Marketing Mayhem

The 3 C’s
o Customer focus: what benefits are important to the various segments?
o Company focus: how good am I at providing the benefits?
o Competitive focus: how good are the competitors at providing the benefits?
Perceptual Map
Perceptual Map
• Tool to map out competitive landscape based on perception of target customers (not necessarily the reality)
• Pick two dimensions, place competitors on the board according to survey results
• Uses: (1) see opportunities for positioning, esp for new product (2) Can see who your closest competitors are
(3) Evaluate how successful a (re)positioning strategy is
• Problems: needs good data, there are more than 2 dimensions (need correlations)
Zaltman Metaphor Elicitation Technique.
What does ZMET stand for?

It is a qualitative market research technique that tries to assess people’s subconscious attitudes, beliefs, and feelings by using pictures that metaphorically represent those attitudes, beliefs, and feelings about a product, brand, or product category. Used for, among other tasks, positioning.
Assumptions: People’s consumer behavior is driven largely by subconscious attitudes or feelings people have towards a brand or a product. These processes are assumed to be difficult to access/introspect/realize for consumers themselves, but this access is facilitated if people are asked to think in terms of images.

1. Respondents collect pictures reflecting feelings about brand
2. Take pictures to lab and explain meaning
3. Researcher and participant make collage
4. Researchers make “summary” collage

Nielsen BASES
(Booz Allen Estimation System) – basically sales volume forecasting.

What it is:
• Combine consumer responses and marketing plan to predict volumetric results
• Looks at promotion, distribution, awareness for the interested universe, removes bias factors, looks at consumer claims, comes up with volume estimate

Pricing strategy (two approaches)
Econ approach
o Max short run profits about demand
o Determined after product design/quality have been fixed
o Assumes a rational consumer
Marketing approach
o Max long run profits allows for market evolution
o Part of evaluating alternative approaches to positioning
o Sees consumer needs of heuristics in info processing
Value in use / economic value to the customer / true economic value
• Price is total cost of purchase and use relative to substitute
• Is equal to reference value + differentiation value
Reference value
o Cost of competition product that is the best substitute for your thing
o Adjusted for difference in quantity used
Differentiation value
o Value of your product attributes that are different from the substitute
o It’s positive if the customer likes the difference, negative if they don’t
(Problem is that people don’t often charge this because people don’t care as much about the future benefits)
Customized value pricing
Basically price discrimination
• Dynamic, demand, or real time pricing – change the price based on those factors
• Personalized pricing – price per buyer, based on estimate of their specific value
Pro: more people get to consume as price it as people want to use it
Con: unfair, not trustworthy, doesn’t include the search cost
Psychological pricing effects
• Essentially people suck when it comes to being rational about pricing
• Its why that $9.99 nonsense works, also can get fooled by good deal thinking
Awareness, Interest, Desire, Action, Satisfaction
What does AIDAS stand for?

The AIDAS model is widely used in marketing and advertising to describe the steps or stages that occur from the time when a consumer first becomes aware of a product or brand through to when the consumer trials a product or makes a purchase decision. Given that many consumers become aware of brands via advertising or marketing communications, the AIDA model helps to explain how an advertisement or marketing communications message engages and involves consumers in brand choice.
o Cognition: knowing, awareness
o Affect: feeling, liking, preference
o Action: doing, conviction, purchasing
o This process is often not linear

Push Strategy
o Directing marketing to channel members
o Good if low brand loyalty, choice made in store, impulse purchase
o Trade promotion major tool here
Pull Strategy
o Go directly to the end consumers
o Good if high brand loyalty, category involvement, choices are made before trip, consumers can tell difference between brands
o Advertising and consumer promotions the key tools
(Multi) Channel Decision model
4 quadrants, with the axes being info delivered (online/offline) and fulfillment (pickup/delivery)
Breakeven cannibalization rate
the rate at which the losses incurred by the company due to loss of old product sales is equal to the gains made by the company due to the new product sales.

