - Operational excellence: Low cost and efficiency + - Customer intimacy: Who is the customer. How intimate we want to get to add value. + +What stores are customer inmtimate ? + +### Product-centric approach + +All about making money by maximising the value of the company +Total value of the company = time value of money -> Maximising shareholders value +Volume and cost reduction: + + - Will it scale : Can we deliver our products and services at scale ? + - Different metrics: + - Volume + - Costs + - Market share (how well you will do right in the future) + +1. Fine tuning the metrics +2. Growth + - PS and OE are now standard + - Search new sources of growth: + - New customer segments and geographies + - Innovation (extending products) + - Companies work in product/service expertise (silos). + - Competitive advantage +4. Mental process: Divergent thinking, different uses for the same product + +## 4.2 Cracks in the product centric approach + +Changes in the last 15-20 years: + + - Emerging trends are here to stay +Leading factors: + + - Commoditization (technology enables product development) + - Lifecycle is shorter + - Always must have a new product coming + - No more natural monopoly power + - Smart customers + - Technology enabled informatino flow + - Aware of options availabl for them + - Put mode demand of companies + - Have to extract value from product + - Retail saturation + - Tech enabled delivery + - Instant availability + - Globalisation + - Deregularization : Must be more competitive + +More demanding customers: + + - How will the product solve my problem + - end-to-end solutions with products form multiple vendors + - Example: IBM + - Customer centric solutions provider + - Harder to commoditize + - Left building and slling products + +Information systems allow customer tracking + + - Before: + Know the sales + Don't know who buys and how many they buy + - Now: Know who buys what and when + +## 4.3 Data driven business models + +Harrahs: + + - Casino chain in the US + - Loyalty programs + - Games / meals / rooms at a really granular data + - Detect thresholds (when to offer a meal, ...) + +Tesco: + + - Grocery chain in UK + - Loyalty program + - What products are boucht in Tesco vs. products bought elsewhere. + - Know which customer can switch to competition easilyDefending against Wal-Mart + +## 4.4 Three cheers from direct marketing + +Individual customers = unit of analysis: + +- Who they are, what they buy +- Determine marketing communication +- Segmentation / Customer lifetime value comes from direct marketing + +What kind of product for the most valuable customers and how to attract them. Capacity to learn and leverage customer information: Should inspire from direct marketing books + +[Being Direct Making Advertising Pay](http://www.amazon.ca/Being-Direct-Making-Advertising-Pay/dp/1558508341/ref=sr_1_fkmr0_1/187-5149283-2579953?ie=UTF8&qid=1415582982&sr=8-1-fkmr0&keywords=lester+winderman+marketing) + +## 4.5 Which firms are customer centric ? + +None of the big firms are really customer centric: + + - Walmart: Best at product-centric + - Apple: Best at product superiority, begins to collect data abour customers with iStore + - Starbucks: Customer-centric only at local level. + - Nordstorm: Great personalized service, but not based on CLV, so does not target the best customers but all of them. + +# Week 5: The Opportunities and Challenges of Customer Centricity + +## 5.1 What is customer centricity + +How do you define customer centricity ? + + - Development and delivery of product and services + - Fulfill the current and future needs of a select set of customers + - Maximise their long-term value to the firm + +You have to be willing to change: + + - Risky + - Require data and models + +Do something even if someone is not an actual customer because he/she will be one later + +## 5.2 Living in a customer-centric world + +- The main goal is still maximising the shareholder's value +- Distinguish the profitable customers from the less profitables ones +- Past is of some guidance for the future +- Focus of future profitability instead of short-term profitability + +- Three tactics: + 1. Acquisition + 2. Retention + 3. Development + +- Customer-centric organisational structure +- Customer data can't be commoditized easily +- Divergent (different uses for the same product) + to convergent thinking (different products for the same customer) + +## 5.3 More reflections on customer-centricity + +There is a balance between really valuable customers and not so valuable ones. +The latter ones add stability to the business like cash or bonds in an investment portfolio. + +*Paradox of customer-centricity* +The more you focus on the most valuable customers, the most you need the other customers too. + +## 5.4 Questions on customer-centricity + +Who is your customer ? + +Example: Healthcare: + + - Patient + - Doctor + - Hospital + - Insurance company + +Procter & Gamble: Customer = Retailers + + - It could be the customers in a few years: get ready for a direct marketing approach + +Barriers to customer-centricity: + + - Data + - Regulatory issues + - Control: Impossible to move + - Specific challenges for each company + - Resources available + - Build IT, hire employees + +What competitors are doing in this area: + + - Financial services + - Hotels and hospitality + - Be the first ones ! + +Does it make sense to be customer-centric ? + + - Technology initiatives + - Experiments + +You have to prepare before taking the big step. + +# Week 6: How Can Customer Centricity Be Profitable? + +## 6.1 How Can Customer Centricity Be Profitable? + +Focus on the right customers for strategic advantage + +Product-centric approach have some cracks: + + - Commoditization + - Well-informed customers + - Globalization + +Customer-centric: + + - Promising alternative + - Not clearly understood + - Many firms are tauted to be customer-centric but are not really + +Clear definition: + + - Celebration of customer heterogeneity + - Customer lifetime value + +How to manage tactics: + + - "Show me the money" + - Can't be world-calss on 3 tactics + - Doing one well can be really lucrative + - A lot trickier than we think of + +Where tu put the extra dollar ? +- Most managers would put it either in retention or development + +### Acquisition + +Metric: Cost per acquisition (CPA): Big mistake to guide customer acquisition performance + +For employees, lawyers, technology: we focus on the best, not the cheapest +Why for customers we would like the cheapest to acquire ? + +VPA: Value per acquisition = Customer lifetime value + + - Upper bound for spending to acquire a new customer + - A lot of value in customers that we don't appreciate + - Match info with what customer prove to be over time + +### Customer acquisition summary + + - Avoid CPA mentality + - Ceiling instead of floors + - Heterogeneity with CLV (search words, geographical, social) + - Be more patient and forward-looking when judging acquisition efforts + - Firms tends to underspend on acquisition + +## 6.2 Customer retention + +Metric: Churn / Attrition / Retention rate + +- Good measure, but need to examine it at the right levevl +- How the retentino rate variaes across customers + +Average retention rate = bad calculation + +[The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value](http://www.amazon.com/Loyalty-Effect-Hidden-Profits-Lasting/dp/1578516870/ref=sr_1_1?ie=UTF8&qid=1416192465&sr=8-1&keywords=the+loyalty+effect+reichheld) + +Right calculation: +Average expected lifetime: Accounts for customer heterogeneity. + +### Customer retention summary + + - There is no average customer + - Difference can be huge between average measures and accounting for heterogeneity + - Attrition elasticity is much lower than in the homogeneous case + - Investment in reducing attrition give more modest returns than expected + +## 6.3 Customer development I + +Make existing customers as valuable as possible +Loyalty programs themselves are not a tool for customer development + + - Cross selling + - Up-selling + - Increase frequency and volume + - Premium pricing + +## 6.4 Customer development II + +Metric: + + - Share of wallet: How many needs are met by this firm + - Amount of product and services + +Share of wallet is not correlated with size of wallet + +Good and bad news about cross-selling + +Good: Customer's share are correlated +Bad: Some customer