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Module 3

MARKETING IN TODAYS GLOBAL


BUSINESS ENVIRONMENT

INFORMATION NEEDS PROBES


What decisions do you regularly make?
What information do you need to make
these decisions?
What information do you regularly get?
What studies do you periodically request?
What information would you want that you
are not getting now?
What are the four most helpful
improvements that could be made in the
present marketing information system?

INTERNAL RECORDS AND MARKETING INTELLIGENCE

Order-to-payment cycle
Sales information system
Databases, warehousing, data mining
Marketing intelligence system

DATABASE MANAGEMENT

WHAT IS A
MARKETING INTELLIGENCE SYSTEM?
A marketing intelligence system is
a set of procedures and sources that
managers use to obtain everyday
information about developments in
the marketing environment.

STEPS TO QUALITY MARKETING INTELLIGENCE


Train sales force to scan for new
developments
Motivate channel members to share
intelligence
Hire external experts to collect intelligence
Network externally
Utilize a customer advisory panel
Utilize government data sources
Purchase information

SOURCES OF COMPETITIVE INFORMATION


Independent customer goods and service
review forums
Distributor or sales agent feedback sites
Combination sites offering customer reviews
and expert opinions
Customer complaint sites
Public blogs

NEEDS AND TRENDS


Fad

Trend

Megatrend

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MAJOR FORCES IN THE ENVIRONMENT


Demographic
Political-legal

Economic

Technological

Socio-cultural
Natural

POPULATION AND DEMOGRAPHICS


Population growth
Population age mix
Ethnic markets
Educational groups
Household patterns

PERSPECTIVE ON THE GLOBAL DEMOGRAPHIC


ENVIRONMENT

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ECONOMIC ENVIRONMENT

Consumer Psychology

Income Distribution
Income, Savings, Debt, Credit

ECONOMIC ENVIRONMENT AND CONSUMER


PSYCHOLOGY

INCOME DISTRIBUTION
Subsistence

economies
Raw-material-exporting economies
Industrializing economies
Industrial economies

SOCIAL-CULTURAL ENVIRONMENT
Views of themselves
Views of others
Views of organizations
Views of society
Views of nature
Views of the universe

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SOCIO-CULTURAL INFLUENCES

NATURAL ENVIRONMENT
Shortage of raw materials
Increased energy costs
Anti-pollution pressures
Governmental protections

KEYS TO AVOIDING
GREEN MARKETING MYOPIA
Consumer Value Positioning
Calibration of Consumer Knowledge
Credibility of Product Claims

CONSUMER ENVIRONMENTAL SEGMENTS

Genuine Greens
Not Me Greens
Go-with-the-Flow Greens
Dream Greens
Business First Greens
Mean Greens

TECHNOLOGICAL ENVIRONMENT
Pace of change
Opportunities for innovation
Varying R&D budgets
Increased regulation of change

THE POLITICAL-LEGAL ENVIRONMENT


Business Legislation

Growth of Special Interest Groups

FORECASTING AND
DEMAND MEASUREMENT

How can we measure market demand?


Potential

market
Available market
Target market
Penetrated market

A VOCABULARY FOR
DEMAND MEASUREMENT
Market Demand
Market Forecast
Market Potential
Company Demand
Company Sales Forecast
Company Sales Potential

ESTIMATING CURRENT DEMAND:


TOTAL MARKET POTENTIAL

Calculations

Multiple potential number of buyers by average


quantity each purchases times price
Chain-ratio method

ESTIMATING CURRENT DEMAND:


AREA MARKET POTENTIAL
Market-Buildup

ESTIMATING CURRENT DEMAND:


AREA MARKET POTENTIAL
Multiple-Factor Index

ESTIMATING FUTURE DEMAND


Survey of Buyers Intentions
Composite of Sales Force Opinions
Expert Opinion
Past-Sales Analysis
Market-Test Method

CONSUMER BEHAVIOR

WHAT INFLUENCES
CONSUMER BEHAVIOR?
Cultural Factors

Social Factors

Personal Factors

WHAT IS CULTURE?
Culture is the fundamental
determinant of a persons wants and
behaviors acquired through
socialization processes with family
and other key institutions.

