Contents

Lecture 1: Creating Customer Value and Engagement ............................................. 1

Company and Marketing Strategy LECTURE 2.......................................................... 4
Lecture 3: Managing Marketing Information, Consumer Markets, and Buyer
Behaviour ............................................................................................................... 7
Part 2: Marketing Analytics in the Real World .................................................... 13
Part 3: Consumer Markets and Buyer Behaviour ................................................ 15
Lecture 4: Business Markets, Buyer Behaviour, and Marketing Strategy ................ 19
Part 1: Business Markets and Business Buyer Behaviour ................................... 19
Part 2: Customer Value-Driven Marketing Strategy: Creating Value for Target
Customers ........................................................................................................ 20
Lecture 5 Cheat Sheet: Consumer Markets and Buyer Behaviour .......................... 23
Lecture 6: Products, Services, and Brands ............................................................ 26
Lecture 7: New Product Development and Product Life Cycle ............................... 30

Lecture 1: Creating Customer Value and Engagement

The sources provide extensive notes from Lecture 1, encompassing topics such as the
definition of marketing, the marketing process, understanding the marketplace,
customer relationship management and the evolving marketing landscape.

What is Marketing?

• Marketing is defined as the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society.

• In simpler terms, it is a process where companies generate value for

customers, build strong relationships, and in turn, capture value from those
customers.

The Marketing Process

The marketing process involves a series of steps aimed at creating and capturing
customer value. This is illustrated in Figure 1.1 in the source document "CIF1001
LECT1.pdf".
Understanding the Marketplace

To market effectively, companies need to understand the marketplace and customer

needs:

• Needs: States of felt deprivation.

• Wants: The form human needs take, shaped by culture and personality.

• Demands: Wants backed by buying power.

• Market Offerings: Combinations of products, services, information, or

experiences offered to satisfy needs and wants.

• Marketing Myopia: Focusing too much on specific products rather than the
benefits and experiences they provide.

• Customer Satisfaction: Determined by whether a product's performance meets

customer expectations, influencing repeat business.

• Exchange: Obtaining a desired object by offering something in return. Marketing

aims to cultivate these relationships.

• Market: Comprises actual and potential buyers.

Customer Value-Driven Marketing Strategy

• Marketing management involves choosing target markets and building

profitable relationships.

• This requires determining the target market and defining the company's value
proposition – the benefits promised to satisfy customer needs.

• Several marketing management orientations guide strategy:

o Production Concept: Focus on production efficiency and wide

distribution.

o Product Concept: Emphasize product quality and improvement.

o Selling Concept: Focus on large-scale selling and promotion.

o Marketing Concept: Understand customer needs and deliver satisfaction

better than competitors.

o Societal Marketing Concept: Consider customer wants, company

requirements, long-term consumer interests, and societal well-being.

• The marketing mix, known as the four Ps (product, price, promotion, place), is
used to create an integrated marketing program that delivers the intended
value.
Customer Relationship Management

• Customer relationship management (CRM) is the process of building and

maintaining profitable customer relationships by delivering superior value and
satisfaction.

• Building blocks of CRM include:

o Customer-perceived value: The difference between benefits and costs

perceived by the customer.

o Customer satisfaction: The degree to which performance matches

expectations.

• Strategies for creating and capturing value include:

o Customer-Engagement Marketing: Fosters continuous customer

involvement in shaping brand conversations, experiences, and
community.

o Consumer-Generated Marketing: Involves brand exchanges created by

consumers themselves.

o Partner Relationship Management: Working closely with partners inside

and outside the company to deliver greater customer value.

• Measuring customer value involves:

o Customer lifetime value: The value of all purchases a customer makes

over their lifetime.

o Share of customer: The portion of a customer's spending captured by the

company in its product categories.

o Customer equity: The combined lifetime values of all customers.

The Changing Marketing Landscape

The marketing landscape is constantly evolving, influenced by factors like:

• The Digital Age: Dominated by the Internet of Things (IoT), digital and social
media marketing, mobile marketing, big data and AI.

• Changing Economic Environment: Impacts consumer spending and behaviour.

• Growth of Not-for-Profit Marketing: Nonprofits are increasingly using marketing

to attract support.

• Rapid Globalization: Businesses need to adopt both local and global

perspectives.
 • Sustainable Marketing: Ethics and social responsibility are crucial.

• Pandemic: Requires marketers to adapt to new norms and changes in consumer

behaviour.

It's worth noting that these trends may continue to evolve and marketers must stay
informed about these changes to adapt their strategies effectively.

Company and Marketing Strategy LECTURE 2

Strategic Planning

• Strategic Planning: Developing and maintaining a strategic fit between the

organization's goals and capabilities, and its changing marketing opportunities.

• Steps in Strategic Planning: Defining the company mission, setting objectives

and goals, designing the business portfolio, planning marketing and other
functional strategies.

Mission Statement

• The mission statement defines the organization's purpose and what it wants to
achieve in the larger environment.

• Market-oriented mission statements define the business in terms of customer

needs. They should be meaningful and specific, and not focus solely on the
product.

Business Portfolio Design

• Business portfolio: The collection of businesses and products that make up the
company.

• Portfolio analysis: Management evaluates the products and businesses in the

company to make decisions on investment and resource allocation.

• Strategic Business Unit (SBU): An independent entity within a company, such

as a division, product line, or single product/brand. It has its own support
functions (HR, marketing, etc.) and reports to the company HQ.

