MGT 103 Lecture Notes PDF

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MGT 101 - Product Marketing & Management3/29/16 - Initiating the Market ProcessI. Marketing comes down to 2 things: A. Segmentation 1. Grouping consumers in a target audience that no others are completely satisfying B. Positioning 1. How do you position your product in the mind of the consum...

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MGT 101 - Product Marketing & Management 3/29/16 - Initiating the Market Process I.

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Marketing comes down to 2 things: A. Segmentation 1. Grouping consumers in a target audience that no others are completely satisfying B. Positioning 1. How do you position your product in the mind of the consumer relative to competing products Evolution of Marketing A. Production Era - all about the engineering/making something desirable B. Sales Era 1. Consumer Bill of Rights - right to be protected/informed/safe products a) Bc harmful things were being sold C. Marketing Concept Era 1. First time marketing became what it is today in a modern sense 2. Identify needs and wants of customer & satisfy them better than the competition 3. Companies began to ask themselves what does the customer want/need a) Beginning of segmentation 4. *Market Orientation a) Responsive companies b) Proactive companies D. Customer Relationship Era Needs vs Wants A. Not creating a new utility, just changing its use (?) Basic Terminology A. Market = a group of consumers that can be characterized by their interests or buying habits. They have the desire and ability to buy an offering B. Industry = it exists to serve a market. This is a collection of product and service providers positioned for a target audience C. Target Market = the group or groups of consumers an organization directs its marketing efforts to The Marketing Mix (4 P’s) = Controllable Factors A. Product 1. Functionality 2. Brand 3. Packaging 4. Services B. Price 1. List Price 2. Discounts

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3. Branding 4. Credit Terms C. Promotion 1. Advertising 2. Sales Force 3. Publicity 4. Sales Promotion D. Place 1. Channel 2. Inventory 3. Logistics 4. Distribution Uncontrollable Factors A. Marketers will execute the marketing strategy while continuously scanning and assessing the potential impact of uncontrollable environmental forces B. Ex: competitive forces, regulations, What is Value? A. Marketing is the conduit by which organizations deliver their value to consumers B. But, How do you define value? 1. Exclusivity/feeling of scarcity Perception A. Finding Benefits with Perceptual Mapping B. Perception is important, not reality 1. Ex: TOMS C. Positioning Map 1. Consumer Ideal points D. Haagen-Daz → means nothing E. Taste with eyes before mouth Supermarket Jam Experiment A. More people stopped for 24 variety table (60% vs 40%) B. But on avg, people tasted the same amount of jams C. 6 option table - 30% consumers purchased D. 24 option table - 3% consumers purchased E. Paradox → more alternatives attracts more, but decreases % of purchase F. The Paradox of Choice: More Variety = 1. Greater Opportunity Costs 2. Greater Consumer Autonomy 3. Greater Expectations 4. Greater Chance of Dissatisfaction 5. Consumer Paralysis → becomes a no purchase Benefits vs Features A. Consumers buy benefits, NOT features 1. Mousetrap example

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Visionary Organizations start with a Foundational Purpose A. Org Foundation (why) + Org Direction (what) = Orgl Strategies (how) B. Organizational Structure: 1. Board of Directors → Corporate-level Strategy (CFO, CEO, etc) → Business Unit-Level Strategy → Functional-Level Strategy (Depts) C. Direction (What) 1. SMART a) Specific b) Measureable c) Attainable d) Relevant e) Time-Based D. BCG Growth Matrix: 1. Stars (high market & high industry growth) a) Put out as much money as they gain but industry growth 2. Cash Cows (high market share & low growth) a) Bring in more money than they spend 3. Question Marks (low market share & high growth) a) Lose money but are good investments bc of potential 4. Dogs (low & low) a) Break even usually E. Strategic Marketing Process (How to Achieve the Objectives) 1. Planning Phase a) Step 1 = Situation Analysis (SWOT) (1) Internal: (a) Strengths - build (b) Weaknesses - correct (2) External: (a) Opportunities - exploit (b) Threats - avoid

Location of Factor

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Weaknesses (correct)

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Opportunities (exploit)

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b) Step 2 = Marketing Product Focus and Goals Setting (1) Often based on market segmentation (putting prospective buyers into groups) c) Step 3 = Marketing Program (4 P’s) 2. Implementation Phase a) Obtaining Resources b) Designing the Marketing Organization c) Defining Precise Tasks, Responsibilities & Deadlines

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d) Executing the Marketing Program 3. Evaluation Phase a) Comparing Results with Plans to Identify Deviations b) Acting on Deviations Where to Grow? Product Current

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Market Penetration

Product Development

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Market Development

Diversification

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Ethics and Law A. Moral Idealism = bad for even ONE person, it’s not ethical B. Utilitarianism = whatever is better for common good is what’s ethical 1. If benefits exceed the costs, the behavior is ethical

4/5/16 - Buyers and Markets I.

