CH.1 DEFINING MARKETING FOR THE 21 ST CENTURY 2.

Business Markets
3. Global Markets
Marketing-about identifying and meeting human and 4. Nonprofit and Governmental Markets
social needs
Marketplace-physical
-meeting needs profitably
Marketspace-digital
-the activity, set of institutions, and processes for
crating, communicating, delivering and exchanging Metamarket-a cluster of complementary products and
offerings that have value for customers, clients, services closely related in the minds of consumers, but
partners and society at large spread across a diverse set of industries

Marketing Management-the art and science of Metamediaries

choosing target markets and getting, keeping and
Core Marketing Concepts
growing customers through creating, delivering and
communicating superior customer value 1.
-deliver a high standard of living
-the art of selling products
Marketers market 10 types of entities
Needs, Wants, Demands
Needs-basic human requirement
Wants when they are directed to specific
objects that might satisfy the needs
Demands-wants for specific products backed
by an ability to pay

1. Goods 5 types of need:

2. Services 1. stated needs
3. Events 2. real needs
4. Experiences 3. unstated needs
5. Persons 4. delight needs
6. Places 5. secret needs
7. Properties
8. Organizations 2. Target markets, Positioning, Segmentation
9. Information 3. Offerings and Brands
10. Ideas Value proposition-a set of benefits that
satisfy those needs (intangible value
Marketer-someone who seeks a responseattention,
proposition)
a purchase, a vote, a donation from another party, Brand-an offering from a known source
called the prospect 4. Value and Satisfaction
Customer value triad: quality, service and
8 demand states
price (qsp)
1. Negative demand-dislike the product and Marketing-the identification, creation,
may even pay to avoid it communication, delivery and monitoring of
2. Non-existent demand-may be unaware of or customer value
uninterested in the product Satisfaction-reflects a persons judgment of a
3. Latent demand-may share a strong need that products perceived performance in
cannot be satisfied by and existing product relationship to expectations
4. Declining demand-begin to buy the product 5. Marketing Channels
less frequently or not at all -communication channels, dialogue channels,
5. Irregular demand-purchases vary on distribution channels, service channels
seasonal, monthly, weekly, daily or even hourly 6. Supply Chain
basis -a longer channel stretching from raw materials
6. Full demand-adequately buying all products to components to finished products carried to
put into the marketplace final buyers
7. Overfull demand-more consumers would like 7. Competition
to buy the product that can be satisfied 8. Marketing Environment
8. Unwholesome demand-may be attracted to -task environment
products that have undesirable social -6 components broad environment:
1. demographic environment
consequences
2. economic environment
*they view sellers as constituting the industry and 3. social-cultural environment
buyers as constituting the market 4. natural environment
5. technological environment
(need markets, product markets, demographic 6. political-legal environment
markets, geographic markets, voter markets, labor
The New Marketing Realities
markets, donor markets)
1. Network Information Technology
Key Customer Markets
2. Globalization
1. Consumer Markets 3. Deregulation
4. Privatization
 5. Heightened competition 4 broad components characterizing holistic marketing
6. Industry convergence
7. Retail transformation 1. Relationship Marketing-to build mutually
8. Disintermediation satisfying long-term relationships with key
9. Consumer buying power constituents in order to earn and retain their
10. Consumer Information business
11. Consumer Participation 4 key constituents for relationship marketing
12. Consumer resistance 1. customers
2. employees
New Company Capabilities 3. marketing partners
4. members of the financial community
1. Marketers can use the Internet as a powerful Marketing network-consisting of the
information and sales channel company and its supporting stakeholders with
2. Marketers can collect fuller and richer
whom it has built mutually profitable business
information about markets, customers,
relationships
prospects, and competitors (customer retention, customer relationship
3. Marketers can tap into social media to amplify
management (CRM), partner relationship
their brand message
management (PRM))
4. Marketers can facilitate and speed external
2. Integrated Marketing-occurs when the
communication among customers
marketer devises marketing activities and
5. Marketers can send ads, coupons, samples and
assembles marketing programs to create,
information to customers who have requested
communicate and deliver value for consumers
them or given the company permission to send
such that the whole is greater than the sum of
them
its parts
6. Marketers can reach consumers on the move
3. Internal Marketing-an element of holistic
with mobile marketing
marketing, the task of hiring, training, and
7. Companies can make and sell individually
motivating able employees who want to serve
differentiated goods
customers well
8. Companies can improve purchasing, recruiting,
4. Performance Marketing-requires
training and internal and external
understanding the financial and nonfinancial
communications
returns to business and society from marketing
9. Companies can facilitate and speed up internal
activities and programs
communication among their employees by
-financial accountability
using the Internet as a private intranet
-social responsibility marketing
10. Companies can improve their cost efficiency by
skilful use of the internet Updating the 4 Ps
Marketing in Practice 1. Product
2. Price
*Turbulence is the new normal, punctuated by periodic
3. Place
and intermittent spurts of prosperity and downturn 4. Promotion
including extended downturns amounting to recession
or even depression Modern Marketing Realities:

1. Production Concept-holds that consumers prefer 1. People-employees, consumers

products that are widely available and inexpensive 2. Processes-refers all the creativity, discipline,
and structure brought to marketing
2. Product Concept-consumers favour products management
offering the most quality, performance, or innovative 3. Program-all the firms consumer-directed
feature activities
4. Performance
3. Selling Concept-consumers and businesses, if left
alone, wont buy enough of the organizations products Marketing Management Tasks
4. Marketing Concept-a customer-centered, sense- 1. Developing Marketing Strategies and plans
and-respond philosophy 2. Capturing marketing insights
3. Connecting with customers
-the job is to find the right customers for your products, 4. Building strong brands
but the right products for you customers 5. Shaping the market offerings
6. Delivering value
*selling focuses on the needs of the seller, marketing 7. Communicating value
on the needs of the buyer 8. Creating successful long-term growth
5. Holistic Marketing Concept-based on the CH. 2 DEVELOPING MARKETING STRATGIES AND PLANS
development, design, and implementation of marketing
programs, processes and activities that recognize their Value chain-a tool for identifying ways to create more
breadth and interdependencies customer value
5 primary activities Marketers must give priority to strategic planning in 3
key areas
1. Inbound logistics-bringing materials into the
business 1. Managing a companys businesses as an
2. Operations-converting materials into final investment portfolio
products 2. Assessing each businesss strength by
3. Outbound logistics-shipping out final considering the markets growth rate and the
products companys position and fit in that market
4. Marketing includes sales 3. Establishing a strategy
5. Service
4 organizational levels:
4 support activities
1. Corporate
1. procurement 2. Division
2. technology development 3. business unit
3. human resource management 4. Product
4. firm infrastructure
Marketing Plan-the central instrument for directing
Core business processes: and coordinating the marketing effort
1. Market-sensing process-all the activities in 2 levels:
gathering and acting upon information about
the market 1. Strategic marketing plan-lays out the target
2. New-offering realization process-all the markets and the firms value proposition, based
activities in researching, developing, and on n analysis of the best market opportunities
launching new high-quality offerings quickly 2. Tactical marketing plan-specifies the
and within budget marketing tactics, including product features,
3. Customer acquisition process-all the promotion, merchandising, pricing, sales
activities in defining target markets and channels and service
prospecting for new customers
4. Customer relationship management Corporate and Division Strategic Planning
process-all the activities in building deeper All corporate headquarters undertake 4 planning
understanding, relationships and offerings to activities:
individual customers
5. Fulfilment management process-all the 1. Defining the corporate mission
activities in receiving and approving orders, 2. Establishing strategic business units
shipping the goods on time and collecting 3. Assigning resources to each strategic business
payments unit
4. Assessing growth opportunities
Core competencies
Defining the corporate mission
3 characteristics:
5 major characteristics of good mission statements
1. It is a source of competitive advantage and
makes a significant contribution to perceived 1. They focus on a limited number of goals
customer benefits 2. They stress the companys major policies and
2. It has applications in a wide variety of markets values
3. It is difficult for competitors to imitate 3. They define the major competitive spheres
within which the company will operate
Business realignment 4. They take a long-term view
5. They are as short, memorable and meaningful
3 steps:
as possible
1. Redefining the business concept or big idea
Vertical sphere-the number of channel levels, from
2. Reshaping the business scope
raw material to final product and distribution, in which
3. Repositioning the companys brand identity
a company will participate
Holistic marketers address 3 key management
Establishing strategic business units
questions:
Market definitions-describe the business as a
1. Value exploration-how a company identifies
customer-satisfying process
new value opportunities
2. Value creation-how a company efficiently Target market definition-focus on selling a product
creates more promising new value offerings or service to a current market
3. Value delivery-how a company uses its
capabilities and infrastructure to deliver the Strategic market definition-focuses on the potential
new value offerings more efficiently market