Growth-Share Matrix

• Purpose: To analyze a company's SBUs based on market growth rate and relative
market share.

• Categories: Stars (high growth, high share), Cash Cows (low growth, high share),
Question Marks (high growth, low share), Dogs (low growth, low share).
 • Limitations: Defining and measuring market share and growth can be difficult, it
doesn't provide much guidance for future planning.

Product/Market Expansion Grid

• Purpose: To identify growth opportunities through four strategies.

• Strategies: Market penetration (existing products, existing markets), market

development (existing products, new markets), product development (new
products, existing markets), diversification (new products, new markets).

Downsizing

• Definition: Reducing the business portfolio by eliminating unprofitable or non-

strategic products or business units.

• Reasons: Rapid growth, lack of experience, changing market environment,

product decline.

Marketing's Role

• Partnering with Other Departments: Marketing works with other departments

(finance, R&D, etc.) to ensure the entire company is customer-focused.

• Value Chain: A series of departments that carry out value-creating activities

(design, production, marketing, delivery, support).

• Value Delivery Network: A partnership between the company, suppliers,

distributors, and customers to improve the entire system's performance.

Marketing Strategy & Mix

• Marketing Strategy: The logic by which the company creates customer value
and achieves profitable customer relationships. It involves segmentation,
targeting, differentiation, and positioning.

• Marketing Mix (4Ps): Product, Price, Place, Promotion - controllable tactical

tools blended to produce the desired response in the target market.

Managing the Marketing Effort

• Functions: Analysis, Planning, Implementation, and Control.

• SWOT Analysis: Assesses internal strengths and weaknesses, and external

opportunities and threats.

• Marketing Plan: A detailed document outlining the marketing situation,

objectives, strategies, action programs, budgets, and controls.

• Implementation: Turning marketing plans into actions to achieve objectives.

Marketing Return on Investment (ROI)

• Definition: Net return from a marketing investment divided by the cost of the
investment.

• Purpose: To measure the profitability of marketing activities and guide resource

allocation.

Analyzing the Marketing Environment

• Microenvironment: Actors close to the company affecting its ability to serve

customers (company, suppliers, intermediaries, competitors, publics,
customers).

• Macroenvironment: Larger societal forces impacting the microenvironment

(demographic, economic, natural, technological, political, cultural).

Demographic Environment

• Demography: The study of human populations (size, density, location, age,

gender, race, occupation, etc.).

• Key Trends: Changing age and family structures, geographic shifts, educational
characteristics, population diversity.

• Generational Marketing: Segmenting markets by lifestyle or life stage instead of

just age.

Economic Environment

• Factors: Economic factors affect consumer purchasing power and spending

patterns.

• Examples: Income levels, inflation, interest rates, unemployment, consumer

confidence.

Natural Environment

• Definition: The physical environment and natural resources that impact

marketing activities.

• Trends: Growing shortages of raw materials, increased pollution, increased

government intervention.

• Environmental Sustainability: Developing strategies and practices that create a

sustainable world economy.

Technological Environment
 • Impact: Technological advancements rapidly change the marketplace, create
new products and opportunities, and raise concerns about safety.

• Examples: Internet of Things (IoT), artificial intelligence (AI), digital marketing

tools, mobile marketing, big data.

Political and Social Environment

• Legislation: Regulations protect companies, consumers, and society's

interests.

• Trends: Increased emphasis on ethics and socially responsible actions, growth

of cause-related marketing.

Cultural Environment

• Definition: Institutions and forces that affect society's values, perceptions, and
behaviors.

• Core Values: Persistent and passed down through generations.

• Secondary Values: More open to change and reflect individual views.

Responding to the Marketing Environment

• Uncontrollable View: React and adapt to environmental forces.

• Proactive View: Take aggressive actions to shape the environment.

• Reactive View: Observe and react to changes in the environment.

Lecture 3: Managing Marketing Information,

Consumer Markets, and Buyer Behaviour
Part 1: Managing Marketing Information to Gain Customer Insights

This section of Lecture 3 focuses on the importance of gathering and managing

marketing information to develop a deep understanding of customers and the
marketplace.

Understanding Customer Insights

• Customer insights are fresh understandings of customers and the marketplace

derived from marketing information.

• They are crucial for creating customer value, engagement, and building strong
relationships.
 • Obtaining valuable insights can be challenging, as marketers need to manage
information from a wide range of sources.

Marketing Information and Big Data

• Big Data refers to the massive and complex datasets generated by today's
information technologies.

• This data comes from various sources, including market research, internal
transaction data, social media monitoring, connected devices, and other digital
platforms.

Managing Marketing Information

• Customer insight teams play a vital role in collecting and analysing information
from numerous sources. These teams usually include members from all
company functional areas (or departments).

• Marketing Information Systems (MIS) consist of people and procedures that:

o Assess information needs

o Develop the required information

o Help decision-makers utilise the information to generate actionable

customer and market insights

Developing Marketing Information

Marketers obtain information from three primary sources:

• Internal Data: This includes information, statistics, and trends that

organisations gather through their own operations. Examples include:

o Facts and figures from internal databases

o Customer data

o Software data

o Reports

• Marketing Intelligence: This refers to the external data collected by a company

about a specific market they wish to enter. This information is used to inform
strategic decisions.

