Articles Marketing Management - Summary MM – Reader & Cases Based on the old reader, some - Studeersnel (2024)

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Summary MM – Reader & Cases

Based on the old reader, some articles are missing

Table of Contents

• LECTURE 1:........................................................................................................................................
• MARKETING MYOPIA........................................................................................................................
• STRATEGIC INSIGHT IN THREE CIRCLES..............................................................................................
• MARKETING STRATEGY – AN OVERVIEW...........................................................................................
• LECTURE 2:......................................................................................................................................
• A NOTE ON CONSUMER MARKET SEGMENTATION.........................................................................
• SEGMENTING THE BASE OF THE PYRAMID......................................................................................
• REDISCOVERING MARKET SEGMENTATION.....................................................................................
• CUSTOMER VALUE PROPOSITIONS IN BUSINESS MARKETS.............................................................
• ANALYZING CONSUMER PERCEPTIONS...........................................................................................
• LECTURE 3:......................................................................................................................................
• THE COHERENCE PREMIUM.............................................................................................................
• ARE YOU IGNORING TRENDS THAT COULD SHAKE UP YOUR BUSINESS?.........................................
• STRATEGIES TO FIGHT LOW-COST RIVALS.......................................................................................
• SHOULD YOU LAUNCH A FIGHTER BRAND?.....................................................................................
• BRANDING IN THE DIGITAL AGE......................................................................................................
• LECTURE 5:......................................................................................................................................
• STRATEGIC BRAND VALUATION: A CROSS-FUNCTIONAL PERSPECTIVE............................................
• STRATEGIC CHANNEL DESIGN..........................................................................................................
• THE FUTURE OF SHOPPING..............................................................................................................
• LECTURE 6:......................................................................................................................................
• THE ONE THING YOU MUST GET RIGHT WHEN BUILDING A BRAND................................................
• FOR MOBILE DEVICES, THINK APPS, NOT ADS.................................................................................
• MARKET TO MILLENNIALS BY GETTING OUT OF THE WAY...............................................................
• PRICING TO CREATE SHARED VALUE...............................................................................................
• PAY-WHAT YOU WANT, IDENTITY, SELF-SIGNALING IN MARKETS...................................................

LECTURE 1:........................................................................................................................................

MARKETING MYOPIA........................................................................................................................

 whenever a market slowed in growth, it was due to management failuresFateful purposes the failure is at the top of the organizationo railroads went down because they let others take away customerso Hollywood almost disappeared because it considered itself to be in moviebusiness while being in entertainment business customer-oriented management can keep growth stable even if obvious growthopportunities have disappearedo constant watchfulness for opportunities to apply technical knowledge tocreate customer-satisfying products error of analysis – industries are defined too narrow so disappearance/maturity isinevitably happening soonisho railroads = railroad industry, not transportation industryShadow of obsolescence examples of industries that dropped out of growtho dry cleaning – growth declined because of competition through new fiberso electric utilities – utility companies were certain there could not becompetition  nonutility companies (e. solar cell producers) provided waysto create electricityo grocery stores – big chains were almost defeated by independentsupermarkets that they ignored self-deceiving cycle – there is no such thing as a growth industry!  companies areorganized to exploit growth opportunities four conditions guaranteeing cycleo assumption that growth is assured by expandingo belief that there is no substituteo too much faith into mass production & benefits of low cost productiono preoccupation with products linked to scientific experimentation,improvement, and manufacturing cost reductionPopulation Myth every industry believes that expanding to new, affluent populations will lead togrowth if product’s market is automatically expanding, no attention is paid to possibleproblems petroleum industry as example of industry that might be declining soon characteristics of companies suffering in this regardo belief into growing market while offering generic producto no product improvements asking for trouble – industry focused on improving efficiency of getting & makingproduct  attitude led to