The Central Role of Strategic Planning A business can define itself in terms of 3 dimensions
 1. Customer groups
2. Customer needs
3. Technology
3 characteristics of strategic business units (SBUs)
1. It is a single business, or a collection of related
businesses, that can be planned separately
from the rest of the company
2. It has its own set of competitors
3. It has a manager responsible for strategic
planning and profit performance, who controls
most of the factors affecting profit
Assigning Resources to Each SBU
*The GE/McKinsey Matrix classifies each SBU by the
extent of its competitive advantage and the
attractiveness of its industry
*BCGs Growth-Share Matrix uses relative market share
and annual rate of market growth as criteria to make
investment decisions, classifying SBUs as dogs, cash
cows, question marks and stars
Assessing Growth Opportunities
How can it fill the strategic-planning gap?
1. To identify opportunities for growth within
current businesses (intensive opportunities)
2. To identify opportunities to build or acquire
businesses related to current businesses
(integrative opportunities)
3. To identify opportunities to add attractive
unrelated businesses (diversification
opportunities)
INTENSIVE GROWTH
product-market expansion grid
1. Market-penetration strategy-
whether it could gain more market
share with its current products in their
current markets
2. Market-development strategy-
whether it can find or develop new
markets for its current products
3. Product-development strategy-
whether it can develop new products of
potential interest to its current market
4. Diversification strategy-review
opportunities to develop new products
for new markets
DIVERSIFICATION GROWTH
1. Concentric strategy
2. Horizontal strategy
DOWNSIZING AND DIVESTING OLDER
BUSINESES
Organization and Organizational Culture
Organization-consists of its structures, policies and
corporate culture, all of which can become
dysfunctional in a rapidly changing business
environment
Corporate culture-the shared experiences, stories,
beliefs, and norms that characterize an organization
Marketing Innovation
*Senior management should identify and encourage
fresh ideas from 3 underrepresented groups:
1. employees with youthful or diverse perspectives
2. Employees far removed from company headquarters
3. employees new to the industry
Scenario analysis-which develops plausible
representations of a firms possible future using
assumptions about forces driving the market and
different uncertainties
The 12 Dimensions of Business Innovation
1. Offerings (What)-develop innovative new
products or services
2. Platform-use common components or building
blocks to create derivative offerings
3. Solutions-create integrated and customized
offerings that solve end-to-end customer
problems
4. Customers (Who)-discover unmet customer
needs or identify underserved customer
segments
5. Customer Experience-redesign customer
interactions across all touch points and all
moments of contact
6. Value Capture-redefine how company gets
paid or create innovative new revenue streams
7. Process (HOW)-redesign core operating
processes to improve efficiency and
effectiveness
8. Organization-change form, function, or
activity scope of the firm
9. Supply Chain-think differently about sourcing
and fulfilment
10. Presence (Where)-create new distribution
channels or innovative points of presence,
including the places where offerings can be
bought or used by customers
11. Networking-create network-centric intelligent
and integrated offerings
12. Brand-leverage a brand into new domains
Business Unit Strategic Planning Process
1. Business Mission
2. SWOT ANALYSIS
3. Goal Formulation
4. Strategy Formulation
5. Program Formulation
6. Implementation
7. Feedback and Control
SWOT Analysis
External Environment Opportunity and Threat Analysis
(macroenvironment forces, microenvironment forces)
Marketing opportunity-an area of buyer need and
interest that a company has a high probability of
profitably satisfying
3 main sources of market opportunities
1. Offer something that is in short supply
2. Supply an existing product or service in a new
superior way
Ideal method-an ideal version of the product
or service
Consumption chain method-asks them to
chart their steps in acquiring , using and
disposing of a product
3. Totally new product or service
Marketers need to be good at spotting opportunities
1. A company may benefit from converging
industry trends and introduce hybrid products
or services that are new to the market
2. A company may make a buying process more
convenient or efficient
3. A company can meet the need for more
information and advice
4. A company can customize a product or service
5. A company can introduce a new capability
6. A company may be able to deliver a product or
service faster
7. A company may be able to offer a product at a
much lower price
Market Opportunity Analysis (MOA)
1. Can we articulate the benefits convincingly to a
defined target market
2. Can we locate the target market and reach
them with cost-effective media and trade
channels
3. Does our company possess or have access to
the critical capabilities and resources we need
to deliver the customer benefits
4. Can we deliver the benefits better than any
actual or potential competitors
5. Will the financial rate of return meet or exceed
our required threshold for investment
Environmental threat-a challenge posed by an
unfavourable trend or development that, in the
absence of defensive marketing action, would lead to
lower sales or profit
Internal Environment Strengths and Weaknesses
Analysis
Goal Formulation
Goal formulation-developing specific goals for the
planning period
Goals-objective that are specific with respect to
magnitude and time
Manages by objective (MBO)
4 criteria the units objectives must meet
1. They must be arranged hierarchically, from
most to least important
2. Objectives should be quantitative whenever
possible
3. Goals should be realistic
4. Objectives must be consistent
Strategic Formulation
Strategy-a game plan for getting there
(marketing, technology, sourcing strategy)
Porters Generic Strategies
1. Overall cost leadership
2. Differentiation
3. Focus
Strategic group-firms directing the same strategy to
the same target market
Operationally effective-using benchmarking and
other tools
Strategy-the creation of a unique and valuable
position involving a different set of activities
-performs different activities from rivals or performs
similar activities in different ways
4 major categories of strategic alliances (marketing
alliances)
1. Product or service alliances-one company
licenses another to produce its product, or two
companies jointly market their complementary
products or a new product
2. Promotional alliances-one company agrees
to carry a promotion for another companys
product or service
3. Logistics alliances-one company offers
logistical services for another companys
product
4. Pricing collaborations-one or more
companies join in a special pricing
collaboration
Partner Relationship Management (PRM)-the
ability to form and manage partnerships as core skills
Program Formulation and implementation
Hardware of success
1. Strategy
2. Structure
3. systems
Software of success
1. style-company employees share a common
way of thinking and behaving
2. skills-employees have the skills needed to
carry out the companys strategy
3. staff-the company has hired able people,
trained them well, and assigned them to the
right jobs
4. shared values-employees share the same
guiding values
Feedback and Control
Product Planning: The nature and Contents of a 4. Income
Marketing Plan 5. Generation
-Millennials/Gen Y
Marketing plan-a written document that summarizes -Gen X
what the marketer has learned about the marketplace -Baby Boomers
and indicates how the firm plans to reach its marketing -Silent Generation
objectives
Different approaches to persuade Gen Y
-contains tactical guidelines for the marketing 1. Online buzz
programs and financial allocations over the planning 2. Student ambassadors
period 3. Unconventional sports
4. Cool events
-provides direction and focus for a brand, product, or 5. Computer games
company 6. Videos
7. Street teams
-documents how the organization will achieve its 3. Race and Culture
strategic objectives through specific marketing Multicultural Marketing
strategies and tactics, with the customer as the 4. Psychographic Segmentation-the science of
starting point using psychology and demographics to better
understand consumers
A marketing plan usually contains the following -buyers are divided into different groups on the
sections basis of psychological/personality traits,
lifestyle or values
1. Executive summary and table of contents
The main dimensions of the VALS segmentation
2. Situation analysis
1. Consumer motivation (horizontal
3. Marketing Strategy
4. Financial projections dimension)
Risk analysis-we obtain 3 estimates 2. Consumer resources (vertical dimension)
(optimistic, pessimistic and most likely) for 3 primary motivation of consumers
each uncertain variable affecting profitability,
under an assumed marketing environment and 1. Ideals-guided by knowledge and principles
marketing strategy for the planning period 2. Achievement demonstrate success to their
5. Implementation controls peers
3. Self-expression-desire social or physical
activity, variety and risk

