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Summary Marketing Science ()
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Summary of the lectures of the BS (SBB) course Marketing Science.
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Marketing ScienceLecture 1
Core of marketing: creating customer value and profitable customer relationship
Target market: segmentation and targeting
Value proposition: differentiation and positioning
→ 4 P’s: Product, Price, Promotion, Place
→ Marketing planning, marketing implementation, marketing control, marketing analysis
Red Ocean strategy = markets that have very strong competition
Blue Ocean strategy = markets that do not have very strong competition
Coca Cola:
- Invented coke Pepsi joined Pepsi bankrupt Pepsi restarted with larger
bottle, but same price = attract price-conscious customers Pepsi’s profit doubled celebrity promotes Pepsi
- Pepsi Challenge: blind taste test Pepsi 53% (= sweeter = choice of new generation) Coca Cola’s market share
dropped from 60% to 24% Coca Cola developed Coke (= more sugar) taste tested: Coke best Coke replaced
classic Coca Cola Unhappy customers: wanted Coca Cola back Coca Cola market share increased again
→ Coca Cola research – brain scan experiments: Coke vs. Pepsi result: customers are emotionally connected with
Coke Coke started promoting this aspect Coke’s market share increased
→ Conclusion: poorly designed marketing research misleads decision-making
→ People don’t do what they say & customers don’t always know what they want give them a clear reason
Coke still focuses on friendship | Pepsi focuses on youth (less/no sugar)
Five Core Customer & Marketplace Concepts: all influence marketing decisions
Needs, wants and demands
Market offerings
Value (utility) and satisfaction
Exchange and relationships
Markets
Customer Needs, Wants & Demands:
Needs = human basic requirement (e.g. food, water, clothes, safety, knowledge, belonging)
Maslow’s Hierarchy of Needs:
- Physiological needs: food, water, rest, clothing and shelter
- Safety needs: protection from violence, health and financial security
- Love and belonging needs: friendships and family bonds
- Esteem needs: respect and acknowledgement from others, self-confidence and independence
- Self-actualisation needs: education, skill development (music, design, cooking), winning awards, travelling
Wants = the form taken by human needs when shaped by culture and individual personality, desires for specific types of items
(e.g. needs food wants a pizza/burger/fries/noodles/rice/etc)
If you are not able to afford the price, your wants do not generate the demand
Demands = wants + buying power
If you cannot predict demand, company will keep high level of inventory high inventory cost & opportunity cost
If company wants to reduce the cost, they should predict the demand as good as possible
Marketing Offerings:
Offered to satisfy a need or want
Except of goods and services, market offerings also include: experiences, people, places, properties, organisations, information,
ideas, clicks, impressions, etc.
Marketing myopia = paying more attention to the specific products (short-term goal) than to the benefits and experiences
produced (long-term goal) fail
Customer Value and Satisfaction:
Customer-perceived value = customer’s evaluation of a marketing offering relative to those of competing offerings
E.g. some people prefer Pepsi, some prefer Coke
Customer satisfaction = extent to which a product’s perceived performance matches a buyer’s expectations
Satisfied customers buy again; Dissatisfied customers switch to competitors
Setting the right level of expectations:
Low expectations may fail to attract buyers
High expectations may disappoint buyers customer is likely to buy product with highest expectations
Better for company to have customers have high expectations of their product (don’t disappoint them!)
Exchange and relationships:
Exchange = the act of obtaining a desired object by offering sth in return
Marketing consists of creating, maintaining and growing desirable exchange relationships
Strong relationships are built by consistently delivering superior customer value
Markets:
Market = set of actual and potential buyers of a product or service
, Porter’s Six Forces: Buyer, Supplier, complements, substitutes, new entrants, existing rivals
Customer relationship management:
- Delivering superior customer value and satisfaction to build and maintain profitable customer relationships
- Goal: to build the right relationship with the right customer
- Lowering price or increasing services / customer satisfaction firms do not attempt to maximise customer satisfaction
- Levels:
Basic relationship low-margin customers
Full partnership high-margin customers
- Tools:
Frequency marketing programs
Loyalty rewards programs
Club marketing programs
Figure: different types of customers treat them differently, according to their loyalty n&
potential profitability
True friends are best type – they bring profits to the company & benefit from the company’s products
Barnacles = customers that buy if you give a discount (buy if discounted, do not buy if not discounted)
Company does not benefit from this type of customer
Difficult to transform into true friends, because maybe they do not have enough buying power
Butterflies = customers that bring benefits to company for short time period
If it depends on their personality, it is hard to transform these customers into true friends
If customer will not bring benefits to company, then company will no longer focus on this customer
Customer Lifetime Value = value of the entire stream of purchases a customer makes over a lifetime of patronage
Customer defections can be costly: losing that customer’s lifetime value; causing other customers to defect
Customer Equity = total combined customer lifetime values of all of the company’s customers
Measures the future value of the company’s customer base
Increases when the loyalty of the firm’s profitable customers increases
Better measure of a firm’s performance than current sales or market share
Marketing = the process by which companies engage customers, build strong customer relationships and create customer value
in order to capture value from customers in return
Goal of marketing:
- Attract new customers by promising superior value
- Keep and grow current customers by delivering satisfaction
Marketing Process – Creating and Capturing Customer Value:
1. Understand the marketplace and customer needs and wants
2. Design a customer value-driven marketing strategy create value for customers & build customer relationships
3. Construct an integrated marketing program that delivers superior value
4. Engage customers, build profitable relationships and create customer delight
5. Capture value from customers to create profits and customer equity capture value from customers in return
By creating value for customers, marketers capture value form customers in return
Designing a Customer Value-Driven Marketing Strategy:
Customer value-driven marketing strategy = once a company fully understands its consumers and the marketplace, it must
decide which customers it will serve and how it will bring them value
Designing a winning marketing strategy:
Target market = dividing the markets into segments of customers & decide which segment to go after
Market segmentation and targeting
Value proposition = company must decide how it will differentiate & position itself in the marketplace
Differentiation and positioning
Example – Pepsi slogan: “Choice of the next generation”
Selling and Marketing Concepts Contrasted: -------->
- Selling concept: high sales volume (push)
- Marketing concept: customer satisfaction (pull)
Changing marketing landscape:
Online, mobile and social media marketing
AI and data analytics to identify customer preference and behaviour pattern and influence customer behaviour
Not-for-profit marketing: WWF, LUGO
Sustainable marketing: “Meest duurzame supermarket” promote that they are doing sustainable development (e.g. CO2)
Avoid greenwashing = claiming sth about their sustainability without evidence to support the claim
Lecture 2
Role of Marketing Plan:
- Marketing strategy outlines which customers to serve & how to create value for these customers
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