Consumer Decision Making Process A. Need Recognition 1. Internal Search a) Personal Knowledge b) Cultural Knowledge 2. External Search a) Personal Sources b) Public Sources c) Marketer-Dominated Sources B. Search for Information C. Evaluation of Alternatives 1. Awareness Set a) Brands you have heard of 2. Evoked Set a) Top of Mind 3. Consideration Set a) Acceptable for further consideration b) Evaluative Criteria D. Purchase Decision 1. When the decision of what to buy is made, the consumer must still determine: a) Where to Buy b) When to Buy E. Post-Purchase Evaluation

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1. Word of Mouth a) Positive - most effective means of communication b) Negative 2. CLTV = Consumer Lifetime Value a) Satisfaction Studies 3. Cognitive Dissonance 4. Must Focus on Value a) Use Value (Functional Utility) + Sign Value (Emotional Value) Semiotics = the study of signs and symbols A. Signifier (linguistic unit or sound) → Signified (the understood meaning of essence) 1. “C” “O” “W” → Cowness B. Signifier → Referent (real world object) → Signified C. Power of a Referent (Floating Signifier) 1. What do you think of when you hear the word “Watch”? Speed of Decision Making A. Consumer felt involvement 1. Enduring involvement 2. Situational involvement Promotion by Involvement A. Low Involvement 1. Maintain product quality 2. Avoid stockouts a) People will just substitute with another 3. Ads targeted at reducing dissonance B. High Involvement 1. Use comparative ads a) Comparison to brands b) Comparison to alternative 2. Use personal selling Influences on the Purchase Decision Process A. Internal Influences 1. Perception a) Selective perception b) Selective exposure c) Selective comprehension d) Selective retention 2. Change Blindness 3. Subliminal Perception a) Connect to sex → below threshold of realizing it 4. Effect of Color 5. Memory a) Schemas (1) Meaning nodes linked to other nodes to create a schema

(2) Things associated w other are closer to one another in your memory 6. Attitude Formation - ∑biei a) Summation of beliefs (bi) about attributes and the evaluation (ei) of those beliefs (1) 7UP vs Diet Pepsi (2) 7UP attributes: (a) No caffeine: (i) bi (belief of the attribute existing) = 10 (ii) ei (your appreciation for it) = +3 (b) All natural ingredients: (i) bi (belief of the attribute existing) = 5 (ii) ei (your appreciation for it) = +1 (c) Lemon-lime flavor: (i) bi (belief of the attribute existing) = 8 (ii) ei (your appreciation for it) = -1 (d) ATTITUDE SCORE = (10)(3) + (5)(1) + (8)(-1) = 27 (3) Diet Pepsi attributes: (a) No calories (i) bi (belief of the attribute existing) = 7 (ii) ei (your appreciation for it) = +2 (b) Caffeine (i) bi (belief of the attribute existing) = 6 (ii) ei (your appreciation for it) = -3 (c) Cola flavor (i) bi (belief of the attribute existing) = 10 (ii) ei (your appreciation for it) = 1 (d) ATTITUDE SCORE = (7)(2) + (6)(-3) + (10)(1) = 6 (4) 7UP proven to be stronger b) Attitude Change (1) Change beliefs about a brand’s attributes (a) Make a belief more salient (b) Increases strength of an existing belief (2) Change perceived importance of attributes (3) Add a new product attribute B. Situational Influences 1. Ability a) Time b) Emotion c) Physical Surroundings 2. Ex: A Good Samaritan C. Cultural Influences 1. Aspects of Culture: a) Values

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b) Customs c) Symbols d) Language 2. Consumer Culture Theory a) Forming behaviors consistent with groups we want to fit into b) But other controls can affect those norms Reference Groups A. Associative Groups 1. Brand Communities B. Aspiration Groups C. Dissociative Groups Socialization A. Goffman’s Theory of Impression Management 1. People, such as actors, play a role in social situations Consumer vs Organizational Buyers A. Organizational Buyers 1. Industrial Markets 2. Resellers a) Wholesales b) Retailers 3. Government Markets B. Organizational Buying 1. Derived Demand: a) Demand for industrial goods is determined by ultimate consumer demand 2. Fewer Buys but Larger Purchase Orders C. Buying Classes 1. Straight Rebuy a) Reorder same product from same supplier b) Typically and automatic decision 2. Modified Rebuy a) Want to alter some part of buy process (1) Product (2) Price (3) Terms (4) Supplier 3. New Buy a) First time purchase of product/service b) Needs significant research

4/12/16 - Marketing Research & Segmentation I.

