Intro-to-marketing-course-notes/Week1.md

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Introduction to marketing: Part 1 - Course Notes	François Pelletier	pdf_document

Wharton School - Introduction to marketing

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

Provide a fair value for 2 of the 3 bundles. Provide superior value for 1 on the 3 bundles.

Strategies for leadership

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

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

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

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)

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

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 - Else -> Peripheral route

3.6 Repositioning a brand

Brand equity must be actively managed over time: must be reinforced

5 rationale for brand change

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

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