SUBCULTURES
Nationalities
Religions
Racial groups
Geographic regions

FAST FACTS ABOUT


AMERICAN CULTURE

The average American:


chews

300 sticks of gum a year


goes to the movies 9 times a year
takes 4 trips per year
attends a sporting event 7 times each
year

SOCIAL CLASSES
Upper uppers
Lower uppers
Upper middles

Middle
Working

Upper lowers
Lower lowers

SOCIAL FACTORS
Reference groups
Family
Social roles
Statuses

REFERENCE GROUPS
Membership groups
Primary groups
Secondary groups
Aspirational groups
Disassociative groups

FAMILY DISTINCTIONS
AFFECTING BUYING DECISIONS

PERSONAL FACTORS

Age
Life cycle stage
Occupation
Wealth

Personality
Values
Lifestyle
Self-concept

AGE AND STAGE OF LIFECYCLE

OCCUPATION AND ECONOMIC CIRCUMSTANCES

PERSONALITY

BRAND PERSONALITY
Sincerity
Excitement
Competence
Sophistication
Ruggedness

LOHAS (LIFESTYLES OF HEALTH AND


SUSTAINABILITY) MARKET SEGMENTS

Sustainable Economy
Healthy Lifestyles
Ecological Lifestyles
Alternative Health Care
Personal Development

MODEL OF CONSUMER BEHAVIOR

MOTIVATION
Freuds
Theory

Maslows
Hierarchy
of Needs

Herzbergs
Two-Factor
Theory

Behavior
is guided by
subconscious
motivations

Behavior
is driven by
lowest,
unmet need

Behavior is
guided by
motivating
and hygiene
factors

MASLOWS HIERARCHY

PERCEPTION
Selective attention
Selective retention
Selective distortion
Subliminal perception

LEARNING

EMOTIONS

MEMORY

STATE FARM MENTAL MAP

CONSUMER BUYING PROCESS


Problem Recognition

Information Search

Evaluation of alternatives

Purchase Decision

Postpurchase Behavior

SOURCES OF INFORMATION

Personal

Commercial

Public

Experiential

SUCCESSIVE SETS IN DECISION MAKING

A CONSUMERS BRAND BELIEFS ABOUT LAPTOP


COMPUTERS

STEPS BETWEEN ALTERNATIVE


EVALUATION AND PURCHASE

NON-COMPENSATORY MODELS OF CHOICE


Conjunctive
Lexicographic
Elimination-by-aspects

PERCEIVED RISK
Functional
Physical
Financial
Social
Psychological
Time

HOW CUSTOMERS USE OR DISPOSE OF


PRODUCTS

LOW-INVOLVEMENT DECISION MAKING

DECISION HEURISTICS
Availability
Representativeness
Anchoring and adjustment

FRAMING

MENTAL ACCOUNTING

Consumers tend to
Segregate

gains
Integrate losses
Integrate smaller losses with larger gains
Segregate small gains from large losses

WHAT IS ORGANIZATIONAL BUYING?


Organizational buying refers to the
decision-making process by which
formal organizations establish the
need for purchased products and
services, and identify, evaluate, and
choose among alternative brands and
suppliers.

TOP MARKETING CHALLENGES

Understanding customer needs in new ways;


Identifying new opportunities for growth;
Improving value management techniques
Calculating better marketing performance and
accountability metrics;
Competing and growing in global markets
Countering the threat of product and service
commoditization
Convincing C-level executives to embrace the
marketing concept

CHARACTERISTICS OF BUSINESS MARKETS

Fewer buyers
Close suppliercustomer
relationships
Professional
purchasing
Many buying
influences

Multiple sales calls


Derived demand
Inelastic demand
Fluctuating demand
Geographically
concentrated buyers
Direct purchasing

BUYING SITUATION

Straight Rebuy
Modified Rebuy
New Task

SYSTEMS BUYING AND SELLING

THE BUYING CENTER

Initiators
Users
Influencers
Deciders

Approvers
Buyers
Gatekeepers

OF CONCERN TO MARKETERS
Who are the major decision participants?
What decisions do they influence?
What is their level of influence?
What evaluation criteria do they use?