o improvements in gasoline quality originate outside industryo innovations in fuel marketing come from small players oil industry is asking for trouble from outsiders idea of indispensability – industry believes that there are no real substitutes ignores that fuel consumption is entirely tied to other products/industries perils of petroleum – historyo (1) use in kerosene lampso (2) Edison invited the lightbulb but oil was starting to be used in space heaterso (3) two innovations: invention of coal heater & combustion engineo (4) 1920s: invention of oil heatero (5) expansion of civil aviation, dieselization of railroads, increasing demand fortruckso (6) central oil heating ran into competition from gas  competition fromoutsiders even though oil companies PRODUCE the gas  did not want tocannibalize own market uncertain future – petrochemicals can create new demand for oil industry but onlyon small scale oil industry was always saved by miraculous innovations from outsideProduction pressures mass production companies work with assumption that driving down unit cost canincrease profit significantly problem: all effort is focused on getting rid of product  marketing is ignoredo marketing – satisfying the customer’s needs with the producto seller needs to take cues from customers lag in Detroit – automotive industry is focused on mass productiono Detroit lost a lot of volume to other car makers because they ignored whatcustomers really wantedo industry was product oriented areas with highest demand are ignored: point of sale & repair/maintenanceo most dealers are independento there are very little opportunities for night service what ford put first – two factors, one terrible one brillianto only selling black car (terrible)o designed a production system fitting market needs  mass production wasdesigned because it fit market needs of low prizes product provincialism – profit potential of low-cost production is most self-deceivingact  importance of marketing & customer is forgotteno eventually leads to decline  industry focuses on product & does not realizewhen its obsolete oil is running into same problem: focus on improving oil instead of coming up withbet fuelso many other firms are working on alternative to combustion engineo batteries as way to store energyo solar energy as alternative power source creative destruction – customers do not like filling up gas  eliminate gas stations!o oil companies must destroy their own assets to increase customer satisfaction

STRATEGIC INSIGHT IN THREE CIRCLES..............................................................................................

 managers do not really have understanding of what having a competitive advantage actually means three circles represent strategy executives need to think about what customers value & why circles o (1) what is most important to customer & what customer needs o (2) what team thinks customers’ perceptions of company’s offerings are o (3) how customers perceive offerings from competitors key areas: o A: our points of differences  what are competitive advantages & how big are they o B: efficient delivery in the areas of overlap o C: how to counter competitors’ advantages assumptions should be tested by asking customers o can lead to insights about white space o can also point out that value is delivered where customers do not need it o usually A is much smaller in the eyes of customers 

MARKETING STRATEGY – AN OVERVIEW...........................................................................................

 strategy – plan of action to achieve certain objectives o Business: sales volume, growth, ... strategies are developed at multiple levels (corporate, divisional, business unit, departmental) marketing strategy is at the head of any business plan o other functions must support the marketing of an organizationElements of marketing strategy (1) product/market selection – which markets to serve with which product lines (2) price (3) distribution systems – channels through which products move to customer (4) market communications – ways of advertising additional factorso product serviceo technical service – useful for customers with manufacturing + productdevelopment functionso plant location – can lead to benefit of being close to customer or having localmarket manufacturingo brand strategy – product-specific of general brand name marketing mix – combination of all factorso varies considerably for products & marketsProduct/market selection most important choice to be made by organization product – total package of attributes a customer obtains when making a purchase product benefitso what product doeso warrantieso repair serviceo assistanceo ... negative factors (e. repair intervals, risk of going on vacation, prepayment) can alsoplay role it is important to see difference between perceived value & potential valueo perceived value – what the customer sees in the producto potential value – what the customer can be educated to see in the product market – pocket of latent demandMarket segmentation markets can be split into segments defining relevant market segments is first step in product/market selection possible dimensionso demography – family income, sex, age, ethnicity, educational background industrial markets: size of organization, nature (for profit, NGO, ...),type of industry is demography

o exercising price leadership – usually the largest firm with best technology, strong distribution & low production costs  sets price  rest of industry might (a) follow or (b) not follow, forcing leader to go back with decision parallelism – is legal as competitors do not communicate directly about their pricesBuyer bargaining power buyers can leverage two factorso if they buy significant share of productiono if they have a lot of choices in terms of products from other competitors powerful buyers might force down prices or even demand services that makebusiness unprofitable sellers have negotiation strength if they offer differentiated productsproduct value customer value might vary significantly between segments price segmentation enables manufacturer to capture different value perceptionso short-run: charge different prices at different locationso long-run: price differentiation has to be based on functional differentiation risk of price differentiation: lower priced products might find the way to higher pricesegments  black market phenomenon skimming vs. penetration pricingo skimming – put high price to reach segments for which product has highestvalueo penetration – low price in order to achieve large market share beforecompetitors can do ito skimming is usually used in early stage of life-cycle to recover costs whenmarket volume is lowo penetration pricing allows for learning curve effects & larger market shareBUT leads to loss of potential profits penetration pricing is more risky, some conditions need to be fulfilledo products must be free from any errorso production capacity must be able to fulfill demando distribution channels must reach potential buyerso there must be no lags between product introduction & general marketacceptanceChannels of distribution leading firms usually have strongest distribution systems, strong product lines,constant innovation, and large installed baseo installed base is key driver of replacement salesElements in the distribution system direct sales reps – employees of firm directly getting in touch with potential clients sales agents – independent operators usually carrying multiple lines from differentsuppliers distributors – usually buy from many suppliers & sell to customers buying relativelysmall amounts but need to have them readily available retail outlets – supply end-products to consumers & business buyerso can often be franchised

