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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) +![Expectations](./1_2_001_Expectations.png) 1. Product attributes -> Operational excellence -> Customization 2. What are customer expectations -> fair value @@ -146,9 +148,9 @@ Personal services: High customer intimacy, low cost efficiency Market segment: - - Dividing into subsets - - Marketing target - - Reach with a distinct marketing mix (4P) + - Dividing into subsets + - Marketing target + - Reach with a distinct marketing mix (4P) ### How to divide market segments @@ -214,22 +216,22 @@ What makes a segment attractive ? - 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 | +| | *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 + - An informal contract, a relationship: + - Promise + - Specific benefits + - Quality + - Value + - It is whatever the customer thinks it is, in a relationship mindset ### Positioning: @@ -239,35 +241,35 @@ A brand is a proprietary trademark: 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 + - 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 + - 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 + - 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 + - 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: @@ -290,19 +292,19 @@ Mental map: brand associations and responses for a target market. What comes to Core brand values: - - Set of abstract concepts and phrases - - Select 5-10 most important for points of parity and points of difference + - 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 + - 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. @@ -312,58 +314,58 @@ Use internally to guide decisions and what should/shouldn't be associated with. Customer experience is: - - Social, behavioral, emotional - - Triggered stimulations + - 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 + - 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 +| 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 + - Multisensory + - Different from all competitors Brand value promise: describe what customers: - - Gets, sense, feel, think, act, relate to, ... - - For all channels of distirubtion + - 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 + - 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 +| 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 @@ -371,24 +373,24 @@ Stay relevant | Gets outdated How customers make decisions: shopping experience - - Impulse purchase - - Habit, intuition, emotion - - What they see and what they miss - - Personal relevance + - 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 + - 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 @@ -396,18 +398,18 @@ Strategy: Sources of information axis and time of day axis: focus on each stage 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 + - 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 @@ -428,23 +430,23 @@ The next stage after identifying a need: Online: - - Interactive display - - Website search - - Online flagship store + - 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 + - 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 + - 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 @@ -452,11 +454,11 @@ 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 + - 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 @@ -484,28 +486,29 @@ 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 + - 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 +| 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) +| STEPPS | Meaning |---| +|---|----------------|---| +| 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 @@ -513,14 +516,14 @@ S|tories | Like to tell good stories (background of a product) Perception: - - Developing an interpretation of a stimulus - - Most crucial process: - - Affect actions - - Affect what is "true" + - Developing an interpretation of a stimulus + - Most crucial process: + - Affect actions + - Affect what is "true" Is constructive - - Function of context + - Function of context Two major factors of bias: @@ -546,40 +549,40 @@ Process: 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 + - 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 + - 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 +| 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 @@ -590,57 +593,57 @@ Packages | Recognision / info / meaning | Production / Channel - Strong perceptions - Consistencty is difficult -![](file:///home/francois/Intro-to-marketing-course-notes/3_3_001_Axes_Color.png) +![](./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 | 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) +![](./color-emotion-guide-small.png) 2. Symbols - - Communicate associations - - Multiple associations - - Positive feelings: liking - - Can get outdated +- 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 +- 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 + - Short + - Differentiated from competition + - Unique + - Easy to say and remember + - Cannt have any connotation + - Protect and trademark + - Emotion Types: - - Imperative - - Descriptive - - Superlative - - Provocative - - Clever + - Imperative + - Descriptive + - Superlative + - Provocative + - Clever ## 3.4 Brand elements: Packaging @@ -652,18 +655,18 @@ Aesthetic and function: Grab attention and work well Distribution channels: - - Retailers - - Changing channels - - Which Retailer like which package + - Retailers + - Changing channels + - Which Retailer like which package Colors: - - See preceding section + - See preceding section Shape: - - excuse for a new product - - Really strong brand image + - excuse for a new product + - Really strong brand image ## 3.5 Brand elements: Persuasion @@ -695,8 +698,8 @@ Difficult ! Interpret what they already believe A good celebrity endorser is: - - Expert: Information - - Peripheral: Attractive + - Expert: Information + - Peripheral: Attractive 1. Considerations: - Audience fit @@ -725,11 +728,12 @@ 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 +| Type of use | Reason | +|-------------|----------------------| +| 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 @@ -741,12 +745,13 @@ 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" +| Situation | Rationale | +|-----------------------------------------------------|---------------------------------------------| +| 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** @@ -774,7 +779,7 @@ 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 + - 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 index 93cb621..d56abaa 100644 --- a/Week2.md +++ b/Week2.md @@ -4,15 +4,17 @@ author: "François Pelletier" output: pdf_document --- +Wharton School - Introduction to marketing + # 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. +- 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 ? @@ -22,11 +24,11 @@ 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) +- 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 @@ -36,61 +38,62 @@ Volume and cost reduction: - Innovation (extending products) - Companies work in product/service expertise (silos). - Competitive advantage -4. Mental process: Divergent thinking, different uses for the same product +3. 