will not become better customers + + - Upside of developmenet opportunities is more limited than managers think + - Icing on the cake: Not to change the customer but unlock value that is already there + +But: Acquisition is not valuable in saturated markets + +### Overall summary + + - Celebrating heterogeneity + - Smart acquisition + - Don't overspend retention: + flighty customers will fly away no matter what you do or will become unprofitable + +## 6.5 Wrap-up + +Making customer centricity profitable: + + - Need to have the technology to track data and do projections + - Update regularly the CLV + - Break customers into segments that we cam measure: + - When they reach us + - What products they buy first + - What campaign bring them to us + - Allocate retention and development ressources appropriately: + target marketing communications based on a segment characteristics + - Constantly experiment with these tactics + - Send different messages to different people + - Bottom up perspectives to drive product line decisions + - Think about competition identifying the same high-value customers too + + + + + \ No newline at end of file diff --git a/Week3.md b/Week3.md new file mode 100644 index 0000000..2b596b9 --- /dev/null +++ b/Week3.md @@ -0,0 +1,812 @@ +--- +title: "Introduction to marketing: Part 3" +author: "François Pelletier" +output: pdf_document +--- + +#Week 7 : Go to market strategies + +## 7.1 Introduction and execution + +Great idea + Great brand + Target customers = time for execution + +## 7.2 Go to market strategies: Introduction + +1. Omni-channel strategy and online-offline interaction +2. How to find lead users and facilitate influence and contagion +3. Targeting and messaging, pricing to value, customer access and distribution + +### Recap + +- 5c's (Constraints) + + customers (need) + + Competitors (Relative strength) + + Company (Resources) + + Collaborators (Partnership) + + Context (Change) + +- 4P's (Parameters) + + Product + + Price + + Promotion + + Place + +- STP + + Segmentation + + Targeting + + Positioning + +- The product should: + + Deliver exceptional value + + Address a large market + + Be easy to explain and describe + + Require not much capital to test and scale + +**Execution - The key question:** + +What is wrong with the status-quo ? + +### Marketing math 101 + +Success = Product x Marketing + +You have to be good at both, on a scale of 0 to 10: + - Have a great product + - Have the right customer, brand fit, STP and 4P's + +## 7.3 Friction + +2 most important frictions + +- Search frictions: + + + Where do I buy a TV ? + + Who will have the best price and assortment + + Search cost to get a better deal + +- Geographical frictions: + + + Cost vs benefits + + Leave the tyranny of local options + +## 7.4 Goods and information + +Prior to the internet: all markets were local + +Internet: Allow businesses to pool customers + - In smaller markets: get unavailable goods + - Get information: How to spend our time (complement) + +## 7.5 Academic research + +Content: + - A lot is purely local (services, restaurants, people to date) + - Websites: Yelp, OKCupid + +1 million population yiends 50-60 websites + +Product: Farther you live from physical retail location: go virtual else go to nearby store. + +Online: + - Lower prices or lower search costs + - Transact with others more efficiently + - Better information about local activities + - Improved customer convenience + +## 7.7 The long tail + +![](file:///home/francois/Intro-to-marketing-course-notes/7_7_long_tail.png) + +Historically: World of hits +Now: Infinite slots + +Long tail exists: + + - Economics of storage and distribution (supply side) + - Endogenous: moreways to discover variety (demand side) + +Old-new economics: + - Pareto: 80%/20% rule + - Zipf: 2nd: 1/2 of the first, 3rd = 1/3 of the first + +Key principles: tyranny of locality + - Once upon a time in India + +Not enough demand for a movie theater but profitable from renting. + +1. Q1: range Quality/Satisfaction ? +2. Q2: Implies for filtering ? (more variance in satisfaction) + +The ratio Niche/Hits is changing +Distribution efficiency is amplifying +Recommendations and reviews drive sales +Collective