• Marketing Research: This involves collecting data that is not readily available.
Common methods for gathering marketing research data include:

o Phone surveys
 o Internet surveys

o In-person surveys

Internal Data

• Internal databases are valuable collections of consumer and market information

obtained from within the company's network.

Competitive Marketing Intelligence

• Competitive marketing intelligence is the systematic process of:

o Collecting publicly available information about consumers, competitors,

and developments in the marketing environment

o Analysing this information for strategic decision making

Marketing Research

• Marketing research is a systematic process with four key steps:

o Designing research

o Collecting data

o Analysing data

o Reporting findings

• Marketing research is used to gain insights into customer motivations, purchase

behaviour, satisfaction, market potential, market share, and the effectiveness of
various marketing activities.

The Marketing Research Process

The marketing research process consists of the following steps:

1. Defining the Problem and Research Objectives

o This stage involves determining the research goals, which might fall into
one of the following categories:

▪ Exploratory research: 'Explore' - Aims to gather preliminary

information to better define a problem or opportunity

▪ Descriptive research: 'Describe' - Aims to describe marketing

variables, such as market potential or demographics

▪ Causal research: 'Cause-and-effect' - Aims to test hypotheses

about cause-and-effect relationships
2. Developing the Research Plan

o This step outlines:

▪ Sources of existing data

▪ Specific research approaches

▪ Contact methods

▪ Sampling plans

▪ Instruments to gather data

3. Defining the Problem and Research Objectives

o This phase involves creating a written proposal that details:

▪ The management problem

▪ Research objectives

▪ Information needed

▪ How the results will inform management decisions

▪ Budget

4. Developing the Research Plan

o This stage involves deciding whether to use secondary or primary data:

▪ Secondary Data: Information that already exists and was

collected for another purpose

▪ Primary Data: Information collected specifically for the current

research purpose

5. Gathering Secondary Data

o Secondary data offers several advantages:

▪ Lower cost

▪ Quick to obtain

▪ Can provide information that would be difficult or impossible to

collect directly

o However, secondary data has some disadvantages:

▪ May not be relevant to the specific research needs

▪ May not be accurate

 ▪ May be outdated

▪ May be biased

6. Primary Data Collection

o This stage involves making decisions on:

▪ Research Approaches:

▪ Observational Research: Gathering data by observing

people, actions, and situations

▪ Ethnographic Research: Observing consumers in their

natural environments

▪ Survey Research: Asking people questions about their

knowledge, attitudes, preferences, and behaviour

▪ Experimental Research: Using controlled experiments to

test cause-and-effect relationships

▪ Contact Methods:

▪ Mail questionnaires

▪ Telephone interviews

▪ Personal interviews

▪ Individual interviews

▪ Group interviews

▪ Focus group interviews

▪ Online marketing research methods

▪ Internet and mobile surveys

▪ Online focus groups

▪ Consumer tracking

▪ Online experiments

▪ Online panels and brand communities

▪ Sampling Plan:

▪ Sampling Unit: Who will be surveyed?

 ▪ Sample Size: How many people will be included in the
sample?

▪ Sampling Procedure: How will the sample be selected?

▪ Probability Sample: Every member of the

population has a known and equal chance of
selection

▪ Simple random sample

▪ Stratified random sample

▪ Cluster (area) sample

▪ Nonprobability Sample: The selection of

participants is not random, making it difficult to
generalise results to the entire population

▪ Convenience sample

▪ Judgement sample

▪ Quota sample

▪ Research Instruments:

▪ Questionnaires

▪ Open-ended questions

▪ Closed-ended questions

▪ Mechanical instruments

7. Implementing the Research Plan

o This step involves:

▪ Collecting the information

▪ Processing the information

▪ Analysing the information

8. Interpreting and Reporting Findings

o In this final stage, researchers:

▪ Interpret findings

▪ Draw conclusions
 ▪ Report to management

Analysing and Using Marketing Information

• Customer Relationship Management (CRM) involves managing detailed

information about individual customers and carefully managing customer touch
points to maximize customer loyalty.

• Marketing Analytics utilizes tools, technologies, and processes to identify

meaningful patterns in big data to gain insights and measure marketing
performance.

• Artificial Intelligence (AI) is a technology where machines think and learn in a

way that simulates human intelligence but with much greater analytical
capacity.

Other Marketing Information Considerations

When conducting marketing research, it's essential to consider the following:

• Marketing Research in Small Businesses and Non-profit Organisations may

have different needs and resource constraints.

• International Market Research presents unique challenges due to cultural

differences and varying market dynamics.

• Public Policy and Ethics are crucial to address, particularly concerning:

o Customer privacy: Protecting the personal information of research

participants

o Misuse of research findings: Ensuring that research results are not used
to mislead or manipulate consumers

Part 2: Marketing Analytics in the Real World

This part of Lecture 3 focuses on the practical application of marketing analytics, using
Instagram Insights as a real-world example.

What is Marketing Analytics and Why Does it Matter?

• Marketing analytics helps marketers understand the effectiveness of their

initiatives across all channels over a specific period.

• It provides a holistic view of marketing performance, unlike data from

individual channels which don't show the complete picture.