STAGES IN THE BUYING PROCESS: BUYPHASES


Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance review

BUYGRID FRAMEWORK

FORMS OF ELECTRONIC MARKETPLACES


Catalog sites
Vertical markets
Pure play auction sites
Spot markets
Private exchanges
Barter markets
Buying alliances

AN EXAMPLE OF VENDOR ANALYSIS

METHODS FOR RESEARCHING


CUSTOMER VALUE

Internal engineering
assessment
Field value-in-use
assessment
Focus-group value
assessment
Direct survey
questions

Conjoint analysis
Benchmarks
Compositional
approach
Importance ratings

ORDER ROUTINE SPECIFICATION


Stockless purchase plans
Vendor-managed inventory
Continuous replenishment

CATEGORIES OF BUYER-SELLER RELATIONSHIPS

Basic buying and


selling
Bare bones
Contractual transaction
Customer supply

Cooperative systems
Collaborative
Mutually adaptive
Customer is king

INSTITUTIONAL MARKETS

EFFECTIVE TARGETING REQUIRES


Identify and profile distinct groups of buyers
who differ in their needs and preferences
Select one or more market segments to enter
Establish and communicate the distinctive
benefits of the market offering

WHAT IS A MARKET SEGMENT?


A market segment consists
of a group of customers who
share a similar set of
needs and wants.

SEGMENTING CONSUMER MARKETS


Geographic
Demographic
Psychographic
Behavioral

GEOGRAPHIC SEGMENTATION

CLARITAS PRIZM
Education and affluence
Family life cycle
Urbanization
Race and ethnicity
Mobility

DEMOGRAPHIC SEGMENTATION
Age and life cycle
Life stage
Gender
Income
Generation
Social class
Race and Culture

AGE AND LIFECYCLE STAGE

GENDER AND INCOME

GENERATIONAL INFLUENCES

RACE AND CULTURE

PSYCHOGRAPHIC SEGMENTATION
AND THE VALS FRAMEWORK

BEHAVIORAL SEGMENTATION BASED ON NEEDS


AND BENEFITS

BEHAVIORAL SEGMENTATION: DECISION ROLES

Initiator
Influencer
Decider
Buyer
User

BEHAVIORAL SEGMENTATION: BEHAVIORAL


VARIABLES
Occasions
Benefits
User Status
Usage Rate

Buyer-Readiness
Loyalty Status
Attitude

EXAMPLE OF A BRAND FUNNEL

LOYALTY STATUS
Hard-core
Split loyals
Shifting loyals
Switchers

BEHAVIORAL SEGMENTATION BREAKDOWN

SEGMENTING FOR BUSINESS MARKETS


Demographic
Operating variable
Purchasing approaches
Situational factors
Personal characteristics

STEPS IN SEGMENTATION PROCESS


Need-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Market mix strategy

EFFECTIVE SEGMENTATION CRITERIA


Measurable
Substantial
Accessible
Differentiable
Actionable

PORTERS 5 FORCES MODEL


Threat of Rivalry

Threat of Buyer
Bargaining Power

Threat of Supplier
Bargaining Power

Threat of
Substitutes

Threat of
New Entrants

POSSIBLE LEVELS OF SEGMENTATION

STEPS IN STRATEGIC BRAND MANAGEMENT


Identifying and establishing brand
positioning
Planning and implementing brand
marketing
Measuring and interpreting brand
performance
Growing and sustaining brand value

WHAT IS A BRAND?
A brand is a name, term, sign, symbol
or design, or a combination of them,
intended to identify the goods or
services of one seller or group of
sellers and to differentiate them from
those of competitors.

THE ROLE OF BRANDS


Identify the maker
Simplify product handling
Organize accounting
Offer legal protection

THE ROLE OF BRANDS


Signify quality
Create barriers to entry
Serve as a competitive advantage
Secure price premium

WHAT IS BRANDING?
Branding is endowing
products and services with the
power of the brand.

WHAT IS BRAND EQUITY?


Brand equity is the added value
endowed on products and services,
which may be reflected in the way
consumers, think, feel, and act with
respect to the brand.

ADVANTAGES OF STRONG BRANDS

Improved
perceptions of
product
performance
Greater loyalty
Less vulnerability to
competitive
marketing actions
Less vulnerability to
crises

Larger margins
More inelastic
consumer response
Greater trade
cooperation
Increased marketing
communications
effectiveness
Possible licensing
opportunities

VIRGIN ATLANTICS BRAND PROMISE

WHAT IS A BRAND PROMISE?