sales of niche products > Hits + +## 7.8 The long tail II + +Research findings: + +Disentangling supply side from demand side + +Study: Data from retailer with two distribution channels: internet and catalog. + +Differences between 2 channels: + - Gini coefficient: G = A/(A+B) + - Lorenz curve + +![](file:///home/francois/Intro-to-marketing-course-notes/7_8_Economics_Gini_coefficient2.svg) + +Internet: More evenly distributed sales. differences not attributed to price and availability. More niche products sold. + +- Directed search +- Non directed search +- Recommendation systems + +**Critiques** + +- Natural monopoly (hits) +- Double jeopardy: Unfamiliar are less liked ([Million short](https://millionshort.com/)) + +[Chris Anderson: Technology's long tail](http://www.ted.com/talks/chris_anderson_of_wired_on_tech_s_long_tail?language=en) + +## 7.9 How internet retailing startups grows + +Data required + +- Gather sales info +- Customer ID / Date / Transaction / Value / Zip code +- Geo-demo "real world" data + +Question: +- Why do some locations have more customers than others ? + +What matters the most in internet retailing: + +1. Alter cost-benefit tradeoff: Making things closer sometime at a better price +2. Sales evolution is structured and predictable: sales-time patterns + - Customers talking to each others + - Observation (packaging is a brand) +3. Good to great + - Expansion to niche locations + - Spacial structure + - Find your doppelganger (similar locations far from each other) + - Physical distance vs. social distance + - More chances of interactions if customers have similar tastes in different products and services. + +2 important patterns: + + 1. Sales start in larger cities and spread through proximity + 2. Sales in smaller areas with "similar" kinds of people (age, education, occupation, ...) + +Long tail over location + +![](file:///home/francois/Intro-to-marketing-course-notes/7_9_long_tail_location.png) + +## 7.10 Preference isolation + +Shelf space allocation: Similar % of shelf space than % of population. In total same shelf space in the market for a same amount of customers but is distributed evenly across different stores, indementently of the size of the market. + +Preference minority is correlated to internet sales. + +# Week 8 + +## 8.1 Brands and digital marketing + +Use of connected devices. It is still marketing. + +1. Social commerce: reviews, blogs, network of curators + +2. Digital ad, behavioral targeting / big data, micro-level targeting + +3. Experimentation and testing + +Intangible assets are 50% of the valuation of a business, against 20% in the 50's + +A third of the value is attributed to brands. + +[Stocks for the long run](http://www.amazon.com/Stocks-Long-Run-Definitive-Investment/dp/0071800514) + +![Top 20 brands](file:///home/francois/Intro-to-marketing-course-notes/8_1_brandz_100_chart.jpg) + +Goals and tactics: + +- Brand goals: + + Heart + + Mind + + Thinking + + Feeling +- Key tactic: + + Real world events + +- Outstanding value and positioning: + + Authenticity and transparency (all stakeholders) + + Brand personality and "hjumanization" + + "Infinite" life and potential for serendipity (finding valuable or pleasant things that are not looked for) + +Example: Jetblue + - All you can jet (599$ for 30 days) + - 10m blog refs + - 31m search queries + - 700% lift in traffic + +[29 days until 29](http://www.29daysuntil29.com/) + +\#McDStories -> Negative stories + +Organic celebrity: [Ree Drummond](http://thepioneerwoman.com/), one of the larget blogs in the USA + +## 8.2 Customers and digital marketing + +Customer goals: + + - Attract + - Engage + - Retain + +Subject to: + + 1. Never pay more to acquire than you will recoup (CLV > AV) + 2. CLV need to incorporate RLV (referral lifetime value) + - 8% of customers are marketing agents + - Top 100 will generate 15000 other customers + +Attractive target customer: + + - Monologue to conversation with technology + - Amplification through virtual and real world synergy + - Long tail leverage + - Marketing "spend" as an asset + +Food for thoughht: + - Status-quo experience that is broken + - [Warby Parker](http://warbyparker.com/) + +## 8.3 Reputation and reviews + +Apparently more than 60% of users read reviews before making a purchase and positive reviews increase conversion rates. + +One friction of market: we don't want to try new stuff + +- Many "up" to build a reputation. One "down" to lose reputation (Franklin) +- Reputation is got without merit, lost without deserve (Shakespeare) + +Lots of sites for vacation, restaurants, cars, movies, contractors: + + - Chris Dixon from Trip Advisor: + Startup build from bringing information into market. + - More info: Almost always better + - Information by firms: might affect behavior as well (better or worse) + +Data: + + - Hygiene grades cards shown in window of restaurants (mandatory in LA/NYC) + - Impact of demand: + - A: increase of 5,7% + - B: Increase of 0.7% + - C: Decrease of 1% + - Objective quality went up: Hospital admission for gfood-borne illnesses down 13% + +Principles: + + - Review systems change behavior + - Should be objective and verifiable, not actually the case + +** Amazon and BN ** + +Reviews: 5* are frequent, 1* are rare. Average 4.14/4.45 +Key findings: + - Customer WOM affect sales + - Better eviews boost sales + - Downside effect of 1* is larger than upside effect of 5* + - Text is actually read + +Might motivate to review their own books. Review writing service/ fake reviews. Real reviewer, more than 25000 reviews. So many reviews does not mean fake reviews. Need algorithms. + +According to Bing Lui, a data mining expert: + + - 1/3 reviews are fake + - A lot of money is involved in this market + +[This Man Made $28,000 A Month Writing Fake Book Reviews Online](read.bi/OiuMh0) + +Difficult for a data mining algorithm because of sarcasm, jokes, ... + +Summary: Reviews could be helpful but authenticity is a concern. + +** Trip Advisor ** + +Approach and key findings: + + - Examine distributions of reviews + - Net gains should be highest for independent hotels with single-unit owners. + - Such hotels have more 5* and neighbors have more 1* + +## 8.4 Product life cycle + +![Top 20 brands](file:///home/francois/Intro-to-marketing-course-notes/8_4_life_cycle.png) + +1. Innovators (Research and Development) +2. Early adopters (Introduction) +3. Early majority (Growth) +4. Late majority (Maturity) +5. Laggards (Decline) + +Pricing, customers and distribution are different in 5 stages + +## 8.5 Influence and how information spreads + +Obesity: Controversial / Spreads like a virus (video) + +Network: + + - Pathways through which information, advice, resources, support flows between people. + + - Physical or virtual + - Homophily: + + Characteristics of participants that are similar (cultural, taste, income) + - Can be simple (dyad) or complex (hundred, thousand of nodes) + - Nodes and connections + - Ability to share information and resources + - Constraints / geography + +Participation in a network is a choice. You decide how many contacts you have, how you will be central and how transitive (embedded) you will be. + +You are being affected ny a network: + + - Strangers and loose connectinos can affect us + - 1 person is 4% of influence + - 15 people are 40% of influence + +Six degrees of separation between you and anyone in the world + +## 8.6 Elements of neighborhoods and examples + +Unit of analysis: Zip code, city blocks + +First order contiguity + +![Matrices](file:///home/francois/Intro-to-marketing-course-notes/8_6_matrices.png) + +* [Social contagion and trial on the internet: Evidence from online grocery retailing](http://d1c25a6gwz7q5e.cloudfront.net/papers/1283.pdf) + +Influence parameter is positive and statistically significant after controlling for demographics. + +## 8.7 More examples of influence + +Observations: + +Connections: + + - Numerous friends + - Few carry a lot of influence + +Scale: + + - Inferring who is influencial to whom is difficult + +First social networks: + - Classmates.com + - Myspace + - Facebook + +Heterogeneity: Significant variance (to be expected), influence vs susceptibility to influence. + +Average: 20% of friends have an influence. 