Introduction to Marketing From University of Pennsylvania

business notes

My notes from Introduction to Marketing (part of Business Foundations Specialization) on Coursera.

Week 1 Marketing strategy and Brand Positioning

Market orientations

Seller’s Market Buyer’s Market
Focus on company / Product-focused marketing Focus on customer/segment and competition
Sell as much as you can Go after some customers / say no to others
Profitability comes from volume Profitability comes from creating value for selected customers
Wide market Narrow market / harvest from loyalty

Product orientation

  • Persuade customer to want what the firm has
  • Generic products
  • Competitive advantage is the lowest cost
  • Profitability driver is the market share

Marketing Orientation

  • Persuade firm to offer what the customer wants
  • Differentiated products
  • Competitive advantage is quality/service/customer knowledge
  • Profitability driver is customer share/customer loyalty

Experience Orientation

  • Manage customer’s entire experience with the firm
  • Experiential value
  • Competitive advantage is transformtaion/customer as co-creator of value
  • Profitability driver is buss/referrals

Trust Orientation

  • Prioritize building a relationship of trust and discipline
  • Genuine value
  • Competitive advantage is trust
  • Profitability driver is discipline

Principle of Marketing

3 Principles of Marketing

  • Principle of Customer Value
  • Principle of Differentiation
  • Principle of Segmentation, Targeting, and Positioning

4 P’s of Marketing

  • Product
  • Place (physical, online)
  • Promotion (advertising, sales)
  • Price

Market-Driven Principles

  • Know your Markets
  • Customers have the final say
  • Commit to being first in the markets you serve
  • Deliver total quality to guarantee customer satisfaction

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Strategies for leadership

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  • Operational Excellence - e.g. tends to have more strict hierarchy
  • Performance Superiority - e.g. innovative R&D company
  • Customer Intimacy - “yes” culture / consulting

Segmentation and Targeting

Segmentation

Identify variables that allow one to segment the market
Market Segment is the process of dividing a market into distinct subsets

Targeting

Evaluate the attractiveness of each segment and choose a target segment

Positioning

Identify positioning concepts for each target segment, select the best, and communicate it.

Segmentation Methods

Characteristics of the Customer
Benefits Sought (comfort, asthetics)
Systematic, Product-Related Behaviors (purchasing behavior)
Cohort analysis (Boomers, Gen X, Gen Y)
Geographic segmentation
Zip (post code) clustering

Segment Selection Criteria

  • Segment size
  • Growth of segment
  • Value of Segment
  • Stability
  • Current company position within segment
  • Ease of entry into segment
  • Ease of competitive entry into segment
  • Number and strength of competitors

Create segment attractiveness study

Brand positioning

What is a Brand?

  • A trademark
  • A promise of specific benefits
  • It is what consumers tell each other

Positioning Statement

  • Target Segment (For Whom)
  • Point of Difference (Reason to Buy)
  • Frame of Reference (Point of Pairity, associations consumer views as necessary to be considered credible)

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The Elevator Speech

  • 30 sec elevator speech
  • Mental map of what your brand is / all associations
  • Mental map -> Core Brand Values -> Brand Mantra
  • Short three- to five-work phrases that capture the essence or spirit of the brand positioning and brand values

Designing the Brand Mantra

  • Used internally to guide decisions - what the brand is and what it is not
  • Brand function - the nature of the product or service
  • Descriptive modifier - clarifies service nature
  • Emotional modifier - how exactly does the brand provide benefits

Brand Mantra Considerations

  • Communicate (define business boundaries)
  • Simplify (memorable, short)
  • Inspire (higher level of meaning)

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Experiential Branding

  • Brand stimulates senses, heart and mind
  • What do customers get? (sense, feel, think, act, relate)
  • Connects the company and the brand to the customer’s lifestyle
  • What does the brand stand for?