The 4 groups with higher resources

1. Innovators
2. Thinkers
3. Achievers
4. Experiencers

CH. 8 IDENTIFYING MARKET SEGMENTS AND TARGETS The 4 groups with lower resources

Market Segment-consists of a group of customers 1. Believers

who share a similar set of needs and wants 2. Strivers
3. Makers
Task: to identify the appropriate number and nature of 4. Survivors
market segments and decide which one to target 5. Behavioral Segmentation
6 different benefit segments
Bases for Segmenting Consumer Markets 1. Enthusiast
2. Image seekers
1. Geographic Segmentation-divides the 3. Savvy shoppers
market into geographical units such as nations, 4. Traditionalist
states, regions, countries, cities or 5. Satisfied sippers
neighborhoods 6. Overwhelmed
Grassrooting marketing-activities
concentrate on getting as close and personally 5 roles in a buying decision
relevant to individual customers as possible 1. Initiator
2. Demographic Segmentation 2. Inflluencer
1. Age and Life-Cycle Stage 3. Decider
2. Life Stage-a persons major concerns, 4. Buyer
such as going through a divorce, going into 5. User
a second marriage, taking care of an older
parent, deciding to cohabit with another User and Usage---Real User and Usage-
person deciding to buy a new home Related Variables
3. Gender 1. User Status
 -every product has its nonusers, ex- 5. Actionable-effective programs can be
users, potential users, first-time users formulate for attracting and serving the
and regular users segments
2. Usage Rate
-light, medium, and heavy product Steps in the Segmentation Process
users
3. Buyer-Readiness Stage 1. Needs-based segmentation-group
-unaware, aware, informed, interested, customers into segments based on similar
desire, intend to buy needs and benefits sought by customers in
4. Loyalty Status solving a particular consumption problem
1. Hard-core loyals-consumers who 2. Segment identification-for each needs-
buy only one brand all the time based segment, determine which
2. Split loyals-consumers who are demographics, lifestyles, and usage behaviors
loyal to 2 or 3 brands make the segment distinct and identifiable
3. Shifting loyals-consumers who (actionable)
shift loyalty from one brand to 3. Segment attractiveness-using
another predetermined segment attractiveness criteria
4. Switchers-consumers who show (such as market growth, competitive intensity
no loyalty to any brand and market access), determine the overall
5. Attitude-enthusiastic, positive, attractiveness of each segment
indifferent, negative and hostile 4. Segment profitability-determine segment
6. Multiple Bases profitability
-combining different behavioural bases 5. Segment positioning-for each segment,
can provide a more comprehensive and create a value proposition and product-price
cohesive view of a market and its positioning strategy based on that segments
segments unique customer needs and characteristics
6. Segment acid test-create segment
3 main types of New Luxury Products: storyboard to test the attractiveness of each
segment s positioning strategy
1. Accessible superpremium products 7. Marketing-mix strategy-expand segment
2. Old Luxury brand extensions
positioning strategy to include all aspects of
3. Masstige goods
the marketing mix: product, price, promotion
*Business marketers generally identify segments and place
through a sequential process
Michael Porter- 5 Forces that Determine the intrinsic
Flexible Market Offering long-run attractiveness of a market or a market
segment:
1. Naked Solution---containing the product and
service elements that all segment members 1. Threat of intense segment rivalry
value 2. Threat of new entrants
2. Discretionary Options---some segment 3. Threat of substitute products
members value 4. Threat of buyers growing bargaining power
-Buyers bargaining power grows when they
Major Segmentation Variables for Business Markets become more concentrated or organized, when
the product represents a significant fraction of
1. Demographic their costs, when the product is
2. Operating Variables undifferentiated, when buyers switching costs
3. Purchasing Approaches are low, when buyers are price-sensitive
4. Situational Factors because of low profits or when they can
5. Personal Characteristics
integrate upstream
Market Targeting 5. Threat of suppliers growing bargaining power