1/3 are not influences by anyone. +Distriubtion of posteriori mean + +Regression involving influence parameters: female influience male but not the opposite. + +Simple metrics: Friend count, profile views are inadequate. + +Retention: If top user defects then disproportionate negative effect + +Advantage: Superior identification of best customers. + +## 8.8 More examples of influence pt. 2 + +Helpful to understand network structure as unexpected leaders emerge + +Contagion was at work and is very important in the diffusion process + +Social capital: + + - Ability of individual to secure benefits due to trust, cohesion, reciprocity. + - Frequency and quality of informatino in a community + +High social capital = more efficient transfer of information + +Example: Bonobos.com + +- Apparel category has a non digital attribute. Fit and feel is difficult online. + +- Focus on new trials: incomplete knowledge ex ante. + +- Socially visible + +- 50% of trials would not have happened if no additional information about non-digital attributes was transmitted through social learning + +- Later trials: Driven by better information about non-digital attributes. Through communication with earlier triers + +- Customer category in product life-cycle + +- Proxy for offline social capital in target segment ? +(20-45 men fashion forward) +=> Number of bars and liquor stores in area. + +How could other firms use this idea ? + +# Week 9: Targeting and Messaging, Pricing to Value, Customer Access and Distribution + +## 9.1 Pricing strategies 1: Introduction + +Overview: + +- Motivation and puzzles +- Inputs to the pricing decision + + Floor, ceiling bound to the EVC (Economic value to the customer) metric + + 5C's affect the final location of the actual price between floor and ceiling +- Getting deeper into customer factors + - Price sensitivity: Driver and measurement + - Psychological factors + +**Motivation and puzzles** + +Pricing have a huge impact on profit but is often neglected. +Can't find a private label everywhere else so evaluate the pricing is hard. + +Trader Joe's: Mainly private brands + +Price is more than a number: It sends signals to customer (premium/discount) + +** Relate 5c's and pricing ** + +- Company issues + + - Target margin or IRR (Internal rate of return) + - Consistency in the product line: Price of the new Toyota Camry is influenced by proces of the Honda Accord or Ford Taurus but also by the prices of Toyota Corolla and Toyota Avalon + - Consistency in image: It's difficult for Neiman Marcus to cut proces in response to competition + +- Competitor issues + + - Competitive aggressiveness: Ability of the competitor to sustain a price-based response. Deep pockets / irrational behavior + - willingness to respond on price: Direct financial cost to competition + - Competitor position: Market leaders will initiate, followers will imitate. + +- Collaborator issues + + Incentives: + + - How hard will he work to push your product + - What kind of pull support do they expect + - What other fucntions will perform, how much influence do they have. + - Also, it's not jsut abour margins: ROA also matters + - ROA = Profit/Assets = Profit/Sales * Sales/Assets = Margin * Rotation + +- Customer issues: + + - Price sensitivity (elasticity) + - What drives it ? + - How can we measure it ? + + - Psychological issues + - Odd numbered endings + - Mental accounting + - Prospect theory + - Endowment effect + +## 9.2 Pricing strategies 2: customer factors + +**Price sensitivity is affected by:** + +- Ease of comparison: + + - Private next to branded: + - \+ ease of comparison + - \+ Price sensivity + - You want price comparison to be somewhat difficult + +- Expenditure + + - Large volume users are more price sensitive + - Focal component is large part of total cost: more price sensitive + +- Shared expenses + + - Separation between customer and payer: lessen price sensitivity + - Feeling the "pain" of payment : more price sensitive + +- Price quality inferences: + - Higher price = higher quality + - It lowers the price sensitivity + + +| Var measured | Natural | Experimental | +| --- | --- | --- | +| Actual purchase | Sales data | Field experiment +|Reference / Intention | Surveys | Tradeoff analysis + +Field experiment: + +![fieldexp](file:///home/francois/Intro-to-marketing-course-notes/9_2_field_exp.png) + +In a grocery in the 1990's + +Conjoint analysis: + +- Warby Parker: Demand is highest at 79$ but gets flat before 95$. Sets price at 95$. + +Survey: + + - How likely to buy X at Y price. + - Calculate elasticity through statistical analysis + +** Psychological factors ** + +9 endings: "Discount, in western culture" + +Experiment: + +Reg: 0,83$, 2817 Sales +Disc: 0,63$, + 194% sales +Disc: 0,59$, + 406% sales + +## 9.3 Pricing strategies 3: Psychological factors + +**Mental accounting: who's happier ?