Summary of the course 'Marketing Mix Management' based on class notes, slides and readings. It also includes a summary of the base 3 notes: quantitative analysis in marketing, marketing strategy & the psychology of new product adoption.
PPT: WHAT IS MARKETING?
Peter Drucker: ‘Because the purpose of business is to create a customer, the business enterprise has two basic functions,
marketing & innovation’
David Packard: ‘Marketing is too important to be left to the marketing department’
Ralph Waldo Emerson: ‘build a better mousetrap, and the world will beat a path to your door’
A business can create value for customers by offering a good solution for a problem they face
(other way to create value is to develop a product that is better than the others on the market)
Marketing = 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. (definition by American Marketing Association)
Marketing includes:
- Thinking about / building brands (eg: brand recognition, brand image)
- Building relationships with customers
- Trying to sell your products + advertising
- Distribution channels
- Creating value for consumers (+ for the company itself)
Example: Britax (= brand for car seats)
First time you buy or need this product, you don’t know anything about it (no common knowledge)
Only information you have: price, brands, salesperson, … + reviews from other customers (= valuable & trustworthy)
Other possibilities: ConsumerReports.org = Test Aankoop (third party who is rating products)
Is there a correlation between reviews on the website itself & the review of organization as Test Aankoop?
Not always the case!
Research confirmed that the correlation is 0,15 (so there is a relation, but not a very strong one)
(-1 = perfect negative relation; 0 = no relation; +1 = perfect positive relation)
Example: Beats headphones
Good brand image because of Dr Dré (consumers like the headphones)
Experts: headphones are not that good, Beats uses plastic elements and add zinc so the product feels heavy
Example: Wine (randomized control trial = experiment = AB test)
Wine is offered at different prices ($5 <> $45 and $10 <> $90)
Linking without price: quality is the same for both glasses (based on product information)
Linking with price: quality is different for the same wine
Higher price = better quality, because price indicates quality & value for consumers
Example: Music
Comparations between independent markets A & B and social markets A & B (research: correlation between A & B)
Social market: demand depends on several elements: song, popularity by others, …
Result: value of a song depends on the marketplace, so inconsistent / unpredictable demand! (A≠B)
! Hits get a high score, just because they are ‘hits’
Independent market: demand only depends on the song itself
Result: value of a song depends on product quality, so demand is consistent / predictable (A=B)
! General finding: the correlation is higher in independent markets
It is not only about the quality of a product, but also about other elements such as brands, other people, market, …
The value of a product doesn’t only depend on the product itself
1
, Value of a product depends on the marketing mix: product; price, promotion & place (4 P’s)
! 3 C’s: company, customers, competitors
What a company offers, what customers want & what competitors offer (overlapping circles!)
Other C’s: collaborators & context
Product development should start from the 3 C’s (and later focused on 4 P’s)
Example: Quidel = pregnancy tests
Business that has 2 different target groups: hopeful (wants to get pregnant) & fearful (doesn’t want babies)
Different product characteristics: baby on packaging, smiley if pregnant, placed with other baby products, …
Possible brand extention: ovulation testing (hopeful customers) & general diseases testing (fearful customers)
Bias in consumers heads:
Egocentrism (false consensus effect) = a consumer / business looks to the world through their own eyes with their own
knowledge whereby you don’t have access to other perspectives of the world. A result is that they assume that their vision, is
the vision of others as well. They are unable to comprehend that views / opinions may be different from their own.
! It harms communication because we tend to make things too complex as we think it is general knowledge (which is not)
Overconfidence = the tendency for a person to overestimate their abilities. An individual can think they are a better-than-
average driver / player / … , although they are not.
Uncertainty neglect (verwaarlozing van onzekerheid) = a person makes it himself too hard when he is uncertain about
something Experiment in class: you could give a lower & upper bound for an answer, but we mostly make these too narrow
PPT: KEY LEARNINGS
‘Value’ depends not only on the intrisic ingredients of a product. It is multiply determined, also by extrinsic marketing
actions, such as price, promotion, place, packaging. ‘Value’ is not objective, but subjective. It depends on how
consumers interpret the marketing mix (4 Ps).
‘Value provided to customers’ is only one part of the equation. Firms ultimately care about the ‘value of customers.’
Creating value for customers is a means to creating value for firms.
Effective marketing mix management (4P) starts with an analysis of the customer, company, and the competition (3Cs).
Beware of egocentrism, overconfidence, and uncertainty neglect.
Consumers and markets are messy. The world desperately needs people with an ability to cleverly combine insights and
methods from the behavioral sciences to solve business and societal problems.
READING: HIGH ONLINE USER RATINGS DON’T ACTUALLY MEAN YOU’RE GETTING A HIGH-QUALITY PRODUCT
Online user ratings & reviews are now one of the most important sources of product quality information
This is because they are free, widely available, easy to access & objective
Is the power of traditional marketing & brands decreasing because of this?
! Illusion of validity: consumers trust much more on star ratings & reviews than they should as online ratings may not reflect a
product’s quality at all.
Issues with user ratings:
Statistical issues: consumers only observe review scores from a part of the product users
(not every user is writing a review = sample size is small; variability tends to be high)
Sampling issues: users who write a review are not randomly sampled
(mostly users with extreme opinions, positive & negative, = brag-and-moan bias) J-shaped distribution
Evaluation issues: reviewing product performance requires a scientific approach, which users don’t do
(consumers review quality biased by other variables such as brand image, price & physical appearance)
Q1: Is the average star rating a good indicator of product quality?
Q2: How much do consumers trust the average star rating as an indicator of quality?
2
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller HWwithLouise. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $16.66. You're not tied to anything after your purchase.