Effective Segmentation Criteria Evaluating and Selecting the Market Segments

1. Measurable-the size, purchasing power and (2 factors to look at: segments overall
characteristics of the segments can be attractiveness; companys objectives and resources
measured 1. Full Market Coverage-a firm attempts to
2. Substantial-the segments are large and
serve all customer groups with all the products
profitable enough to serve
they might need
3. Accessible-the segments can be effectively
Undifferentiated/mass marketing-the firm
reached and served
ignores segment differences and goes after the
4. Differentiable-segments are conceptually
whole market with one offer
distinguishable and respond differently to
-when consumers have roughly the same
different marketing-mix elements and
preferences
programs
 Differentiated marketing-the frim sells
different products to all the different segments
of the market
*Differentiated marketing typically creates
more total sales than undifferentiated
marketing (higher costs, higher sales)
2. Multiple Segment Specialization
Selective specialization-firm selects a subset
of all the possible segments, each objectively
attractive and appropriate
Supersegment-a set of segments sharing
some exploitable similarity
Product specialization-firm sells a certain
product to several different market segments
Market specialization-firm concentrates on
serving many needs of a particular customer
group
3. Single-Segment Concentration-the firm
markets to only one particular segment
-firm gains deep knowledge of the segments
needs and achieves a strong market presence,
enjoys operating economies by specializing its
production, distribution and promotion
Niche-a more narrowly defined customer group
seeking a distinctive mix of benefits within a
segment
4. Individual Marketing-segments of one,
customized marketing, one-to-one marketing
Customerization-combines operationally
driven mass customization with customized
marketing in a way that empowers consumers
to design the product and service offering of
their choice
5. Ethical Choice of Market Targets
CH. 6 ANALYZING CONSUMER MARKETS
Aim of marketing: to meet and satisfy target
customers needs and wants
What Influences Consumer Behavior?
Consumer behavior-the study of how individuals,
groups, and organizations select, buy, use and dispose
of goods, services, ideas, or experiences to satisfy their
needs and wants
1. Cultural Factors
Culture-the fundamental determinant of a
persons wants and behavior
Subculture-provide more specific
identification and socialization for their
members
-nationalities, religions, racial groups,
geographic regions
Social classes-relatively homogeneous and
enduring divisions in a society, hierarchically
ordered and with members who share similar
values, interests, and behavior
(lower lowers, upper lowers, working class,
middle class, upper middles, lower uppers,
upper uppers)
2. Social Factors
1. Reference Groups
Reference groups-all the groups that
have a direct (face-to-face) or indirect
influence on their attitudes or behavior
Membership groups-groups having a
direct influence
Primary groups-with whom the person
interacts fairly continuously and informally,
such as family, friends, neighbors, and
coworkers
Secondary groups-religious, professional,
and trade-union groups, which tend to be
more formal and require less continuous
interaction
Reference groups influence members in at
least 3 ways
1. They expose an individual to new
behaviors and lifestyles
2. They influence attitudes and self-
concept
3. They create pressures for conformity
that may affect product and brand
choices
Aspirational groups-those a person
hopes to join
Dissociative groups-those whose values
or behavior an individual rejects
Opinion leader-the person who offers
informal advice or information about a
specific product or product category, such
as which of several brands is best or how a
particular product may be used
2. Family
2 families in the buyers life
1. Family of orientation-consists of
parents and siblings
2. Family of procreation-the persons
spouse and children
*Direct influence describes childrens hints
*Indirect influence means that parents
know the brands, product choices, and
preferences of their children without hints
or outright requests
3. Roles and Status
Role-activities a person is expected to
perform
Status-each role in turn connotes a status
3. Personal Factors
1. Age and Stage in the Life Cycle
a. Family life cycle-the number, age
and gender of people in the
household
b. Psychological life-cycle-passages,
transformations
c. Critical life events/transitions-
marriage, childbirth, illness,
relocation, divorce, first job, career
change, retirement, death of a
spouse
2. Personality and Self Concept
Personality-a set of distinguishing human
psychological traits that lead to relatively
consistent and enduring responses to
 environmental stimuli (including buying
behavior)
Brand personality-the specific mix of
human traits that we can attribute to a
particular brand
1. Sincerity (down to earth, wholesome,
cheerful)
2. Excitement (daring, spirited,
imaginative and up to date)
3. Competence (reliable, intelligent and
successful)
4. Sophistication (upperclass and
charming)
5. Ruggedness (outdoorsy and charming)
Consumers often choose and use brands
with a brand personality consistent
1. Actual self-concept-how we view
ourselves
2. Ideal self-concept-how we would like
to view ourselves
3. Others self-concept-how we think
others see us
3. Lifestyle and Values
Lifestyle-a persons pattern of living in the
world as expressed in activities, interests,
and opinions
-portrays the whole person interacting with
his or her environment
Core values-the belief systems that
underlie attitudes and behaviors
-go much deeper than behavior or attitude
and determine, at a basic level, peoples
choices and desires over the long term
4 Key Psychological Processes
1. Motivation (Freud, Maslow, Herzberg)
Biogenic-they arise from physiological states
of tension such as hunger, thirst, or discomfort
Psychogenic-they arise from psychological
states of tension such as the need for
recognition, esteem or belonging
Motive-when it is aroused to a sufficient level
of intensity to drive us to act
a. Freuds Theory
-assumed the psychological forces
shaping peoples behavior are largely
unconscious, and that a person cannot
fully understand his or her own
motivation
Laddering-trace a persons
motivations from the stated
instrumental ones to the more terminal
ones
Projective techniques: word
association, sentence completion,
picture interpretation, role playing
b. Maslows Theory
-sought to explain why people are
driven by particular times
-physiological needs, safety needs,
social needs,, esteem needs, self-
actualization needs
c. Herzbergs Theory