• It helps marketers to answer key questions about their campaigns, competitor

activities, resource allocation, and investment prioritisation.
Real Marketing: Instagram Insights

• Instagram Insights is an analytics tool that offers data on:

o Follower demographics

o Follower actions

o Content performance

• It's divided into three sections:

o Content Insights: Provides data on recent posts and their performance,

sortable by type, metric, and time period.

o Activity Insights: Shows interaction data for the account, including

actions taken, profile visits, website clicks, reach, and impressions.

o Audience Insights: Offers information on audience demographics like

location, age range, gender, and times of peak activity.

Understanding Instagram Metrics

• Impressions: The number of times content is displayed, even if shown multiple

times to the same user.

• Reach: The number of unique users who saw the content.

• Engagement: The total number of interactions with the content, including likes,
comments, shares, saves, follows, mentions, hashtag usage, clicks, and direct
messages.

• Engagement Rate: The percentage of people who saw the content and
interacted with it.

The Importance of Instagram Insights

• Without data, businesses risk wasting resources on Instagram due to:

o Targeting the wrong audience

o Ineffective posting frequency

o Driving irrelevant traffic to their website

o Missing partnership opportunities

o Posting at non-optimal times

o Missing engagement opportunities

Leveraging Instagram Insights for Growth

 • By analysing data from Instagram Insights, businesses can:

o Understand what content resonates best with their audience

o Optimize posting times based on audience activity patterns

o Improve calls-to-action on product photos

o Develop successful content strategies based on top-performing posts

o Use branded hashtags to increase engagement

o Track the effectiveness of user-generated content

• The sources also provide links to further resources on using Facebook Analytics
for marketing decisions, noting that it was discontinued in 2021.

Part 3: Consumer Markets and Buyer Behaviour

This section of Lecture 3 introduces the concept of consumer behaviour and explores
the various factors that influence consumers' buying decisions.

Understanding Consumer Markets and Buyer Behaviour

• Consumer buyer behaviour refers to the buying behaviour of individuals and

households who purchase goods and services for personal consumption.

• Consumer markets consist of all individuals and households that purchase

goods and services for personal consumption.

Factors Influencing Consumer Behaviour

The following factors can significantly influence consumer buyer behaviour:

• Cultural Factors:

o Culture: The set of basic values, perceptions, wants, and behaviours

learned by a member of society from family and other institutions

o Subcultures: Groups of people within a culture who share common life

experiences and value systems

o Social Classes: Relatively permanent and ordered divisions in society

whose members share similar values, interests, and behaviours. These
are often measured by a combination of occupation, income, education,
wealth, and other variables.

• Personal Factors:

o Occupation: A person's job can influence the types of goods and services
they purchase
 o Age and Life Stage: Consumer preferences evolve throughout their lives,
affecting their choices in food, clothing, furniture, and recreation

o Economic Situation: Factors like personal income, savings, and interest

rates can impact spending patterns

o Lifestyle: A person's pattern of living as expressed in their activities,

interests, and opinions (psychographics)

o Personality: The unique psychological characteristics that distinguish a

person or group

• Psychological Factors:

o Motivation: A need that is sufficiently pressing to drive a person to seek

satisfaction

o Perception: The process of selecting, organizing, and interpreting

information to create a meaningful picture of the world

▪ Selective Attention: The tendency to screen out most information

▪ Selective Distortion: Interpreting information in a way that

supports existing beliefs

▪ Selective Retention: Remembering information that supports a

favoured brand and forgetting information about competing brands

o Learning: Changes in behaviour resulting from experience

o Beliefs: Descriptive thoughts that a person holds about something based

on knowledge, opinion, or faith

o Attitudes: Relatively consistent evaluations, feelings, and tendencies

towards an object or idea

Types of Buying Decision Behaviour

Consumer buying behaviour can be classified into four types:

• Complex Buying Behaviour: This occurs when consumers are highly involved in
a purchase and perceive significant differences among brands. It's common for
expensive, risky, infrequent, and self-expressive purchases.

• Dissonance-Reducing Buying Behaviour: Consumers are highly involved in the

purchase but see little difference among brands. This often applies to expensive,
infrequent, or risky purchases where the consumer wants to minimize post-
purchase dissonance (buyer's remorse).
 • Habitual Buying Behaviour: Low consumer involvement and little perceived
brand difference. Consumers don't put much effort into decision-making and
may exhibit brand loyalty simply out of habit.

• Variety-Seeking Buying Behaviour: Low consumer involvement but significant

perceived brand differences. Consumers frequently switch brands to try
something new.

The Buyer Decision Process

The buyer decision process consists of five stages:

1. Need Recognition: The consumer becomes aware of a problem or need,

triggered by internal or external stimuli.

2. Information Search: The consumer seeks information about potential solutions

to their need. They may consult personal sources, commercial sources, public
sources, or experiential sources.

3. Evaluation of Alternatives: The consumer uses the information gathered to

evaluate different brands and options.

4. Purchase Decision: The consumer decides which brand to purchase. However,

factors like the attitudes of others and unexpected situational factors can
influence the final purchase decision.

5. Postpurchase Behaviour: The consumer's actions after the purchase are based
on their satisfaction or dissatisfaction. Cognitive dissonance (buyer's remorse)
can occur if the consumer experiences post-purchase conflict.

The Customer Journey

• The customer journey encompasses all the experiences a consumer has with a
brand over time. This includes their interactions, purchases, and engagement
with the brand.

