Module 1,2

MODULE 1
Why Market is Important

Marketing is defined as an exchange between a firm and its customers.
Marketing Management Framework

The 5Cs, STP and the 4Ps constitute the marketing management framework
The 5 Cs of Situational Analysis

Company Competitor
The firm’s capabilities, resources, etc. The companies/people firm works against and how they compare to
What does it do well? the firm in terms of resources, capabilities, customer preferences,
What doesn’t it do well? Etc reaction patterns, etc.
Customer Collaborators
The firm’s current and potential customers The companies/people firm works with
What are current customers’ preferences, Are these relationships strong? Can these relationships be
buying trends, etc.? improved or leveraged?
What are potential customers’ preferences?
Should they be targeted? Context [PESTEL]
The macro-environmental forces facing firm
STG
Segmenting
Grouping customers with similar needs
Target
Pursuing segment who makes the most sense for the firm
Position
Communicating product’s benefits clearly to the intended target
Developed through the 4Ps
4Ps
Product Place
What should constitute your product mix? What How will you get the product into the customers’ hands?
features and benefits should comprise each product? Will you go direct to customers or use channel partners?
Price Promotion
How much should you charge given your costs, What communications mix will you use to communicate
competitive pricing and customer demand? with your targets? What message will you use?
Considerations
-The situation facing the company changes over time

 Customer preferences change
 Competitors change offerings
 Government passes new laws, etc.
-Firm must consistently monitor the 5 Cs

-5 Cs, STP and 4 Ps are interdependent
-Marketers must understand the interdependencies
Managerial Recap
-Marketing can make customers happier, and companies more profitable.
-Marketing is about trying to find out what customers would like, providing it to them, and doing so
profitably.
-Marketing facilitates a relationship between customers and a company.
-Just about anything can be marketed.
-The marketing management framework—5Cs, STP, 4Ps—will structure the book.
-If you can remain customer-eccentric, you’ll be five steps ahead of the competition.
MODULE 2
Customer Behavior
The Science of Consumer Behavior
• There are known, reliable patterns that comprise consumer behavior, including:
• The phases consumers go through when making a purchase
• The different kinds of purchases that consumers make
• How consumers sense & learn, become motivated, form attitudes, and make decisions
• The cultural differences that influence consumers
The purchase process
Pre-Purchase Phase Post-Purchase Phase

• Customers recognize a need/desire • Customers determine
• Some are heavily marketer influenced; some are not satisfaction
• e.g., Having trendy clothes vs. needing to eat • Did the customer get what
• Customers search and evaluate products that address their need he expected?
• e.g., Conduct online search, ask friends, etc. • Customers’ level of
• Customers create a consideration set satisfaction leads to
• All brands considered as candidates for purchase • Negative or positive word-
of-mouth
Purchase Phase • Repeat purchases
• Customers narrow the consideration set • Product returns, etc.
• Customer may delay the purchase
• Customer may decide not to purchase
• Customers decide on retail channel
Who Utilizes the Purchase Process?

• Business-to-Consumer (B2C) and Business-to-Business (B2B) both utilize the buying process
• The amount of time spent on a stage depends upon what is being bought
• A business customer is an agent buying something on behalf of an organization
• e.g., administrative assistants, operations department, etc
Three Types of Consumer Purchases
Convenience purchases
• Standard, frequently consumed goods Specialty purchases
• Low involvement • Occasional purchases, often more
• Consumers don’t spend much time thinking or planning the purchase expensive, require more thought; High
involvement
Shopping purchases • Customers put much effort into the
• Not as frequently purchased; Medium involvement purchase
• Consumers will spend time and effort prior to purchase
Types of Business Purchases

Straight rebuy
• Low involvement; purchase what was purchased last time with little or no thought
Modified rebuy
• Medium involvement; something about the purchase is altered requiring some thought
New buy
• High involvement; purchase something that hasn’t been purchased before requiring much thought and
planning
Low Involvement Purchases High involvement purchases
• Low involvement purchases • Have lower price sensitivity
• Have higher price sensitivity • Usually go well with events
• Usually go well with price discounts • May generate word-of-mouth
• Generally don’t generate word-of-mouth • Are usually distributed selectively
• Are usually distributed intensively • Marketers should focus on providing
• Marketers should focus on how to capture consumers with information
consumers’ attention
Sensation and Perception