** + +A: Won 50$ and 25$ on two tickets +B: Won 75$ + +A: 56, B: 16, No difference: 15 + +One big box for gifts or several smaller boxes + +Bad news: Should be aggregated + +Listing the details: Increase the unhappiness sentiment. +Charge more and give a rebate + +** Prospect theory ** + +[Prospect theory](https://en.wikipedia.org/wiki/Prospect_theory) + +- Internal reference point +- Respond differently to deviation from reference point whether negative or positive. (loss aversion) +- Drive the reference point down with a rebate +- Unhappiness when increased + +**Summary** + +4 inputs to pricing process: + +- Marginal cost +- willingness to pay +- Competitive pressure +- Distributor margins + +Consumer price sensitivity: +- EVC +- Statistical and marketing research methods, regression and conjoint analysis + +Consider human psychology + + +## 9.4 Distribution strategies 1: Introduction + +Overview: + +- Channel structure (who is doing what) +- Channel coordination (who gets compensated) +- Place: final frontier + - Often the less appreciated of the 4 P's + - Managers often underestimate + - Sustainable competitive advantage + - Increasing return to scale + - Source of customer value + - Hard good to soft good + +- Channel structure: Who are the players + +Direct vs. Indirect + +![channels](file:///home/francois/Intro-to-marketing-course-notes/9_4-channels.png) + +Indirect reduce the amount of transactions + +Strategic advantage of direct: + +- erecting barriers to entry +- quality of direct marketing feedback +- Bundling with high margin products and services + +Channel flow / functions + +![channel-flow](file:///home/francois/Intro-to-marketing-course-notes/9_4-channelflow.png) + +How it can be disrupted by technology + +---- + +Physical flows: + +- Breaking bulk +- Assorting +- Assuring availability (Inventory or BTO) +- Customization +- Delivery +- Installation +- Maintenance and repair + +Information flows: + +- Identify needs and solutions +- Identify customers and suppliers +- Matching needs and solutions +- Matching customers ans suppliers +- Assessing and certifying quality +- Negociation / closing the deal +- Ordering +- Market feedback + +Tools and framework: Hybrid grid + +X axis: Activities +Y axis: Individuals and entities + +System optimized / operates efficiently and smoothly + +Example: Posilac, controversial genetically engineered bovine growth hormone + + +## 9.5 Distribution strategies II: Channel design + +Intensive: + +- Selling support not vital +- Minimize cost over customer + +Selective: + +- Tradeoff +- Both are important + +Exclusive: + +- Strongest selling support +- Customer cost of obtaining offering not considered vital + +Implications of functional view: + +- Function or activities required to succeed depends on the nature of your offering +- You can eliminate intermediaries but not functions. Functions are shifted forwards: + + - Forwards: IKEA (Delivery and installation) + - Backwards: Apple store to assure consultative selling + - Sideways: Amazon use FedEx/UPS for delivery + +### Conflict betwen manufacturers and distributors: + +Manufacturers: + +- Carry out full line (no cherry picking) +- Need active involvment in selling new products +- Know more about "your" customers to make better products +- Need to improve sales efforts +- Channel margins are too high + +Distributors: + +- Who wants the dogs ? +- We need exclusive territories +- We do not keep any such records +- Need more trade promotions and discounts +- Your prices are too high + +Solutions: +- Conflict might have some good side +- Vertical conflicts vs. horizontal conflicts + +### Vertical conflict: + +Nike <-> Foot locker + +Managing: +- Integrate (flagship stores) +- Have