A brand promise is the marketers vision of
what the brand must be and do for
consumers.

BRAND EQUITY MODELS


Brand Asset Valuator (BAV)
Brandz
Brand Resonance

BAV MODEL

UNIVERSE OF BRAND PERFORMANCE

BRAND DYNAMICS PYRAMID

BRAND RESONANCE PYRAMID

BRAND BUILDING BLOCKS

MASTERCARD CREATED AN
EMOTIONAL BOND TO ITS BRAND

DRIVERS OF BRAND EQUITY

BRAND ELEMENTS

Brand names
Slogans
Characters

Symbols
Logos
URLs

BRAND ELEMENT CHOICE CRITERIA


Memorable
Meaningful
Likeable
Transferable
Adaptable
Protectable

SLOGANS

Like a good neighbor,


State Farm is there
Just do it
Nothing runs like a
Deere
Save 15% or more in
15 minutes or less

We try harder
Well pick you up
Nextel Done
Zoom Zoom
Im lovin it
Innovation at work
This Buds for you
Always low prices

SECONDARY SOURCES OF BRAND KNOWLEDGE

INTERNAL BRANDING
Choose the right moment
Link internal and external marketing
Bring the brand alive for employees

FIGURE 9.6 BRAND VALUE CHAIN

MEASURING BRAND EQUITY


Brand audits
Brand tracking
Brand valuation

THE 10 MOST VALUABLE BRANDS

INTERBRAND BRAND VALUATION METHOD

MANAGING BRAND EQUITY


Brand reinforcement
Brand revitalization

DEVISING A BRANDING STRATEGY


Develop new brand elements
Apply existing brand elements
Use a combination of old and new

BRANDING TERMS

Brand line
Brand mix
Brand extension
Sub-brand
Parent brand
Family brand

Line extension
Category extension
Branded variants
Licensed product

REASONS FOR BRAND PORTFOLIOS

BRAND ROLES IN A BRAND PORTFOLIO


Flankers
Cash cows
Low-end, entry-level
High-end prestige

BRAND EXTENSIONS

WHAT IS POSITIONING?

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VALUE PROPOSITIONS

Perdue Chicken
More

tender golden chicken at a moderate


premium price

Dominos
A

good hot pizza, delivered to your door within


30 minutes of ordering, at a moderate price

COMPETITIVE FRAME OF REFERENCE

CUSTOMER RATINGS OF COMPETITORS

DEFINING ASSOCIATIONS
Points-of-difference
Attributes or benefits
consumers strongly
associate with a
brand, positively
evaluate, and believe
they could not find to
the same extent with a
competitive brand

Points-of-parity
Associations that are
not necessarily unique
to the brand but may
be shared with other
brands

POINT-OF-DIFFERENCE CRITERIA
Desirable
Deliverable
Differentiating

POP VERSUS POD

PERCEPTUAL MAP: CURRENT PERCEPTIONS

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PERCEPTUAL MAP: POSSIBILITIES

BRAND MANTRAS

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DESIGNING A BRAND MANTRA


Communicate

Simplify

Inspire

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CONSTRUCTING A
BRAND POSITIONING BULLS-EYE

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CONVEYING CATEGORY MEMBERSHIP


Announcing category benefits
Comparing to exemplars
Relying on the product descriptor

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EXAMPLES OF NEGATIVELY CORRELATED ATTRIBUTES


AND BENEFITS

Low-price vs. High


quality
Taste vs. Low
calories
Nutritious vs. Good
tasting
Efficacious vs. Mild

Powerful vs. Safe


Strong vs. Refined
Ubiquitous vs.
Exclusive
Varied vs. Simple

DIFFERENTIATION STRATEGIES

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MEANS OF DIFFERENTIATION
Employee
Channel
Image

Services

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EMOTIONAL BRANDING
Strong culture

Communication style

Emotional hook

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MARKET SHARE, MIND SHARE,


AND HEART SHARE

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BRAND NARRATIVES AND STORYTELLING

FOR REVIEW

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How can a firm develop and establish


an effective positioning in the market?
How do marketers identify and analyze
competition?
How are brands successfully
differentiated?
What are the differences in positioning
and branding with a small business?

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