Marketing is Managing profitable customer relationships.Fulfilling customers wants and desires in order to make a profitThe process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return

New Definition of Marketing (est. in 2007) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

(American Marketing Association)

Product/ServiceProducer/DelivererRetailerDistributorWholesalerCustomerRESEARCHAttitudeBehaviorCharacteristicsNecessity/DesireExistingConceptMARKETING OUTLINEMARKETINGAS A FIELD OF STUDYOPERATIONSCONSUMER BEHAVIOUR4Ps

Anticipating customer need Developing and Selling Product Concept

Creating/anticipating demand

Fulfilling demand

Making and delivering a product to the customer

MARKETING PROCESSUnderstand the marketplace, customer needs and wantsDesign a Marketing StrategyConstruct a marketing program Build Profitable relationships with CustomersCapture value from customers in return

Marketing ManagementOrientations Production Concept

Product Concept

The idea that consumers will favour products that are available and highly affordableThe idea that consumers will favour products that offer the most in quality, performance and features and that organizations should therefore devote all its efforts to make continuous product improvements

Selling Concept

Marketing Concept

The idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effortThe marketing management concept holds that achei8ving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.Marketing ManagementOrientations

Marketing ManagementOrientations A principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants, the companys requirements, consumers long term interests and societys long run interestsSocietal Marketing Concept

Psychological FactorsPerceptionLearningBeliefs &AttitudesMotivation

Model of Consumer BehaviorConsumerPsychology

MotivationPerceptionLearningMemoryPurchase Decision

Product choiceBrand choiceDealer choicePurchase timingPurchase amountConsumercharacteristics

CulturalSocialPersonalPsychological

NEED RECOGNITIONINFORMATION SEARCHPURCHASE DECISIONPOSTPURCHASE BEHVIOREVALUATION OF ALTERNATIVESBUYER DECISION PROCESS

Steps Between Evaluation of Alternatives and a Purchase DecisionEvaluationofalternatives

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Decision Heuristics and Biases

Rules of thumb or mental shortcuts in the decision process Availability Heuristic: Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to minds

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Decision Heuristics and Biases

Representativeness Heuristic: Consumers base their predictions on how representative or similar the outcome is to other examples

Anchoring and Adjustment Heuristic: Consumers arrive at an initial judgment and them make adjustments of that first impression based on additional information.

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect TheoryConsumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Mental Accounting

The manner by which consumers code, categorize and evaluate financial outcomes of choices

Prospect TheoryConsumers frame decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight very low probabilities and underweight very high probabilities

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Mental Accounting

Consumers tend to segregate gains Consumers tend to integrate losses Consumers tend to integrate smaller losses with larger gains. Cancellation Principle Consumers tend to segregate small gains from large losses. Silver-lining Principle

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Mapping the Customers Consumption System/Customer Activity Cycle/Customer Scenario

How are consumers thinking? Introspective method Retrospective method Prospective method Prescriptive method

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Biases in Decision Making

Plugging-in Frame Blindness Lack of frame control Overconfidence in judgment Shortsighted shortcuts Shooting form the hip Group failure

Pg 202 Marketing Management Jay Russo and Kevin Schoemaker

MARKETINTELLIGENCECONSUMER BEHAVIOUR

Biases in Decision Making by Marketing Managers

Fooling yourself about feedback Not keeping track Failure to audit your decision process

Problem RecognitionPostPurchasePurchaseInfoSearch/EvalNeedRecognition

Participants in the Business Buying ProcessGatekeepersInitiatorsBuyersInfluencersDecidersUsersApprovers

Four Types of Buying BehaviorComplexBuyingBehaviorDissonance-Reducing BuyingBehaviorVariety-SeekingBehaviorHabitualBuyingBehaviorSignificantdifferencesbetweenbrandsFewdifferencesbetweenbrandsHighInvolvementLowInvolvement

Product

Place

Promotion

Price(features, quality, service, support, product line etc.)(channel of distribution, exclusive vs. intensive, etc.)(advertising, sales force, brochures, coupons, etc.)(list price, discount, deals, both end-user and channel)

The Marketing Mix

Packaging (Physical Evidence)

Positioning (Process)

People

The Marketing Mix

Product

Place

Promotion

Price(features, quality, service, support, product line etc.)(channel of distribution, exclusive vs. intensive, etc.)(advertising, sales force, brochures, coupons, etc.)(list price, discount, deals, both end-user and channel)

The Marketing Mix

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

Preferences Segments Homogeneous preferences Diffused preferences Clustered preferencesSEGMENT MARKETING

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

Customers with distinct set of needs Pay premium to a firm that best satisfies their needs Unlikely to attract other competitors Nicher gains certain economies through specialization Niche has size, profit and growth potential Fairly small and attract few competitors NICHEMARKETING

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

LOCAL MARKETINGCUSTOMERIZATION Customized Marketing One-to-one Marketing

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

GEOGRAPHICVARIABLES Geographic region City size Density Climate

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

DEMOGRAPHICVARIABLES Demographic age Family size Family Life cycle Gender Income Occupation Education Religion

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

DEMOGRAPHICVARIABLES Race Generation Nationality Social Class

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

DEMOGRAPHICVARIABLES Race Generation Nationality Social Class

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PRIZM (Potential Rating Index by Zip Markets) Combines Geographic and Psychographic segmentation variables togetherExamplesBlue Blood Estates, Winners Circle, Hometown Retired, Latino America, Shotguns and Pickups, Black Country Folk, Young Digerati, Beltway Boomers, The Cosmopolitans, Old Milltowns

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PSYCHOGRAPHICVARIABLES Psychographic Lifestyle(Culture oriented, Sports oriented, Outdoor oriented) Personality(Compulsive, Gregarious, Authoritarian, Ambitious)

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PSYCHOGRAPHICVARIABLES VALS Framework

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PSYCHOGRAPHICVARIABLESInnovatorsSurvivorsThinkersBelieversAchieversStriversExperiencersMakersIdealsAchievementSelf-ExpressionPrimary MotivationHigh ResourceHigh InnovationLow ResourceLow Innovation

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PSYCHOGRAPHICVARIABLESGroups with Higher Resources Innovators Successful, Sophisticated, Active, Take Charge people, with high self esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services

Thinkers Mature, satisfied and reflective people who are motivated by ideals and value order, knowledge and responsibility. Favour durability, functionality and value in products

MARKETINTELLIGENCEIDENTIFYING MARKETSEGMENTS AND TARGETS

PSYCHOGRAPHICVARIABLESGroups with Higher Resources Achievers successful goal-oriented people who focus on career and family. Favour premium products that demonstrate success to their peers Experiencers Young, enthusiastic, impulsive people who seek variety and excitement. Spend comparatively high proportion of their income on fashion, entertainment and socializing

MARKETINT