• By understanding the customer journey, marketers can create positive brand

experiences that lead to:

o Positive purchase behaviour

o Increased engagement

o Brand advocacy

The Buyer Decision Process for New Products

• The adoption process is the mental process through which an individual

progresses from first learning about a new product to finally using it regularly.
 • The adoption process includes five stages:

o Awareness: The consumer becomes aware of the new product.

o Interest: The consumer seeks information about the new product.

o Evaluation: The consumer considers whether to try the new product.

o Trial: The consumer tries the new product on a small scale to assess its
value.

o Adoption: The consumer decides to make full and regular use of the new
product.

• Consumers can be categorized based on their innovativeness and how quickly

they adopt new products:

o Innovators: The first individuals to adopt a new product. They are

venturesome and enjoy trying new things.

o Early Adopters: Opinion leaders in their communities and adopt new

products early but carefully.

o Early Mainstream: Adopt new products before the average person but
are not opinion leaders.

o Late Mainstream: Skeptical of new products and adopt them only after a
majority of people have already done so.

o Lagging Adopters: Tradition-bound and resistant to change. They adopt

new products only when they become widely accepted and almost
essential.

Influence of Product Characteristics on Rate of Adoption

Five characteristics can influence the rate at which a new product is adopted:

• Relative advantage: The degree to which the innovation appears superior to

existing products.

• Compatibility: The degree to which the innovation fits the values and
experiences of potential consumers.

• Complexity: The degree to which the innovation is difficult to understand or use.

• Triability: The degree to which the innovation may be tried on a limited basis.

• Communicability/Observability: The degree to which the results of using the

innovation can be observed or communicated to others.
Lecture 4: Business Markets, Buyer Behaviour, and
Marketing Strategy
Part 1: Business Markets and Business Buyer Behaviour
Key Differences Between Business and Consumer Markets:

• Market Structure and Demand: Business markets have fewer, but larger buyers.
Demand is derived from consumer demand, inelastic (less affected by price
changes), and fluctuates more.

• Nature of the Buying Unit: Business purchases involve more decision

participants, a more professional approach, and increased interaction between
buyer and seller.

• Types of Decisions and the Decision Process: Business purchases are

typically more complex and may involve supplier development, where
businesses build close relationships with suppliers to ensure a reliable supply
chain.

Factors Influencing Business Buyer Behaviour:

• Major Types of Buying Situations:

o Straight rebuy: routine reorder without modifications.

o Modified rebuy: buyer seeks modifications to product, price, terms, or

supplier.

o New task: first-time purchase of a product or service.

o Systems selling (solutions selling): purchasing a complete solution

from a single seller. (For example, UPS manages Overstock.com's order
fulfillment and returns process.)

• Participants in the Business Buying Process:

o Users: individuals who will use the product or service.

o Influencers: provide input on specifications and evaluation.

o Buyers: formal authority to select suppliers and negotiate terms.

o Deciders: approve final suppliers.

o Gatekeepers: control information flow.

 • The Buying Center: The buying center is not a fixed entity but a collection of
individuals playing different roles in the buying process. It's important for
marketers to understand:

o Who participates in the decision?

o Their relative influence?

o Their evaluation criteria?

o Are there informal participants?

• Major Influences: Business buying decisions are influenced by environmental

factors (economic, technological, political, competitive), organizational factors
(objectives, strategies, structure, systems), interpersonal factors (influence,
expertise, authority, dynamics), and individual factors (motivation, perceptions,
preferences, risk tolerance).

The Business Buying Process:

1. Problem Recognition: Identifying a need or problem that can be met by

acquiring a good or service. Triggered by internal or external stimuli (e.g.,
Salesforce's ads showcasing problem-solving for customers like Intuit).

2. General Need Description: Describing the general characteristics and quantity

of the item needed.

3. Product Specification: Developing detailed technical specifications for the

product.

4. Supplier Search: Identifying potential suppliers.

5. Proposal Solicitation: Requesting proposals from qualified suppliers.

6. Supplier Selection: Evaluating proposals and selecting a supplier based on

criteria.

7. Order-Routine Specification: Finalizing the purchase order with the chosen

supplier, including all specifications and terms.

8. Performance Review: Evaluating the supplier's performance based on the

agreed terms and specifications.

Part 2: Customer Value-Driven Marketing Strategy: Creating Value

for Target Customers
Designing a Customer-Driven Marketing Strategy:
 1. Market Segmentation: Dividing the market into smaller segments with distinct
needs, characteristics, or behaviours that might require different marketing
strategies or mixes.

2. Targeting: Evaluating the attractiveness of each market segment and choosing

which segments to target.

3. Differentiation: Creating a unique and valuable offering that sets your product
or service apart from the competition.

4. Positioning: Establishing a clear, distinctive, and desirable place for your

product or service in the minds of target customers relative to competitors.

Market Segmentation Bases:

• Consumer Markets:

o Geographic: dividing the market based on location (nations, regions,

cities).

o Demographic: age, life-cycle stage, gender, income, occupation,

education, religion, ethnicity, generation.

o Psychographic: social class, lifestyle, personality.

o Behavioural: knowledge, attitudes, uses, responses to a product. This

includes occasions, benefits sought, user status, usage rate, and loyalty
status.

• Business Markets:

o Operating characteristics

o Purchasing approaches

o Situational factors

o Personal characteristics

• International Markets:

o Geographic location

o Economic factors

o Political and legal factors

o Cultural factors

Evaluating Market Segments:

Market segments should be:

 • Measurable: size, purchasing power, profiles can be measured.