Market Segmentation A. Definition: process of dividing a market into groups of similar consumers

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1. Answers: Who is our customer? B. Enables the firm to select the most appropriate groups to serve Product Positioning A. The process marketers use to determine how best to communicate their products’ benefits to target customers and satisfy these customer wants and needs Increasing Customer Lifetime Value A. Increase per customer sales 1. More often or larger purchases B. Loyalty - Retain customers longer C. Lower the cost to serve 1. Stop marketing to low value customers 2. Move customers to lower cost channels Consumers are grouped by: A. Demographic variables (demo = “people”) 1. Describing populations (age, ethnicity, socioeconomic status, etc) a) ME = youth, south asian, female B. Psychographic variables (mind/spirit) 1. Useful when describing the psychological structure of individuals (activities, interests, opinions, values, attitudes, lifestyles etc) a) ME = liberal, dance, honesty/integrity, structured lifestyle C. Purchasing Behavior 1. What are the types of items and frequency of purchase for a typical group of consumers? Segmentation Tools A. VALS 1. Long-standing traditional example of psychographic segmentation that follows a post hoc model 2. That is, consumers are asked a variety of questions about their lifestyles and then are grouped on the basis of the similarity of their responses 3. The VALS™ Framework groups consumers horizontally by three primary motivations (ideals, achievement, and self-expression) and vertically by high or low resources 4. Marketers can purchase research data that show which VALS™ groups are the primary buyers of specific products and services. This information can be used to select a consumer target for advertising or promotion. B. PRIZM NE = “Potential Rankings Index of ZIP Markets—New Evolution,” 1. based on the assumption that consumers that live in the same neighborhood have similar lifestyles. 2. The goal is to create classifications of actual, addressable, mappable, neighborhoods where consumers live and shop 3. PRIZM NE classifies every U.S. neighborhood into one of 15 groups. Each of these groups is further divided into 3 to 6 segments, with a total of 66 distinct segments in the system

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4. Each group and segment is based on zip codes, demographic information from the U.S. Census, and information on product use, media use, and lifestyle preferences. Brand Loyalty & The Degree of Use A. This involves a process designed to telescope-in on the core consumer B. 80/20 Rule = A marketing rule of thumb that 20% of purchasers account for 80% of sales 1. Most involved consumers 2. Airwalk’s mistake about moving away from that 20% C. Core is like a magnet - attracting other consumers 1. May be sensitive to changes in product design or marketing strategy D. This discussions of the core leads us to segmentation strategy E. Concentrated → Differentiated segmentation strategy Segmentation and Ethics A. Perceptions play an important role in the marketing paradigm. This includes the way consumers perceive aspects of marketing strategies and ways the general public may perceive the social impact of marketing B. Thus, framing is important to both the way that theorists articulate the marketing paradigm and the practice of marketing C. Segmentation involves a process of “grouping” that “enables the firm to select the most appropriate group or groups to serve” 1. SAME = “Segmentation involves gathering information on consumers without their knowledge, then using the power of multinational corporations to target or profile the most vulnerable groups” D. Be careful when: 1. The product (cigarettes) or service (online dating) could be dangerous to the consumer; and 2. The segment of consumers targeted is vulnerable (in the sense that they may lack resources of have not yet developed critical capacities) Selecting a Target Market A. Society is becoming ever fragmented opening up opportunities for new market segments to be reached B. When selecting a segment, the marketer must consider: 1. Market Size 2. Expected Growth 3. Competitive Position 4. Cost to Reach Segment 5. Organization Compatibility C. Matrix Analysis 1. A common tool to use for market segment analysis is the use of matrices 2. Compare segments by market size, expected growth, consumer need, benefits offered, or any other key differentiation/positioning point D. Objective Identification: 1. Problem definition – problems are barriers that prevent the