-two-factor theory: dissatisfiers-
factors that cause dissatisfaction
Satisfiers-factors that cause
satisfaction
*sellers should do their best to avoid
dissatisfiers
*the seller should identify the major
satisfiers or motivators of purchase in
the market and then supply them
2. Perception
*In marketing, perceptions are more important
than reality, because perceptions affect
consumers actual behavior
Perception-the process by which we select,
organize and interpret information inputs to
create a meaningful picture of the world
Attention-the allocation of processing
capacity to some stimulus
3 perceptual processes
a. Selective Attention-marketers must
work hard to attract consumers notice
-explain which stimuli people will notice
1. People are more likely to notice
stimuli that relate to a current need
2. People are more likely to notice
stimuli they anticipate
3. People are more likely to notice
stimuli whose deviations are large in
relationship to the normal size of the
stimuli
b. Selective Distortion-the tendency to
interpret information in a way that fits
our preconception
c. Selective Retention-were likely to
remember good points about a product
we like and forget good points about
competing products
Subliminal Perception
3. Learning
Learning-induces changes in our behavior
arising from experience
*most human behavior is learned, although
much learning is incidental
2 popular approaches to learning
1. Classical conditioning
2. Operant (instrumental) conditioning
Drive a strong internal stimulus impelling
action
Cues-minor stimuli that determine when,
where, and how a person responds
Discrimination-we have learned to recognize
differences in sets of similar stimuli and can
adjust our responses accordingly
Hedonic bias-occurs when people have a
general tendency to attribute success to
themselves and failure to external causes
 4. Emotions Market partitioning-the process of
5. Memory identifying the hierarchy of attributes
Short-term memory (STM)a temporary and that guide consumer decision making
limited repository of information in order to understand different
Long-term memory (LTM)-a more competitive forces and how these
permanent, essentially unlimited repository various sets get formed
Associative network memory model views
LTM as a set of nodes and links 1. Brand-dominant hierarchy
Nodes-stored information connected by links 2. Nation-dominant hierarchy
that vary in strength 3. Price dominant
Brand associations-consist of all brand- 4. Brand dominant
related thoughts, feelings, perceptions, images, 5. Type/price/brand-dominant
experiences, beliefs, attitudes and so on that consumers
become linked to the brand node 6. Quality/service/type buyers
Memory encoding-describes how and where
information gets into memory 3. Evaluation of Alternatives
Memory retrieval-the way information gets *the customer is trying to satisfy a
out of memory need
1. The presence of other product information *the consumer is looking for certain
in memory can produce interference effects benefits from the product solution
and cause us to either overlook or confuse *the consumer sees each product as a
new data bundle of attributes with varying
2. The time between exposure to information abilities to deliver the benefits
and encoding has been shown generally to
Belief-a descriptive thought that a
produce only gradual decay
3. Information may be available in memory person holds about something
Attitudes-a persons enduring
but not accessible for recall without the
favorable or unfavourable evaluations,
proper retrieval cues or reminders
emotional feelings, and action
6 traits that characterize all great ideas and tendencies toward some object or idea
used the acronym SUCCESS to organize them Expectancy-value model-attitude
formation posits that consumers
1. Simple evaluate products and services by
2. Unexpected combining their brand beliefs---the
3. Concrete positives and negatives---according to
4. Credibility importance
5. Emotion
6. Stories 1. Redesign the laptop computer real
repositioning
The Buying Decision Process: The Five-Stage model
2. Alter beliefs about the brand
1. Problem Recognition psychological repositioning-
2. Information Search attempting to alter beliefs about
-2 levels of engagement in the search the brand
1. heightened attention-milder 3. Alter beliefs about competitors
search state, at this level a person brands competitive
simply becomes more receptive to depositioning-when buyers
information about a product mistakenly believe a competitors
2. Active information search-looking brand has more quality than it
for reading material, phoning friends, actually has
going online, visiting stores to learn 4. Alter the importance weights
about the product 5. Call attention to neglected
attributes
4 groups information sources 6. Shift the buyers ideals
1. Personal 4. Purchase Decision
2. Commercial Noncompensatory models of consumer choice
3. Public Heuristics-rules of thumb in the decision
4. Experiential process
1. Conjunctive heuristic-the consumer sets
Successive sets involved in consumer a minimum acceptable cutoff level for each
decision making attribute and chooses the first alternative
that meets the minimum standard for all
1. Total set
attributes
2. Awareness set
2. Lexicographic heuristic-the consumer
3. Consideration set
4. Choice set chooses the best brand on the basis of its
5. Decision set perceived most important attribute
 3. Elimination-by-aspects heuristic-the
consumer compares brands on an attribute
selected probabilisticallywhere the
probability of choosing an attribute is
positively related to its importanceand
eliminates brands that do not meet
minimum acceptable cutoffs
Intervening factors
2 general factors can intervene between the
purchase intention and the purchase decision
1. Attitudes of others
a. The intensity of the other persons
negative attitude toward our
preferred alternative
b. Our motivation to comply with the
other persons wishes
2. Unanticipated situational factors
-may erupt to change the purchase
intention
Perceived risk
1. Functional risk-the product does not
perform to expectations
2. Physical risk-the product poses a
threat to the physical well-being or
health of the user or others
3. Financial risk-the product is not worth
the price paid
4. Social risk-the product results in
embarrassment in front of others
5. Psychological risk-the product affects
the mental well-being of the user
6. Time risk-the failure of the product
results in an opportunity cost of finding
another satisfactory product
5. Postpurhcase Behavior
1. Postpurchase Satisfaciton (disappointed,
satisfied, delighted)
2. Postpurchase Actions (exit option, voice
option)
3. Postpurchase Uses and Disposal
Moderating Effects on Consumer Decision Making
1. Low-involvement consumer Decision Making