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Experience within the 4P’s

  • Product - build in experiential features
  • Place - design, fragrance, music
  • Promotion - noteworthy, brand personality
  • Price

Characteristics of great brands

  • Consistency in delivering in their promise
  • Superior products and processes
  • Distinctive positioning and experience
  • Aligned of all commitments
  • An ability to stay relevant

Week 2 Customer Centricity

Product-Centric Approach

  • Targets Operational Excellence and Performance Superiority
  • The goal of the firm is to maximize shareholder value
  • Maximum profits through volume and cost reductions
  • Focus on scale
  • Key performance indicators such as market share
  • Growth through extyending the product
  • Product-oriented org structure
  • The competitive advantage: product expertise

Cracks in the Product-Centric Approach

  • Tech-enabled product development -> commoditization
  • Tech-enabled information flow -> smart customers
  • Tech-enabled delivery -> retail saturation
  • Globalization
  • Deregulation
  • Customers want “end-to-end solutions”
  • Information systems enable customer-level tracking

Customer-Centric Approach

Three Cheers for Direct Marketing

  • The individual customer is the unit of analysis
  • Know who their customers are and what they buy
  • Aim to determine marketing communication based on past purchases
  • Constantly determine individual customer value

What is Customer Centricity?

  • Targets Customer Intimacy
  • Support selected set of customers and get more customers like them
  • Maximize long-term financial value
  • Align company’s development/delivery activities round selected customers
  • Putting valuable customers in the center
  • Focus on “Which customers will be valuable in the future?”

Living in a Customer-Centric World

  • The goal of the firm is to maximize shareholder value
  • Distinguish the profitable customers from the less profitable ones
  • Focus on customer profitability (customer lifetime value CLV) rather than past profits
  • Success arises through enhanced customer acquisition, retention, and development
  • Customer-centric organizational structure
  • The competitive advantage - “relationship expertise” with respect to customers
  • No company can be 100% customer-centric
  • You don’t want to put “all the eggs in one basket”, you should keep less valuable customers, have a healthy balance
  • Being customer-centric with some customers, product-centric with the rest

Week 3 Go to Market Strategies

Online/offline competition

  • Delivery times
  • Uncertainty about quality/fit
  • Cost of returns

Friction

  • Search friction (finding better deals take extra time)
  • Geographic Friction (products available only at specific location)
  • Internet reduces friction of search and geography

The Long Tail

  • Popular vs niche products
  • You want to keep popular products available quickly (offline)
  • Our taste becomes more unique because we get access to more products (long tail), not only the most popular onces
  • Online offers wide range of selection (long tail)
  • Researchers find out that people buy more niche products over internet due to search, recommendation systems, reviews
  • Long tail concept can be applied to geographies (main sales in huge cities, less transaction in smaller towns)

Preference Isolation

  • Offline stores focus on satisfying needs of majority
  • Online aggregates people with different interests and a store can reach scale
  • Customers are more likely to buy online if a local market doesn’t have longer sales distribution

How Internet Retailing Startups Grow

  • Customer acceptance of online retail depends on offline shopping costs (closer, faster, …)
  • Sales evolution in eCommerce is structured and predictable (transactions happen close to the previous sales due to living close to each other/ talking)
  • Migrate from “Good” to “Great” requires expansion to niche products (the long tail)

Customers and Digital Marketing

  • Never pay more to acquire than you plan to capitalize CLV (customer lifetime value) > AC (Acquisition rate)
  • CLV needs to incorporate RLV (residual lifetime value)

Influence and how information spreads

  • Six degrees of separation
  • Influence spreading out from you will not go more than 3 steps

Pricing strategies

  • By making a recognizable product cheaper you send a message that all other products are at a lower price
  • Cents in the price mean that a merchast sqeezed all possible places to make it as cheap as possible
  • When $44 becomes less popular than $49 (discount from $50)
  • Marginal cost (floor), customer willingness to pay (ceiling), competition drops the ceiling, and what is the amount we need to raise the price from the floor to motivate everyone
  • Price sensitivity gets affected by ease of comparison, expenditure, shared expenses, price/quality inferences,

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5Cs and Pricing

  • Customers (price sensitivity; if I raise price by 1% how much will demand decrease; psychological issues)
  • Company (consistency in the product line, image, finance)
  • Collaborators (what are incentives)
  • Competitors (aggressiveness, willingness to respond, position leader or follower)
  • Context (market situation)

The 7ms

  • Market (who should I talk to?)
  • Message (what should I tell them?)
  • Mission (what do we intend to achieve?)
  • Message Design (how should I say it?)
  • Media Strategy (how do I reach them?)
  • Money (how much do I need to spend?)
  • Measurement (was it worth it?)

