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Consumer marketing – lecture notes
Lecture 1
Direct-to-consumer (DTC) brands
- DTC brands sell products directly to end users through their own e-commerce sites, cutting
the middleman, out of the traditional retail process
- Many of them are online brands
Why do consumers like DTC brands?
- Perception of alignment
- Customized programs
- Direct contact, which makes contact easier and faster/which builds brand trust/which builds a
relationship with the brand/it becomes transparent/it builds loyalty
- It feels like you personally support and help grow a brand
Why would DTC brands be the new dawn?
- Easy to start/cheap to fail
- Easy to communicate and understand
- Use margin to improve product
- Control your value (because you have access to all the customer data)
- You are more independent
- Expand your reach
- Better margins
- More money for other marketing levers (e.g., superior customer service)
o Improve customer engagement
- Access to data (understand your consumer better; access feedback)
Why would DTC brands be a fad?
- Might actually be more expensive
- Owner does everything
- Where do you find the customer
- Will the customer trust this new small brand
- You have to spend lots of money on promos and ads
- Policy returns
- It’s harder to scale up
How did DTC brands become so successful?
Customer insights -> R&D and product design -> production -> marketing and distribution ->
customer experience
The rise can be attributed to at least 3 major shifts
1. Legacy players used to have a strong on retail channels and it was impossible for a new
product to get shelf space. Rise of e-commerce and direct distribution significantly reduced
this barrier.
2. Democratized marketing where smaller players can reach and capture the attention of
consumers with much lower budgets.
3. Each part of the value chain has become modular and many third-party players have emerged
to take of production, warehousing, logistics, web hosting, and distribution. These services
are often on-demand and are flexible. So, young entrepreneurs can launch new products at
minimal cost.
Casper example
• Only sold online, shipped to customers
• No retail locations
• Minimal ads
, • Predominantly WOM
Wants to be “Nike of sleep” -> How?
- Create ads with animals testing the matrasses (think outside the box)
- Expanding distribution to physical retail
Takeaways
- Marketing has undergone a dramatic shift in the last decade
- Unmet customer needs, not technology, are often the cause of disruption; don’t lose sight of
your customer and their needs as the consumer experience drives business
- Customer centricity aims to manage how individual customers, not only products or brands,
create profitability
- Good products do not sell themselves
Lecture 2
Utilitarian products: categorizing the buying process
- Triggers may be based on (basic) needs
- Shorter research process, maybe not a key decision
- Deliberation process is short/nonexistent
- Repeat purchases shorten the process
- Based on emotions
- It depends on the need, context, convenience
Ego-expressive products: categorizing the buying process
- Long decision-making process
- You take other people’s opinions
o They might know better
o Might have had relevant experience
o Ego-validated
- Take into consideration alternatives
- Consider opportunity cost
Cross model
Utilitarian (serve a purpose)
vs. Ego-expressive (how we express ourselves
High vs low involvement
Benefits of segmentation
- Segmentation aims at dividing the marketing into subsets of customers
- Members are different between segments, but similar within
- Benefits:
o To the firm: identification of valuable customers and more targeted promotions and
marketing and communications
o To the customers: customized products and services and personalized experience
2
, Tropicana example
Although segmenting is good to be able to target all
customers, Tropicana might be overdoing it. They offer
so many different options that customers might be
overwhelmed and avoid the brand.
Dogfood market segmentation example
Research: people are willing to pay most for their dog’s food if their dog is allowed to sleep in its
owner’s bed.
Segmentation
Segmentation: discovering and profiling groups of customers with similar needs and preferences
Targeting: evaluating segment attractiveness and targeting most attractive ones
Lecture 3
Why does it matter (The hershey’s kiss video)?
Because it shows that people can only focus on one or a few things, but that a lot of cues go lost in the
chaos. So, when you are successful in drawing the attention to your product or service, people will
remember it even more.
Attention
- Attention is selective, limited and can be divided
- Memory: attention to brand in magazine ad improves brand memory
- Brand preference: attention to brand on product display predicts preference
- Sales: attention to feature ads increases sales of featured SKU
- Attention is not perception
Impact of perception in marketing
- What consumers see, to a large extent, is determined by what they expect
o Consumers see patterns where are none and interpret patterns to fit their personal
beliefs and ideas
- Perception is reality: what is perceived is not necessarily what is true. Markets need to be
aware that perception is as influential as what is real
- Perception is constructed from the stimulus, expectations, and context
Words memory task
People tend to make up words that are similar to the words they had to remember, so when one has to
remember words in the topic of sleeping, people start ‘remembering’ words like ‘tired’, ‘dreaming’, or
‘bed’.
3
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