franchises (downstream) +- Monitor downstream partners (mystery shoppers, surprise visits) +- Alter incentives via trade promotion policies + +### Horizontal conflicts + +Problem between retailers + +**Free riding** + +- Low price and low service vs. High price and high service (customer gets educated) +- Establish boundaries between channels (territories) +- Set appropriate level of distribution intensity +- As distribution becomes more selective. reseller support and merchandising efforts increase + +## 9.6 Horizontal conflict + +Smartphone to find a better price + +Buy online, pickup in store (BOPS) +Some physical inspection: increase store sales and lowers online sales +Research online, purchase offline (ROPO) + +Mores strategies to manage horizontal conflict: + +- Boundaries between channels (how many intermediaries) + - Length (how many intermediaries) + (conflict proportional to length) + - Autonomy + (conflict proportional to autonomy) + - Density + (high conflict at average density) + +- Set appropriate level of distribution intensity +- Multiple brands for each retailers + +## 9.7 The 7 M's + +Overview: +- Trends and data +- "Classic" campaign (Milk) +- 7M Framework +- Mission and message: rational and emotional appeals + +### Classic campaign + +- California milk processor board +- Decrease in consumption +- Milk advertising in 1992 (+ indicators) + +### The 7M's + +- Market (target audience) + - People who currently drinks milk +- Message content (key benefit/positioning) + - Make sure you have enough milk (it compliments many other meals) +- Mission (Awareness, knowledge, interest, trial) + - Increase milk consumption by one glass per week within a year +- Message design (creative solution) + - Got milk? deprivation campaign +- Media strategy (How do I reach them) + - TV, print +- Money (how much do I need to spend ?) + +- Measurement (Was it worth it ?) + - 60% aided recall in 3 months + - 2,67% (30M) increase in annual sales + +## 9.8 The mission and message (rational appeals) + +What are we tying to influence ? + +Rational appeals +- Demonstration (appropriate: key features) +- Spokesperson (positive characteristic get transfered to the product) +- Testimonial (May end up using a long period of time) +- Comparative (Framing, surveys can easily be biased) + +## 9.9 The mission and message (emotional appeals) + +Negative (fear: financial services, public interest) + +Too much fear is not effective + +### Money + +Methods of setting advertising budget: +- Percentage of sales +- Match of better competition +- Objective and tasks methods + +Simplified Parfitt-Colling model: + +- Break even market share: 6% +- 30% of awary try the product +- 40% of those who try will buy again +- aware × try × repeat = market share +- 50% must be aware \ No newline at end of file diff --git a/color-emotion-guide-small.png b/color-emotion-guide-small.png new file mode 100644 index 0000000..0424871 Binary files /dev/null and b/color-emotion-guide-small.png differ diff --git a/color-emotion-guide.png b/color-emotion-guide.png new file mode 100644 index 0000000..54fe405 Binary files /dev/null and b/color-emotion-guide.png differ diff --git a/matrices.tex b/matrices.tex new file mode 100644 index 0000000..fa9f79b --- /dev/null +++ b/matrices.tex @@ -0,0 +1,24 @@ +\documentclass[11pt,english,francais]{article} +\usepackage[utf8]{inputenc} +\usepackage{amsmath} % recommandé pour les mathématiques +\numberwithin{equation}{section} % pour numéroter les équations selon les sections +\usepackage{amsfonts} \usepackage{amsthm} \usepackage{thmtools} + +\begin{document} + +\begin{equation*} +\begin{bmatrix} +0&1&1&0\\ +1&0&1&1\\ +1&1&0&1\\ +0&1&1&0\\ +\end{bmatrix} +\Longrightarrow_{standardization} +\begin{bmatrix} +0&\frac{1}{2}&\frac{1}{2}&0\\ +\frac{1}{3}&0&\frac{1}{3}&\frac{1}{3}\\ +\frac{1}{3}&\frac{1}{3}&0&\frac{1}{3}\\ +0&\frac{1}{2}&\frac{1}{2}&0\\ +\end{bmatrix} +\end{equation*} +\end{document} \ No newline at end of file diff --git a/template.html b/template.html new file mode 100644 index 0000000..5d4d6b6 --- /dev/null +++ b/template.html @@ -0,0 +1,20 @@ + + + + + + +%PAGENAME% +%EXTRAHEADERS% + + + + + +

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