Week 4 Branding

Brand Messaging & Communication

  • Perception (The process of developing an interpretation of a stimulus, deciding what a stimulus means)
  • What customers perceive is what affects their actions
  • What is perceived is not necessarily what is “true”
  • People construct perceptions on the fly
  • We interpret data based on what we know already
  • Shape, color, visual illusions, proximity bias (close -> similar), similarity (if its close to a quality product, it must be of good quality as well)
  • Brand is not equal to product

Choosing a brand name

  • Brand elements (name, logo, symbol, character, packaging, slogan, color)
  • Choice criteria (memorable, meaningful, appealing, protectable, adaptable, transferable, )
  • Consistence and integration
  • Names are the most difficult to change

Effect of brand names

  • Consumers
  • Employees
  • Firm
  • Investors

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Picking brand names is China

  • Coca-Cole (Kekoukele - tasty fun)
  • Reebok (Rui bu - quick steps)
  • Colgate (Gao lu jie - superior cleanliness)
  • Cadillac (Ka di la ke - means nothing)

Brand elements

  • Rules about color (ultimate goal is to own a color)
  • Color can also be used to separate product lines
  • Different viewers experience color differently
  • Colors can create very strong perceptions (luxury - gold, silver, black, white; gender - blue, pink)
  • More “universal” axis (doesn’t change as much from culture to culture) is arousal

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Rules about color

  • Red - stimulates the appetite, also love, excitement
  • Blue - most preffered by men, productive, curbs appetite
  • Green - tranquility and health, fertility, money, nature
  • Brown - reliability, boredom, practicality
  • White - purity, innocence, empty, spacious
  • Black - evil, death, mourning, slimming
  • Yellow - bright, gives you energy
  • Orange - excitement, enthusiasm, caution, warmth
  • Lavender - calms the nerves, relaxation
  • Purple - royalty, wealth, success, wisdom
  • Pink - calming, warm, girl’s color

Slogan/tagline

  • Can be tailored to a positioning strategy
  • Can remove some the ambiguity associated with brand
  • Can generate its own equity/emotion
  • Can reinforce the name or symbol
  • Easy to say, unique, short
  • Can be protected and trademarked
  • Imperative (Just do it)
  • Descriptive (You’re in good hands)
  • Superlative (The ultimate driving machine)
  • Provocative (Got milk?)
  • Clever (Drivers wanted)

Packaging

  • Package influences perception of a product
  • Influences not only at the point of purchase, but also at the point of consumption
  • Aesthetics and function are both critical
  • Know your distribution channel

Persuasion

  • An attempt to change belief and attitude
  • Central Route to Persuasion (when motivation to use is high)
  • Peripheral Route to Persuasion (when motivation to use is low)
  • Preipheral cues: classical conditioning, reciprocity (you owe me), consistency (we’ve always done it that way), social proof (everybody’s doing it), liking (love me, love my ideas), authority (just because I say so), scarcity (limited availability)
  • Q-rating shows how appealing a celebrity is
  • Celebrities = individuals charged with detailed and powerful meanings

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Repositioning a Brand

  • Brand must be actively managed over time
  • Brand should be consistent, otherwise people will rationalize it however they want
  • Introducing changes over time (evolving brand/trademarks)
  • Consistency over time is very valuable in building strong brands

5 Reasons for Brand Change

  • The identity/execution was poorly conceived
  • The target for the identity/execution is limited
  • The identity/execution has become out of date
  • The identity/execution loses its edge, becomes old-fashioned
  • The identity/execution has just become “tired”