= unit margin (new vol)/average unit margin (lost vol)

Customer Decision Journey (three stages)
The 3 stages
o Consider & Buy: overemphasized, build tons of awareness
o Evaluate & Advocate: new media, positive word of mouth through current customers
o Bond: if good job, consumers repurchase and skip the other steps in process
General Marketing Equation
(Marketing) Value = Benefits (tangible and intangile) – Costs (both acquisition and use)
Consumer Behavior
The study of the processes involved when consumers select, purchase, use, and dispose of products, services, ideas and experiences. The key is understanding customers.
Consumer Behavior Psychology
the study of how people buy, what they buy, when they buy and why they buy.

People are irrational. When you give people lots of choices, sometimes they buy less, due to decision overload.

Consumer Decision Process (4)
1) Need recognition
2) Information Search
3) Evaluation & Choice/Purchase
4) Post-Choice Evaluation
(P + M + O = )Purchase Decision
P = Prior Preferences
M = Marketer Input
O = Other people/sources input
Multi-Attribute Model
Multi-Attribute Model
Comparison tool for weighing beliefs about product attributes according to importance
The Loyalty Loop
The Loyalty Loop
Buy, enjoy, advocate, bond
process of identifying groups of customers and developing profiles for each group. To be useful, must be MADAS (measurable, accessible, differentable, actionable, substantial)
the process of evaluating segments and selecting one or more as the focus of the marketing mix.
Companies should aim for the best bang for their buck
Importance-Performance Model
Helps compare segments with competing products…in table/cube form.
Answers: “Does segment X want us?”
Customer Lifetime Value
Present Value of projected future cash flows from relationship. Depends on:
(1) Acquisition Cost
(2) Customer Contribution Margin
(3) Expected Lifetime
the act of framing the brand in the minds of target customers so it occupies a distinct and valued place in relation to competitors.
It provides an organizational rallying point.
Primary Demand Generation
demand generation for a whole category
Secondary Demand Generation
demand generation for a specific product
AIDAS/Hierarchy of Effects Model
Model used for consumer purchasing (two models)
(1) Cognition (know)
(2) Affect (feel)
(3) Action (do)
Advertising Appeals (2)
1) Cognitive/Rational Appeals (more specific)
2) Affective (emotional) Appeals (less specific)
Online Advertising
What is this referring to?

Two major pluses: Targeting and Measurability
One major minus: measuring effectiveness

Problems with Sales Promotions (5)
1) Deceptive Expense
2) Limited increase in LT sales
3) Brand Equity dilution
4) Competitive Response
5) Channel Issues
Conjoint Analysis (3 factors)
What it is: a regression analysis for each respondent’s ranking and willingness to pay for specific product features

1) Evaluations
2) Willingness to Pay
3) Choice between two products

Two-Sided Platforms
Marketplaces matching supply and demand. Important to balance value created for both buyers and sellers.
Note: freemium users can influence the value proposition for others.
Perceived Value (plus added components)
= Perceived Quality – Price – Time (+/-) Psychological Factors
Direct Perceived Value Rating Method
“Allocate 100 points to reflect the total quality of A, B, and C offerings”
Direct Price Rating Method
“Indicate price that reflects the total quality of the offering”
Brand Power
Allows you to monetize the quality of your product
Levels of distribution intensity (3)
1) Intensive (to all)
2) Selective
3) Exclusive (to one)
Types of Channel Intermediaries (5)
1) Producer
2) Agent
3) Wholesaler
4) Retailer
5) Consumer
The hardest part of the 4 P’s to change, but can also be a competitive advantage.
Customer Equity
The total of the discounted lifetime values of all the firm’s customers
The Customer Pyramid (4)
Lead (not profitable)
Whale Curve
a graph of profit and customer contributions that typically shows how many customers contribute negatively to profits
Customer Divestment Ladder (RERMT)
Reassess the relationships
Educate the customers
Renegotiate the value proposition
Migrate the customers
Terminate the relationship
Loyalty Programs
What is this?

Goal: Increase profits by rewarding customers for repeat purchasing