• Utilize senses to convey information
• Consumers have selective attention; they block out Taste can what is not
relevant • Distinguish one brand from
another
Visual: colors can • e.g., Coke vs. Pepsi
• Convey a brand identity (Tiffany’s aqua blue)
• Make products stand out (Ipod’s white) Smell can
• Convey meaning (black = mourning) • Get attention (Smelling the
Cinnabon store)
Hearing can • Allow product sampling
• Increase spending (Perfume in magazines)
• e.g., Quick tempo music = increased spending
• Convey a brand Touch can
• e.g., Harley-Davidson’s distinctive sound • Can convey brand imagery
• e.g., Well designed
Subliminal advertising products compared to
• An ad that is shown so quickly that is doesn’t meet the value designed products threshold of
liminal recognition • e.g., Ergonomics, clean
• Has been debunked by research lines, simplicity,
beauty, sensual experiences,
Mere exposure etc.
• Repeated exposure to an ad brings familiarity and a positive feeling
Perceptual fluency
• Customers may pay the most attention to the content of a message;
• However, the colors, font, etc. make a brand impression as well
Learning and Memory

• Sensory and perceptual impressions become brand associations
• Brand associations: brands are attached to specific attributes in consumers’ memory
• Learning is the process that creates brand associations
• Classical and operant conditioning
Learning
• Companies may have negative brand associations in customers’ memories
• Some companies change names to help create new associations
Operating Conditioning
• Skinner used pigeons to show that learning occurs by positively reinforcing behavior
• Fixed ratio reward: reward is given every time or every 4th time, etc.
• Variable ratio reward: reward varies
• Subject will engage in the behavior more often if rewarded on the variable schedule
Maslow’s Hierarchy of Needs

• Maslow suggests that people must have their basic needs met before moving onto more abstract needs
• Marketers may identify their product with one of Maslow’s needs
• e.g., Volvo and safety needs
• Many brands are associated with a sense of belonging, social acceptance and respectMarketers may
identify products with aspiration groups
• Marketers may offer an extended brand line for customers at different levels in Maslow’s hierarchy
• e.g., Mercedes has a lower-end C model, then upward to E, S and finally CL models
• Marketers use hierarchy for positioning
Distinguishing Motivations
• Utilitarian vs. hedonic

• e.g., A Honda Civic vs. a Mercedes
• Conformity vs. individuality

• e.g., Conformity is high in high school, but not later in life
• Risk-seeking vs. risk-averse

• Risk tolerance may vary with product knowledge
Attitudes and Decision Making

• Attitudes and decision making influence
• Whether consumers
• Will buy a brand
• Repeatedly purchase it
• Become loyal
• Recommend it to others, etc.
What Are Attitudes?

Attitudes are a mix of beliefs and importance weights
Beliefs
• e.g., I think Sprite has caffeine
Importance
• e.g., I think having caffeine is important
• Customer may differ on both importance
and beliefs
Decision Making
• Decision making:
• With a few choices, consumers easily compare brands to make decision
• With many choices, consumers use 2 stages:
Stage 1: Determine consideration set

• Non-compensatory method: if a brand doesn’t have important attributes, it is cut
• Lexicographic method: compare all brands on most important attribute; cut brands that don’t have
it;move on to next important attribute and compare & cut, etc.
Stage 2: Determine brands in detail Compare brands in detail

• Compensatory model (cost/benefits)
• One excellent attribute can compensate for a poor attribute
• Some websites aid this process by allowing users to view a side-by-side comparison of attributes
Cultural Differences
• Socio-cultural differences influence consumers and produce shopping patterns
• Social class, age, ethnicity, gender, country culture, etc.
• e.g., Old monied people seek exclusivity; nouveaus indulge in conspicuous consumption
• e.g., Young people buy furniture; as they get older they need diapers and minivans; then college and
finally healthcare
Managerial Recap
• Three major phases of consumption How do consumers think?
• Pre-purchase, purchase, post-purchase • Sensing and perceiving
information that is
• Three major classes of purchases learned and stored in
• B2C: convenience, shopping, specialty memory
• Motivations help marketers
• B2B: straight rebuy, modified rebuy, new buy understand what
consumers are seeking to
satisfy
• Attitudes and decision
making are subject to
influence by good
information and biases
• Involvement determine class

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MODULE 1

Why Market is Important

Marketing Management Framework

The 5 Cs of Situational Analysis

-The situation facing the company changes over time

-Firm must consistently monitor the 5 Cs

The purchase process

Pre-Purchase Phase Post-Purchase Phase

Who Utilizes the Purchase Process?

Three Types of Consumer Purchases

Types of Business Purchases

Sensation and Perception

Learning and Memory

Maslow’s Hierarchy of Needs

• Utilitarian vs. hedonic

• Conformity vs. individuality

• Risk-seeking vs. risk-averse

Attitudes and Decision Making

What Are Attitudes?

Stage 1: Determine consideration set

Stage 2: Determine brands in detail Compare brands in detail

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