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 +- 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 +- 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 +- 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 +- 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, ...) +- 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 +- 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 @@ -108,10 +111,10 @@ What kind of product for the most valuable customers and how to attract them. Ca 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. +- 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 @@ -119,14 +122,14 @@ None of the big firms are really customer centric: 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 +- 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 +- Risky +- Require data and models Do something even if someone is not an actual customer because he/she will be one later @@ -161,34 +164,34 @@ Who is your customer ? Example: Healthcare: - - Patient - - Doctor - - Hospital - - Insurance company +- 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 +- 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 +- 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 ! +- Financial services +- Hotels and hospitality +- Be the first ones ! Does it make sense to be customer-centric ? - - Technology initiatives - - Experiments +- Technology initiatives +- Experiments You have to prepare before taking the big step. @@ -200,27 +203,27 @@ Focus on the right customers for strategic advantage Product-centric approach have some cracks: - - Commoditization - - Well-informed customers - - Globalization +- Commoditization +- Well-informed customers +- Globalization Customer-centric: - - Promising alternative - - Not clearly understood - - Many firms are tauted to be customer-centric but are not really +- 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 +- 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 +- "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 @@ -234,17 +237,17 @@ 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 +- 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 +- 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 @@ -262,27 +265,27 @@ 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 +- 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 +- 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: How many needs are met by this firm +- Amount of product and services Share of wallet is not correlated with size of wallet @@ -291,34 +294,34 @@ 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 +- 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 +- 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 +- 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 diff --git a/Week3.md b/Week3.md index 2b596b9..ebd3137 100644 --- a/Week3.md +++ b/Week3.md @@ -4,7 +4,9 @@ author: "François Pelletier" output: pdf_document --- -#Week 7 : Go to market strategies +Wharton School - Introduction to marketing + +# Week 7 : Go to market strategies ## 7.1 Introduction and execution @@ -51,21 +53,20 @@ What is wrong with the status-quo ? 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 + +- Have a great product +- Have the right customer, brand fit, STP and 4P's ## 7.3 Friction 2 most important frictions -- Search 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 @@ -74,43 +75,48 @@ You have to be good at both, on a scale of 0 to 10: 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) + +- 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 + +- 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 + +- 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) +![](./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) +- 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 + +- 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 + +- Once upon a time in India Not enough demand for a movie theater but profitable from renting. @@ -134,7 +140,7 @@ 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) +![](./7_8_Economics_Gini_coefficient2.png) Internet: More evenly distributed sales. differences not attributed to price and availability. More niche products sold. @@ -175,12 +181,12 @@ What matters the most in internet retailing: 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, ...) +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_9_long_tail_location.png) ## 7.10 Preference isolation @@ -206,7 +212,7 @@ 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) +![Top 20 brands](./8_1_brandz_100_chart.jpg) Goals and tactics: @@ -239,27 +245,28 @@ Organic celebrity: [Ree Drummond](http://thepioneerwoman.com/), one of the large Customer goals: - - Attract - - Engage - - Retain +- 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 +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 +- 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/) +Food for thought: + +- Status-quo experience that is broken +- [Warby Parker](http://warbyparker.com/) ## 8.3 Reputation and reviews @@ -272,24 +279,24 @@ One friction of market: we don't want to try new stuff 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) +- 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% + +- 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 +- Review systems change behavior +- Should be objective and verifiable, not actually the case ** Amazon and BN ** @@ -304,10 +311,10 @@ Might motivate to review their own books. Review writing service/ fake reviews. According to Bing Lui, a data mining expert: - - 1/3 reviews are fake - - A lot of money is involved in this market +- 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) +[This Man Made $28,000 A Month Writing Fake Book Reviews Online](https://read.bi/OiuMh0) Difficult for a data mining algorithm because of sarcasm, jokes, ... @@ -317,13 +324,13 @@ Summary: Reviews could be helpful but authenticity is a concern. 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* +- 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) +![Top 20 brands](./8_4_life_cycle.png) 1. Innovators (Research and Development) 2. Early adopters (Introduction) @@ -339,23 +346,23 @@ 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 +- 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 +- 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 @@ -365,7 +372,7 @@ Unit of analysis: Zip code, city blocks First order contiguity -![Matrices](file:///home/francois/Intro-to-marketing-course-notes/8_6_matrices.png) +![Matrices](./8_6_matrices.png) * [Social contagion and trial on the internet: Evidence from online grocery retailing](http://d1c25a6gwz7q5e.cloudfront.net/papers/1283.pdf) @@ -520,14 +527,14 @@ Price is more than a number: It sends signals to customer (premium/discount) - It lowers the price sensitivity -| Var measured | Natural | Experimental | -| --- | --- | --- | -| Actual purchase | Sales data | Field experiment -|Reference / Intention | Surveys | Tradeoff analysis +| 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) +![fieldexp](./9_2_field_exp.png) In a grocery in the 1990's @@ -607,9 +614,7 @@ Overview: - Channel structure: Who are the players -Direct vs. Indirect - -![channels](file:///home/francois/Intro-to-marketing-course-notes/9_4-channels.png) +### Direct vs. Indirect Indirect reduce the amount of transactions @@ -619,9 +624,9 @@ Strategic advantage of direct: - quality of direct marketing feedback - Bundling with high margin products and services -Channel flow / functions +### Channel flow / functions -![channel-flow](file:///home/francois/Intro-to-marketing-course-notes/9_4-channelflow.png) +![channel-flow](./9_4-channelflow.png) How it can be disrupted by technology @@ -644,7 +649,7 @@ Information flows: - Matching needs and solutions - Matching customers ans suppliers - Assessing and certifying quality -- Negociation / closing the deal +- Negotiation / closing the deal - Ordering - Market feedback diff --git a/compile.sh b/compile.sh new file mode 100644 index 0000000..6b73e04 --- /dev/null +++ b/compile.sh @@ -0,0 +1,5 @@ +pdflatex matrices.tex +pandoc --standalone -i Week1.md -o Week1.pdf +pandoc --standalone -i Week2.md -o Week2.pdf +pandoc --standalone -i Week3.md -o Week3.pdf +pdftk Week1.pdf Week2.pdf Week3.pdf cat output Intro-To-Marketing-Coursera.pdf \ No newline at end of file diff --git a/matrices.pdf b/matrices.pdf new file mode 100644 index 0000000..ef0c752 Binary files /dev/null and b/matrices.pdf differ