 internet – provides easy access, can deliver digital products & can be platform for after-sales service o drawbacks:  accessible market is limited  less-educated, older, lower-income segments might be harder to reach  security concerns channels support – suppliers need to support network through which the product is brought through the market  assure that o products are stocked and available at resale level o resellers actively display the product to consumers o resale prices & margins do not deteriorate suppliers gain strength under multiple conditions o selective rather than intensive distribution – the fewer intermediaries in a geographic area, the less incentive they will have to cut down prices o superior product line & breadth – competitive edge o high degree of supplier/reseller interdependency – the higher the share of products sold is, the more power supplier & reseller have over other party o supplier salesforce presence at resale level – salesforce plays essential role in training dealers (B2B) and how products are displayed & promoted (B2C) o end-market demand development – advertising can be key element pressures for change – distribution systems are the hardest to build & change o strong relationships between suppliers & resellers might be in way of changeMarket communications elements: print media, telemarketing, trade shows, point-of-sale displays, personalsalesforce, third-party influencers combination of elements requires understanding of decision making processes (DMP)and decision-making unit (DMU)DMP: process:o (1) awareness of needo (2) search for informationo (3) identification of optionso (4) source qualification & short listingo (5) selectiono (6) post-purchase affirmation communication vehicles can be different at different stages of process  TV createsawareness, visiting store helps gather informationDMU can consist of multiple parties  family decision involves husband, wife, children, ... participants usually have different perspectives & requirements understanding needs of individuals is first step to identify right response  ways ofstimulation usually vary between different members of DMUSelection of tools key factor: cost different tools have different purposeso media advertising as cost effective way to

LECTURE 2:......................................................................................................................................

A NOTE ON CONSUMER MARKET SEGMENTATION.........................................................................

 goal: segment whole market into smaller groups of consumers based on their characteristics helps marketing in four ways o helps marketer identify groups that can be more effectively target o helps prevent trial-and-error strategic formulation methods o helps with implementation of marketing concept by making marketer understand needs of certain customer groups o analysis offers information for long-range planningRationale & assumptions underlying segmentation segmentation might not always be useful  when all customers have similar needs,one mass marketing strategy is appropriate today, finding entirely hom*ogenous market is hardo many markets are relatively hom*ogeneous in terms of needs in differentiated market, it makes sense for marketer to segmentAssumptions underlying segmentation three important assumptions (1) consumption is not random  there are groups in markets with different needs (2) marketer is willing to identify target segments whose needs should be fulfilled (3) if multiple target segments are present, marketer is willing to design differentmarketing strategies for theseCriteria for segmentation defined segments need to fulfill various requirementso internally hom*ogeneouso identifiable (individuals can be placed inside or outside a segment)o accessible (can be reached by advertising)o have effective demand (consumer group is large enough & has purchasingpower)Dimensions on which to segment the market segmentation analysis needs to be find characteristics that will be predictive forpurchasing behavior two classes: (1) consumers’ background and (2) market historyo background – who consumer is as an individualo market history – what consumers have done on the market segmentation procedure aims too define factors that significantly differentiate consumerso discriminate segments in the marketo choose most promising segment(s)o detail characteristics of target group example of dimensions: P.

o geographyo demographicso psychographico general life styleo product usageo product benefito decision-process usually segmentation is based on two factors, one in product-usage area and one inconsumer background two important points to remembero unless they behave differently, consumers with different characteristics (age,gender, ...) are not different segments if different life-styles do not lead to different behaviors, segmentationalong these dimensions is not usefulo segmentation is iterative  has to be repeated when new market data areavailable or competitive situation changesSegmentation analysis + application (1) define the purpose + scope of segmentationo objectiveso looking for new segments or trying to improve service to old oneso use existing data or generate new?o level of detail necessary (2) analyze total market datao character of total marketo basic differences between users & non-userso competitive position at the moment (3) develop segment profileso which factors clearly differentiate amongst segmentso are segments internally consistent (4) evaluate segmentationo what are differences + similarities amongst segmentso should the number of segments be increased or decreased?o how sensitive is the segmentation (e. to competition changes) (5) select target segmentso where are the best opportunitieso what are further details about the segmentso if data is not available, can reasonable assumptions be made?o is there competition (6) designing the marketing strategy for the target segmento what type of products do the consumers wanto price/place/promotiono would other segments react positively to similar strategy (7) reappraisal of segmentationo are there enough resources to carry out strategyo how flexible is the strategyo if strategy changes, how will it impact target segmento does the strategic plan meet firm’s objectives