• Accessible: segments can be effectively reached and served.

• Substantial: segments are large or profitable enough.

• Differentiable: segments respond differently to different marketing mix

elements.

• Actionable: effective programs can be designed for the segments.

Market-Targeting Strategies:

• Undifferentiated Marketing (Mass Marketing): targeting the whole market with

one offer, focusing on common needs.

• Differentiated Marketing: targeting several segments with separate offers for

each (e.g., Marriott International with multiple hotel brands).

• Concentrated Marketing (Niche Marketing): targeting a large share of a smaller

market (e.g., Fila's focus on retro fashion).

• Micromarketing:

o Local Marketing: tailoring to local customer segments (cities,

neighbourhoods, stores).

o Individual Marketing (One-to-One Marketing, Mass Customization):

tailoring to individual customer needs and preferences (e.g., Rolls-
Royce's Bespoke design service).

Differentiation and Positioning:

• Product Position: how consumers perceive a product compared to competing

products.

• Positioning Maps: visual representations of consumer perceptions of brands on

important buying dimensions.

• Choosing a Differentiation and Positioning Strategy:

o Identify possible competitive advantages.

o Choose the right competitive advantages.

o Select an overall positioning strategy.

o Communicate and deliver the position to the market.

• Competitive Advantage: offering greater value (lower prices or more benefits).

• Differentiation: along the lines of product, services, channels, people, or image.

 • Value Proposition: full mix of benefits on which the brand is positioned. There
are five main types:

o More for More: upscale product or service.

o More for the Same: high quality at lower prices.

o More for Less: best winning proposition, difficult to sustain.

o The Same for Less: good deal, powerful appeal.

o Less for Much Less: meeting lower performance requirements at a lower

price.

• Positioning Statement: summarizes company or brand positioning in this form:

To (target segment and need) our (brand) is (concept) that (point of
difference/benefit) (reason to believe).

Rebranding vs. Repositioning:

• Rebranding: changing outward factors like brand image (e.g., Burger King's logo
redesign, dahmakan's shift from "healthy food" to affordability).

• Repositioning: changing customer perception of the brand relative to

competitors (e.g., Spotify's focus on original content and playlists during the
pandemic).

Lecture 5 Cheat Sheet: Consumer Markets and Buyer

Behaviour
Understanding Consumer Behaviour

Consumer buyer behaviour refers to the buying behaviour of individuals and

households who buy goods and services for personal consumption. The consumer
market is made up of all these individuals and households.

Factors Influencing Consumer Behaviour

• Cultural Factors: Culture plays a significant role in shaping consumer wants

and behaviour. Marketers need to consider:

o Culture: the basic values, perceptions, wants, and behaviours learned by

a member of society.
 o Subcultures: groups within a culture with shared value systems (e.g.,
ASDA Supermarket in the UK catering to Muslim consumers during
Ramadan).

o Social Classes: relatively permanent divisions in society whose

members share similar values, interests, and behaviours (often measured
by a combination of factors like occupation, income, education, and
wealth).

• Social Factors: Social influences play a role in consumer decision-making.

o Groups and Social Networks: membership groups, reference groups,

and online social networks can influence buying decisions.

o Family: family members have a strong influence on buying behaviour.

o Roles and Status: an individual's position within a group can influence

their buying choices.

• Personal Factors: Individual characteristics influence consumer choices.

o Age and Life-Cycle Stage: tastes in food, clothes, furniture, and

recreation change over time.

o Occupation: influences the goods and services purchased (e.g., CAT

phones marketed to construction workers).

o Economic Situation: factors like income, savings, and interest rates

affect spending patterns.

o Lifestyle: a person's pattern of living as expressed in their psychographics

(activities, interests, opinions).

o Personality: unique psychological characteristics that influence an

individual's responses (e.g., MINI's marketing appeals to "adventurous"
and "individualistic" personalities).

• Psychological Factors: Internal psychological processes impact consumer

behaviour.

o Motivation: a need that is sufficiently pressing to direct a person to seek

satisfaction. Motivation research aims to understand consumers'
hidden, subconscious motivations. Maslow's Hierarchy of Needs is a
framework for understanding different levels of needs.

o Perception: the process of selecting, organizing, and interpreting

information to create meaning. Key perceptual processes:
 ▪ Selective Attention: consumers screen out most information they
are exposed to.

▪ Selective Distortion: interpreting information in a way that

supports existing beliefs.

▪ Selective Retention: remembering good points about favoured

brands and forgetting good points about competing brands.

o Learning: changes in behaviour arising from experience. This can be

through drives, stimuli, cues, responses, and reinforcement.

o Beliefs and Attitudes:

▪ Beliefs: descriptive thoughts about something.

▪ Attitudes: consistent evaluations, feelings, and tendencies toward

an object or idea.

Types of Buying Decision Behaviour

• Complex Buying Behaviour: high involvement, significant perceived differences

between brands (e.g., expensive, risky, infrequent purchases).

• Dissonance-Reducing Buying Behaviour: high involvement, but little perceived

difference between brands (focus on post-purchase reassurance).

• Habitual Buying Behaviour: low involvement, little brand difference (routine

purchases).

• Variety-Seeking Buying Behaviour: low involvement, significant brand

differences (frequent brand switching).

The Buyer Decision Process

1. Need Recognition: consumer recognizes a problem or need (triggered by

internal or external stimuli).