Elaboration likelihood model-an influential
model of attitude formation and change,
describes
2 means of persuasion
a. Central route-in which attitude
formation or change stimulates much
thought and is based on the
consumers diligent rational
consideration of the most important
product information
b. Peripheral route-in which attitude
formation or change provokes much
less thought and results from the
consumers association of a brand with
either positive or negative peripheral
cues
Peripheral cues-celebrity
endorsements, credible source, or any
object that generates positive feelings
*we have low involvement with the
most low-cost, frequently purchased
products
4 techniques to try to convert a low-
involvement product into one of higher
involvement
i. Link the product to an
engaging issue
ii. Link the product to a personal
situation
iii. Design advertising to trigger
strong emotion related to
personal values or ego defense
iv. Add an important feature
2. Variety-seeking Buying Behavior
Behavioral Decision Theory and Behavioral Economics
*Many situations in which consumers make seemingly
irrational choices
3 broad areas of behavioral economics
1. Decision heuristics
2. Framing
3. Contextual effects
Decision Heuristics
1. Availability heuristics-consumers base their
predictions on the quickness and ease with
which a particular example of an outcome
comes to mind
2. Representativeness heuristics-consumers
base their predictions on how representative or
similar the outcome is to other examples
3. Anchoring and adjustment heuristics-
consumers arrive at an initial judgment and
then adjust It based on additional information
Framing
Decision framing-the manner in which choices are
presented to and seen by a decision maker
Choice architecture-the environment in which
decisions are structure and buying choices are made
Mental accounting the way consumers code
categorize and evaluate financial outcomes of choices
-the tendency to categorize funds or items of value
even though there is no logical basis for the
categorization
Mental accounting is based on a set of core principles
1. Tend to segregate gains
2. Tend to integrate losses
3. Tend to integrate smaller losses with larger
gains cancellation principle
4. Tend to segregate small gains from large losses
silver lining principle
 Prospect theory-maintains that consumers frame
their decision alternative in terms of gains and
losses according to a value function
CH.4 CONDUCTING MARKETING RESEARCH
Marketing insights-provide diagnostic information
about how and why we observe certain effects in the
marketplace, and what that means to marketers
Marketing research-the systematic design, collection
analysis and reporting of data and findings relevant to
a specific marketing situation facing the company
For small companies
1. Engaging students or professors to design and
carry out projects
2. Using the internet
3. Checking out rivals
4. Tapping into marketing partner expertise
Marketing research firms fall into 3 categories
1. Syndicated-service research firms-these
firms gather consumer and trade information,
which they sell for a fee
2. Custom marketing research firms-these
firms are hired to carry out specific projects,
they design the study and report the findings
3. Specialty-line marketing research firms-
these firms provide specialized research
services, which sells field interviewing services
to other firms
The Marketing Research Process
1. Define the Problem, the Decision Alternatives
and the Research Objectives
*not to define the problem too broadly or too
narrowly for the marketing researcher
*management should first spell out the
decisions it might face and then work backward
*to set specific research objectives
1. exploratory-its goal is to shed light on the
real nature of the problem and to suggest
possible solutions or new ideas
2. descriptive-it seeks to quantify demand
3. causal-its purpose is to test a cause-and-
effect relationship
2. Develop the Research Plan
1. Data Sources
Primary data-data freshly gathered for a
specific purpose or for a specific research
project
Secondary data-data that were collected
for another purpose and already exist
somewhere
*When the needed data dont exist or are
dated, inaccurate, incomplete or unreliable,
the researcher will need to collect primary
data
2. Research Approaches
1. Observational research
Ethnographic research-a particular
observational research approach that
uses concepts and tools form
anthropology and other social science
disciplines to provide deep cultural
understanding of how people live and
work
Goal: to immerse the researcher into
consumers lives to uncover
unarticulated desires that might not
surface in any other form of research
2. Focus group research
Focus group-a gathering of 6 to 10
people carefully selected by
researchers based on certain
demographic, psychographic, or other
considerations and brought together to
discuss various topics of interest at
length
*useful exploratory step: but
researchers must avoid generalizing
from focus-group participants to the
whole market, because the sample size
is too small and the sample is not
drawn randomly
-allow marketers to observe how and
why consumers accept or reject
concepts, ideas or any specific notion
-its still the most cost-effective,
quickest, dirtiest way to get
information in rapid time on an idea
3. Survey research
4. Behavioural research
-high income people dont necessarily
buy the more expensive brands,
contrary to what they might state in
interviews, and many low-income
people buy some expensive brands
5. Experimental research
-designed to capture cause-and-effect
relationships by eliminating competing
explanations of the observed findings
3. Research Instruments
Questionnaire-consists of a set of
questions presented to respondents
Closed-end questions-specify all the
possible answers and provide answers that
are easier to interpret and tabulate
1. Dichotomous-a question with 2
possible answers
2. Multiple choice-a question with 3 or
more answers
3. Likert scale-a statement with which
the respondent shows the amount of
agreement/disagreement
4. Sematic differential-a scale
connecting 2 bipolar words; the
respondent selects the point that
represent his or her opinion
5. Importance scale-a scale that rates
the importance of some attribute
6. Rating scale-a scale that rates some
attribute from poor to excellent
 7. Intention-to-buy scale-a scale that
describes the respondents intention to
buy
Open-end questions-allow respondents
to answer in their own words and often
reveal more about how people think
1. Completely unstructured-a question
that respondents can answer in an
almost unlimited number of ways
2. Word association-words are
presented one at a time, and
respondents mention the first word that