missteps at the base of the pyramid  companies need to understand importance of supporting success of BoP communities  responsibility does not end when product is sold  failure often leads to criticism for companies  microfinance institutions are under constant threat  not because of high interest rates but because they do not realize that clients still fail to achieve higher standard of living  when profit potential diminishes, initiatives are often moved to the CSR departmentshow to entwine commercial and social value  innovative business models enable firms to create both types of value  working model requires operations to be streamlined & appropriate incentives for people brought into economic ecosystemslow-income segment  strategies depend on companies’ abilities to provide incentives to small retailers/doctors/salespeople integral to distribution channels  Gilead: offering HIV medicine BUT regulations were limiting availability o made patents available to domestic producers for only royalty fee on sales  increased reach and broke evenSubsistence segment  consumers lack awareness of products  companies must create demand for whole categories of products  access channels (e. channels) must play a role when creating demand & awareness  Roshan: encouraged afghans to distribute SIM-cards through distribution networks o involved community leaders and employs up to 30,000 peopleextreme-poverty segment  require heavy investments  companies have to engage in public-private partnerships o otherwise there are almost no opportunities for profits  companies need to provide outstanding value & gain communities’ trust  teaming up with NGOs can lead to additional benefits

REDISCOVERING MARKET SEGMENTATION.....................................................................................

 market segmentation has been narrowly focusing on needs of advertising in 1964, reliance on demographic factors was questioned o traditional demographic traits are not enough as basis for marketing strategy o nondemographic traits are more likely to influence purchases o marketing strategy requires identifying segments receptive for brands today’s segmentations often fail to broaden in order to influence innovation, pricing, choice of distribution channels, etc. segmentation can do more than delivering psychographics  psychographics have little predictive power good segmentation identifies groups worth targetingDrift into nebulousness years after WWII were characterized by groundbreaking innovations  advertisingwas not much needed as products were too special & groundbreaking in early 1960s, consumers were less predictableo education changed & different tastes were developed product introductions continued but were more and more focused on improvingexisting products advertising was focused on testimonials & meeting unmet needs in mid 1970s, belief in imagery to sell dull products took away pressure to innovate two developments supported emphasis on consumer self-perceptiono social scientists applying their modes of analysis on business problemso business executives welcomed methods in order to reduce their confusion byspeed of changing tastes 1978: values and lifestyles (VALS) programo commercial research deviceo classified individuals according to nine psychological typeso assumed that purchasing behavior can be explained with individual’scorrespondence to one of the groups psychographics were powerful at brand reinforcement & positioningo they can move emotionally but are NOT drivers of commercial activityo segmentation based on psychographics also fails to inform which segments totarget while market segmentation is widely used (59% of firms), only 14% of executives seereal value from it the best advertising will not spur sales if based on faulty segmentationThe way back meaningful segmentation depends on finding patterns in customers’ purchasingbehavioro requires extensive data collection information is usually collected routinely but can always be collected qualitatively segments can be determined thato reflect company’s strategyo indicate where sources of profit/revenue lie

The Gravity of decision spectrum  most common error: use a segmentation designed to deal with one issue to solve another issue  first step for marketers: evaluate the expectations consumers bring to a particular transaction o some decisions (e. which toilet paper brand) are inconsequential o some matter a lot (e. buying a house)  at shallow end of spectrum, consumers look for products that save time/effort/money o segment based on price sensitivity/habits/impulsiveness  segmentations for big purchases o based on quality, design, status product might offer  deepest end o investment is great, core values are engaged o core values are usually not in line with market values  segmentation needs to expose such issuesThe shallow end  example: men’s shavers  small-ticket item o can the company introduce a disposable shaver without cannibalizing own shaving systems  segmentation prove that there are three segments o exclusive system buyers o exclusive disposable buyers o switchers  switching segment is relatively small  introduce disposable razor without cannibalizing systems market  second segmentation: would disposable users be willing to pay more for higher quality? o most were not willing to o young men going on dates were emotionally committed  willing to pay a bit morein the middle  in 1990s, Toyota introduced prius  analysis showed that around 10% of buyers value the decreased environmental impact & accepted performance/design  focused promotion via the internet rather than wide-range public ads were efficientDeep end  continuing care retirement communities (CCRCs) require large paymentresidents usually sell their homes in order to get a unit  fees are gigantic  two key values characterizing segment o desire for autonomy – avoid being a burden on loved ones o willingness to embrace life among strangers  adding Alzheimer care would add to the segments valuing not being burden on their loved ones

Summary  three reasons for failures of segmentation o focus on identities, distracting from product features that actually matter + o too little emphasis on actual customer behavior o missing understanding from chief executives for what marketers do  organizations able to overcome these weaknesses will be able to respond to markets more quickly + effectively