2. Information Search: seeking information about products or services that might

meet the need. Sources can be personal, commercial, public, or experiential.

3. Evaluation of Alternatives: using information to compare different brands in the

choice set.

4. Purchase Decision: choosing a brand to purchase. Factors like others' attitudes

and unexpected situational factors can influence the final decision.

5. Postpurchase Behaviour: actions taken after purchase based on satisfaction or

dissatisfaction. Cognitive dissonance (buyer discomfort) can occur due to post-
purchase conflict. Marketers aim to delight customers to ensure satisfaction.
The Customer Journey

• Customer journey: the sum of the ongoing experiences consumers have with a
brand over time, affecting their buying behaviour and engagement.
Understanding the customer journey helps marketers create positive
experiences.

The Buyer Decision Process for New Products

• Adoption process: the mental process an individual goes through from learning
about an innovation to final regular use.

o Stages: Awareness, Interest, Evaluation, Trial, Adoption

• Individual Differences in Innovativeness:

o Innovators: venturesome, try new ideas at some risk.

o Early Adopters: guided by respect, opinion leaders.

o Early Mainstream: deliberate, adopt before the average person.

o Late Mainstream: skeptical, adopt only after the majority have tried it.

o Lagging Adopters: tradition-bound, suspicious of change.

• Influence of Product Characteristics on Rate of Adoption:

o Relative Advantage: the degree of improvement over existing products.

o Compatibility: consistency with existing values and experiences.

o Complexity: ease of understanding and use.

o Triability: the degree to which the innovation can be tried on a limited

basis.

o Communicability/Observability: the degree to which the benefits are

observable by others.

Lecture 6: Products, Services, and Brands

What is a Product?

• Product: Anything offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need.

• Service: An activity, benefit, or satisfaction offered for sale that is intangible and
does not result in ownership.
 • Market offerings: Encompass both tangible goods and services, often combined
with customer experiences to differentiate from competitors.

Product and Service Classifications

Consumer Products

Products bought by final consumers for personal consumption.

• Convenience Products: Frequently purchased, low-involvement, minimal effort

(e.g., toothpaste, magazines).

• Shopping Products: Less frequent purchase, more planning and comparison

(e.g., major appliances, clothing).

• Specialty Products: Unique characteristics, strong brand preference, low price

sensitivity (e.g., luxury goods).

• Unsought Products: Little awareness or interest, often require aggressive selling

(e.g., life insurance).

Table 8.1 in the sources provides a detailed breakdown of marketing considerations

for each consumer product type.

Industrial Products

Products purchased for further processing or for use in conducting a business.

• Materials and Parts: Raw materials and manufactured materials used in

production.

• Capital Items: Aid in the buyer's production or operations (e.g., machinery).

• Supplies and Services: Operating supplies, maintenance items, and business

services.

Product and Service Decisions

Individual Product Decisions

Figure 8.2 in the sources provides a visual overview of individual product decisions.

• Product and Service Attributes:

o Quality: Characteristics that impact satisfaction of customer needs.

▪ Total quality management, return-on-quality, quality level,

performance quality, conformance quality.

o Features: Differentiate a product from competitors, value to customer vs.

cost to the company.
 o Style and Design: Style refers to appearance, design enhances
usefulness and aesthetics.

• Branding: The name, term, sign, or design that identifies a product or service.

• Packaging: Design and production of the container or wrapper.

• Labelling: Identifies the product/brand, describes attributes, and can be used

for promotion.

• Product Support Services: Enhance the value of the product (e.g., customer
service).

Product Line Decisions

• Product Line: A group of closely related products (similar functions, customer

groups, price ranges).

• Product Line Length: Number of items in the product line.

o Product Line Filling: Adding more items within the present range.

o Product Line Stretching: Lengthening the product line beyond its current
range.

Product Mix Decisions

• Product Mix (Product Portfolio): The set of all product lines and items offered by
a seller.

• Product Mix Dimensions:

o Width: Number of different product lines.

o Length: Total number of items within product lines.

o Depth: Number of versions offered for each product.

o Consistency: How related the product lines are in end use, production,
distribution, etc.

Services Marketing

Four Service Characteristics

• Intangibility: Cannot be seen, tasted, felt, heard, or smelled before purchase.

• Inseparability: Cannot be separated from their providers.

• Variability: Quality depends on who provides them and when, where, and how.

• Perishability: Cannot be stored for later sale or use.

Marketing Strategies for Service Firms

• Service-Profit Chain: Links profits with employee and customer satisfaction.

o Internal service quality, satisfied employees, greater service value,

satisfied customers, profits and growth.

• Internal Marketing: Orienting and motivating employees to provide customer

satisfaction.

• Interactive Marketing: Service quality depends on the buyer-seller interaction.

Brand Strategy

Brand Equity and Brand Value

• Brand Equity: The differential effect of knowing the brand name on customer
response.

• Brand Value: The total financial value of a brand.

Major Brand Strategy Decisions

Figure 8.5 in the sources outlines the major brand strategy decisions.

• Brand Positioning: Positioning on attributes, benefits, beliefs and values.