comes to mind
3. Sentence completion-an incomplete
sentence is presented and respondents
are asked to complete it
4. Story completion-an incomplete story
is presented, and respondents are
asked to complete it
5. Picture-a picture of 2 characters is
presented, with one making a
statement; respondents are asked to
identify with the other and fill in the
empty balloon
6. Thematic apperception test (TAT)-a
picture is presented and respondents
are asked to make up a story about
what they think is happening or may
happen in the picture
Qualitative research techniques-are
relatively unstructured measurement
approaches that permit a range of possible
responses
1. word association-ask subjects what
words come to mind when they hear
the brands name
2. projective techniques-give people an
incomplete stimulus and ask them to
complete it, or give them an
ambiguous stimulus and ask them to
make sense of it
3. visualization-requires people to
create a collage from magazine photos
or drawings to depict their perception
4. brand personification-ask subjects
what kind of person they think of when
the brand is mentioned: If the brand
were to come alive as a person, what
would it be like, what would it do,
where would it live, what would it wear,
who would it talk to if it went to a party
(and what would it talk about)
5. laddering-a series of increasingly
more specific why questions can
reveal consumer motivation and
consumers deeper, more abstract
goals
-attribute, functional benefit, emotional
benefit, brand essence
Technological devices
Galvanometers-can measure the
interest or emotions aroused by exposure to a specific
ad or picture
Tathiscope-flashes an ad to a subject
with an exposure interval that may range from less
than one hundredth of a second to several seconds
4. Sampling Plan
3 dimensions:
1. Sampling unit: Whom should we survey?
2. Sample size: How many people should
we survey?
3. Sampling procedure: How should we
choose the respondents?
5. Contact Methods
1. Mail Contacts
Mail questionnaire-one way to reach
people who would not give personal
interviews or whose responses might
be biased or distorted by the
interviewers
-the response rate is usually low or
slow
2. Telephone Contacts
Telephone interviewing-gathering
information quickly, interviews must be
brief and not too personal
3. Personal Contacts
Personal interviewing-the most
versatile method
-the most expansive method is subject
to interviewer bias, and the requires
more administrative planning and
supervision
Arranged interviews-marketers
contact respondents for an
appointment and often offer a small
payment or incentive
Intercept interview-researchers stop
people at a shopping mall or busy
street corner and request an interview
on the spot; nonprobability samples
4. Online Contacts
Advantages
1. Online research is inexpensive
2. Online research is fast
3. People tend to be honest and
thoughtful online
4. Online research is versatile
Disadvantages
1. Samples can be small and skewed
2. Online panels and communities can
suffer from excessive turnover
3. Online market research can suffer
from technological problems and
inconsistencies
3. Collect the Information
*data collection phase of marketing research is
generally the most expensive and the most
prone to error
4 major problems arise in surveys
1. Some respondents will be away from home
or otherwise inaccessible and must be
contacted again or replaced
2. Other respondents will refuse to cooperate
3. Still others will give biased or dishonest
answers
 4. Some interviewers will be biased or
dishonest
4. Analyze the Information
5. Present the Findings
6. Make the Decision
Personas-detailed profiles of one, or perhaps a few,
hypothetical target market consumers, imagined in
terms of demographic psychographic, geographic, or
other descriptive attitudinal or behavioural
creativity information
7 characteristics of Good Marketing Research
1. Scientific method
2. Research
3. Multiple methods
4. Interdependence of models and data
5. Value and cost of information
6. Healthy scepticism
7. Ethical marketing
Measuring Marketing Productivity
Marketing Metrics
Marketing metrics-the set of measures that
helps them quantify, compare, and interpret
their marketing performance
Evaluation:
1. Short-term results-often reflect profit-
and-loss concerns as shown by sales
turnover, shareholder value, or some
combination of the two
2. Changes in brand equity-customer
awareness, attitudes, and behaviors,
market share, relative price premium,
number of complaints, distribution and
availability, total number of customers,
perceived quality and loyalty and retention
Marketing-Mix Modeling
Marketing accountability-means that
marketers must more precisely estimate the
effects of different marketing investments
Marketing-mix models-analyze data from a
variety of sources, such as retailer scanner
data, company shipment data, pricing, media
and promotion spending data, to understand
more precisely the effects of specific marketing
activities
-focuses on incremental growth instead of
baseline sales or long-term effects
-generally fails to incorporate metrics related to
competitors, the trade or the sales force
Marketing Dashboards
Marketing dashboard-a summary set of
relevant internal and external measures for
synthesis and interpretation
-like the instrument panel in a car or plane,
visually displaying real-time indicators to
ensure proper functioning
2 key market-based score-cards that reflect
performance and provide possibly early
warning signals
1. Customer-performance scorecard-
records how well the company is doing
year after year on such customer-based
measures
2. Stakeholder=performance scorecard-
tracks the satisfaction of various
constituencies who have a critical interest
in and impact on the companys
performance: employees, suppliers, banks,
distributors, retailers and stockholders
4 common measurement pathways
marketers are pursuing today
1. Customer metrics pathway-looks at how
prospects become customers, from
awareness to preference to trial to repeat
purchase or some less linear model
(customer experience)
2. Unit metrics pathway-reflects what
marketers know about sales of
product/service unitshow much is sold by
product line and/or by geography, the
marketing cost per unit sold as an
efficiency yardstick, and where and how
margin is optimized in terms of
characteristics of the product line or
distribution channel
3. cash-flow metrics pathway-focuses on
how well marketing expenditures are
achieving short-term returns
4. brand metrics pathway-tracks the
development of the longer-term impact of
marketing through brand equity measures
that asses both the perceptual health of
the brand from customer and prospective
customer perspectives as well as the
overall financial health of the brand