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accomplishment of organizational goals. “Well-defined problems are already half solved.” a) Clearly defining the problem permits the researcher to focus the research process on securing the data necessary to solve the problem 2. Exploratory research – this involves searching for the cause of the problem, as clarified in step one. It is hoped that by focusing on the cause of the problem, the researcher will begin to understand which specific areas of study may eventually lead to a solution a) Exploratory research usually involves “secondary data” = data that has already been collected prior to the project at hand (1) A firm may use “internal secondary data” to review sales, product performance, sales-force activities, or marketing costs, production costs, etc. (2) A firm may review “external secondary data” to learn about competitors, customers, economic, legal, or political environments, trade journals, corporate reports, magazines, and newspapers (3) Examples of external data: (a) Census Bureau (b) University Research (c) Nielsen Data (d) JD Power Surveys (e) Bloomberg Businessweek b) Primary Data = collected specifically for the given project 3. Develop Hypotheses Converting Research to Action A. Motion picture companies are often concerned about how well a movie will be accepted depending on the fate of its characters. 1. The producers may have alternate scenes or endings prepared based on expectations of the target audience(s) reception of the film Primary Data Research Methods A. Surveys 1. The survey method is by far the most popular with researchers 2. Question wording problems B. Observational 1. The observation method means to simply monitor the behaviors of consumers without their knowledge. 2. There are many different observation techniques a) Supermarket scanner data b) Mystery shopping c) Video recording d) Checking the floor wear in a museum → see where more people were going

3. We want to witness actual behaviors without intrusiveness C. Experimental 1. We hope to determine some level of causality where an independent variable affects a dependent variable 2. True Market Experiments are often times low in Internal Validity (the outcome is due to the IV and not due to some extraneous variable). 3. However, experiments are often considered to be high in External Validity (level of generalizability). D. Qualitative 1. Ethnography: a) Ethnography is a form of research focusing on the sociology of meaning through close field observation of sociocultural phenomena. b) Typically, the ethnographer focuses on a community, selecting informants who are known to have an overview of the activities of the community

4/19/16 - New Product Development and Product Lifecycle I.

What is a Product A. Goods, Services, & Ideas B. Goods 1. Non Durable (Consumer Advertising) a) Ex: Gum 2. Durable (Personal Selling) a) Ex: Car C. Product Types: 1. Convenience Products a) Purchased frequently, conveniently, & with a minimum of shopping effort 2. Shopping Products a) Consumer compares several alternatives on criteria such as price, quality, or style 3. Speciality Products a) Consumer makes a special effort to search out and buy 4. Unsought Products a) Consumer does not know about or knows about but does not initially want b) Ex: Injury related D. Product Taxonomy 1. Product Class a) All types of products fall under b) Ex: Running shoes 2. Product Form

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a) The different types of the product 3. Product Line a) All of the offerings by the brand 4. Product Mix a) Assortment of all products owned by a brand 5. SKU - Stock Keeping Units (Barcodes) a) Ralphs has 35,000 SKU’s b) Walmart has 142,000 SKU’s E. New Product 1. Functional differences from existing products 2. Adding new features to existing products a) Must be careful to avoid feature bloat (“er” words) F. The Product Concept 1. Core → Expected → Augmented (others can’t keep up) → Potential Positioning A. Positioning - The place that a brand occupies in the mind of its consumers relative to competing brands B. Reverse Positioning - When a firm positions itself in a way that runs counter to the direction in which the rest of the market is moving 1. Shift only on the “Augmented” ring C. While its competitors are focused on augmenting their value proposition, a firm that adopts a reverse position does the opposite; It decides to withhold many of the attributes that its competitors consider necessary to compete D. EX: IKEA Product Concept 1. No in-store sales assistance 2. Limited variety 3. No delivery 4. Substandard quality 5. No installation or assembly INSTEAD OFFERS: 6. Day care Center 7. Lunch cafe on site 8. Items besides furniture → houseware, toys etc 9. Scandinavian style that communicates simplicity, clarity, etc New Product from the Consumer Perspective A. Continuous Innovation 1. Simple changes → new feature → different aesthetic 2. No need to reeducate consumers B. Dynamically Continuous Innovation 1. Minor changes in consumer behavior needed 2. Marketers educated consumers on use and benefits C. Discontinuous Innovation 1. Consumers must learn entirely new consumption patterns

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2. Marketers must gain awareness from consumers 3. Must educated about benefits & proper use of product 4. Most expensive type of product innovation from marketer’s perspective New Product from the Organization Perspective A. Product Line Extension 1. Slightly different version B. Jump in Innovation 1. Pretty big advancement in evolution C. Brand Extension 1. New category of products D. Radical Innovation What Makes a Successful New Product Launch A. Significant (Insignificant) Points of Difference 1. Arguably the single most import...