• Brand Name Selection: Considerations include:

o Suggesting benefits and qualities

o Ease of pronunciation, recognition, and remembrance

o Distinctiveness

o Extendability

o Translatability

o Legal protection

• Brand Sponsorship:

o Manufacturer's Brand: Marketed under the manufacturer's own name

(e.g., Mercedes).

o Private Brand: Owned by a wholesaler or retailer (e.g., Tesco).

o Licensed Brand: Using another company's brand name under license

(e.g., Machines selling Apple products).

o Co-brand: Two companies jointly brand a product (e.g., a credit card

company partnering with an airline).
 • Brand Development: Choices include line extensions, brand extensions,
multibrands, and new brands.

Brand Management

• Communicating the brand's positioning.

• Managing all brand touchpoints.

• Training employees to be customer-centric.

• Auditing brand strengths and weaknesses.

Lecture 7: New Product Development and Product

Life Cycle
New Product Development Strategy

• Acquisition: Buying a whole company, a patent, or a license to produce

someone else's product. This provides a quick way to enter a new market or
acquire new technology.

• New Product Development: Creating original products, improving existing ones,

modifying product lines, or launching new brands. This relies on the company's
own research and development (R&D).

New Product Development Process

Figure 9.1 in the sources illustrates the major stages in the new product
development process.

1. Idea Generation: A systematic search for new product ideas.

o Internal Sources: Brainstorming with employees, R&D departments, and

using hackathons (events where employees collaborate on new ideas).

o External Sources: Customers, competitors, distributors, suppliers, and

outside design firms. Crowdsourcing is a way to get ideas from a large
community of people, including the public.

2. Idea Screening: Evaluating ideas to identify those with the greatest potential.
Use the R-W-W screening framework:

o Is it real? Is there a real need and desire for the product?

o Can we win? Does the company have the resources and competitive
advantage to succeed?
 o Is it worth doing? Will the product be profitable and fit the company's
objectives?

3. Concept Development and Testing:

o Product Idea: A basic idea for a potential product.

o Product Concept: A detailed version of the idea expressed in terms that

consumers can understand.

o Product Image: How consumers perceive an actual or potential product.

o Concept Testing: Presenting the product concept to target consumers to

gauge their reactions and get feedback.

4. Marketing Strategy Development: Creating an initial marketing plan for the new
product.

o Define the target market.

o Outline the product's value proposition (what benefits it offers).

o Set initial sales, market share, and marketing mix objectives.

5. Business Analysis: A thorough review of the financial projections for the new
product.

o Project sales revenue.

o Estimate costs (development, production, marketing, distribution).

o Analyse potential profitability.

o Determine if the product meets the company's financial objectives.

6. Product Development: Turning the product concept into a physical prototype.

o Develop a prototype that can be tested.

o Conduct product testing to ensure it performs as intended and meets

customer needs. (e.g., Brooks uses "Lab Rats" and "Wear Testers" for
product feedback)

7. Test Marketing: Testing the product and its marketing program in realistic market
conditions.

o Provides valuable feedback on the product and the marketing mix.

o Helps identify potential problems.

o Can be expensive and time-consuming.

 o Companies might shorten or skip test marketing to launch quickly in
rapidly changing markets.

8. Commercialisation: Launching the new product into the market.

o Decisions include:

▪ When to launch (timing)

▪ Where to launch (geographic strategy)

▪ How to launch (rollout strategy)

Managing New Product Development

• Customer-Centred New Product Development: Focusing on solving customer

problems and creating satisfying experiences. Companies that excel in this (like
LEGO and Apple) are highly successful.

• Team-Based New Product Development: Cross-functional teams work

together to develop the product, often using concurrent development
(overlapping stages) to speed up the process.

• Systematic New Product Development: Establish an innovation management

system to create an innovation-oriented culture and generate a consistent flow
of new product ideas.

Product Life Cycle (PLC) Strategies

• Products go through a life cycle with distinct stages, each requiring different
marketing strategies.

• Figure 9.2 in the sources shows the typical sales and profit patterns over a
product's life cycle.

1. Introduction Stage

• Slow sales growth.

• Little or no profit due to high development and launch costs.

• Heavy spending on distribution and promotion to create awareness.

• Focus on building primary demand (demand for the product category).

2. Growth Stage

• Sales increase rapidly.

• Profits rise as costs are spread over a larger volume.

• New competitors enter the market, attracted by the growth potential.

 • Companies focus on:

o Building brand preference.

o Expanding distribution.

o Possibly lowering prices to attract more buyers.

3. Maturity Stage

• Sales growth slows down.

• Competition intensifies, often with many suppliers and substitute products.

• Industry profits might decline due to price competition and increased marketing
costs.

• Companies focus on:

o Modifying the market: Finding new users and segments.

o Modifying the product: Improving features, styling, or quality.

o Modifying the marketing mix: Adjusting prices, distribution, or

promotion.

4. Decline Stage

• Sales and profits fall off.

• Companies need to decide:

o Maintain: Support the product in the hope that competitors will exit the
market.

o Harvest: Reduce investment and try to maximise remaining profits.

o Drop: Discontinue the product and sell off remaining inventory.

Table 9.2 in the sources summarises product life cycle characteristics, objectives,
and strategies.

Additional Considerations

• Social Responsibility: Companies must consider the ethical and societal

impact of their product decisions, including issues of safety, quality, and
environmental sustainability.

• International Product and Services Marketing:

o Decide which products and services to offer in different countries.

o Choose between standardisation (same product worldwide) and
customisation (adapting to local needs).

o Address packaging, labelling, and legal requirements in different markets.

(e.g., McDonald's success in France is attributed to adapting its menu to
French tastes)