Marketing class - winter 2015

4 components of the Marketing Process:

1.      Determine Value prop

2.      Deliver Value (in terms of products, distribution channel)

3.      Capture Value

4.      Communicate Value

Segmentation & Targeting (Cialis & Calyx)

To determine right segment (right customer)

1.      Create table of product attributes vs customer segment (ex. Onset, Safety, duration VS Current/dropouts/never tried)

2.      Table of product attribute vs products (you+ competition)

Example:

Decision Making Process

1.        Need/Problem Recognition

2.        Information Search- Understand how people look for the info ex. Google search for some products

3.        Evaluation of Alternatives

4.        Purchase Decision

5.        Post purchase behavior

At every step, there is a probability game.

Understand your weak spot and try to eliminate step (ex amazon removed few steps and that made a difference.)

Pull Approach: Consumer pulling the product through channel (ex. Colgate toothbrush- I go and ask for Colgate)

Push Approach: Push the product through distribution (ex. Coracle). Relying on channel intermediaries to push the product.

Vertical Positioning: When an attribute is considered better by all users (ex. All users think longer the duration of Viagra , better it is). Manufacturer focusses on that attribute to promote the product.

Horizontal Positioning: The unclear aspect. Ex. Naughty vs Romantic ads- some might prefer one and not the other. Matter of opinion. This is better for long term competitive advantage.

Reverse Positioning: Strip down value prop to cater to untapped segment- remove expected features and price in a chunk of prev unserved market (Nano car in india, Ikea for furniture)

Skimming vs penetration (Skimming is price high first then lower eg:- Vaccines), this works when product is patent protescted or there are no DSIR effects.

Penetration is price low and then higher( eg:- Network effects like OpenTable)

Increasing revenues – consider all levers

a.       Price

b.      Volume –

a.       more users

b.      creating more usage (eg:- Shave India Shave movement, Gillette color changing strip, Jiffy Lube oil change @3000 miles), alternative uses (eg:- baking soda used for cooking, and then fridge odor), usage is a function of available quantity (eg:- Gillette razor club keeps replenishing before you run out, so that you are not using slowly at any point); advertisements targeting more usage or substitute use of product

Gillette 14 vs 21 blades – don’t overuse an attribute, it loses relevance

Lifetime value of a customer

LTV = Sigma (i=1toN) [(M.r^n-1) /(1+i)^n] – Acq Cost

Pricing level (simply changing price points)

vs Pricing Structure (eg:- Virgin mobile eliminated minutes, prepaid BS) important to be tailored to the target customer

Channel length – how many intermediaries between manufacturer and end user

If info matters a lot, direct is preferable (eg:-ferrari car)there is a lot of PUSH

If logistics matter more, indirect is okay (eg:- Coke), there is a lot of PULL

Advertisements can have many different goals

Eg. 1. Increase perception of need

3.      increase awareness (apple ad in 1994) they don’t have to be informative

4.      creating purchase decisions

5.      creating reminders and boosting post purchase evaluations (eg. Campbell soup that eats like a meal)

Four pillars of power

1.      stopping power- attract attention – eg. sex appeal, 4^th july)

2.      transmission power: engage and communicate a single message eg. chevy silvarado

3.      persuasive power: eg. Michigan auto industry

4.      locking power: good ads stick in mind. Eg. gocompare.com

Good ads have strong brand linkage

Eg. Google

Other points

1.      Price is only one of the many forms of resistance to product adoption

2.     Changing consumer behavior can be difficult

Communicating Value Class:

1.      Your job is not to create a likeable ad but one that is accessable (ex. Charmin Toilet paper)

2.      Ad should affect Decision making process

a.       Increase perception of need (Ex. Jiffy Lube, Gillette)

b.      Increase awareness (Apple ad)

c.       Changing evaluations- (Flintstones ad on cigarettes)

d.      Creating purchase intentions (Dominos Cheesy Pizza ad)

e.       Creating reminders and boosting Post-purchase evaluations (Chunky Campbell soup)

3.      Ads should have following powers:

a.       Stopping power: Attract attention (4^th of July, dancing ads in the corner)

b.      Transmission Power: Engage and communicate a single message clearly (Ex. Chevy Apocalypse)

c.       Persuasive power: Overcome resistance (Ex. Michigan auto, Crow foods)