Lecture 1
What is Marketing?
Marketing is identifying and serving customer needs profitably, by means of
goods and services, but also people, ideas, places and events.
What should marketing be?
Marketing should be creating value for ALL stakeholders. Its orientation should be
external, so customer-focused. Its goal should be profit through customer
satisfaction. People can achieve this to determine the needs and wants of
customers. The outcome should be to deliver the desired benefits more
effectively than the competitors.
“There are only two important functions in business: marketing and innovation,
everything else is cost.”
Peter Drucker
There are three alternative business orientations:
Production orientation: businesses take a look at production capabilities and
see how they can manufacture a product, as cheap and superior as possible.
Sales orientation: businesses use aggressive sales effort to sell their products
and services to the customer.
Customer orientation: critical! Business explore the potential market
opportunities and see where they can satisfy potential customers.
Focusing on customer needs, however, is proven to be difficult. Businesses often
focus on themselves or focus on competitors narrowly defined. Insights into
needs are often hard do discover, whether they are stated (asked for) or latent
(not asked for) needs.
Functional needs = Needs for customers that are provide comfort,
performance, durability,
protection and efficiency. It should be easy to use.
Emotional needs = Needs for customers that might be symbols for them, it
can represent their
individualism, perseverance, status, striving for excellence or
they can just
simply be part of something.
What is customer value?
Customer value is the perceived benefits minus the perceived sacrifice.
Benefits can be tangible (physical) and intangible (non-physical), but most of the
time the intangible benefits attribute to a better atmosphere and thus are a
greater benefit. Costs include costs of acquiring and use.
Lecture 2
What is the study of consumer behaviour?
Consumer behaviour is the study of the
processes involved when consumers select,
purchase, use and dispose of products, services,
ideas and experiences. Consumer behaviour exists
out of value creation and customer needs,
consumer decision-making process and attitudes
and perceptions.
Value creation and customer needs
o What gives objects value?
Diamond-Water Paradox
, Labour Theory of Value: Labour is the real measure of the
exchangeable value of all commodities.
o Value is subjective, everyone has different economic, functional, social
and experiential values. Products with more values, are likely more
purchased than products with less values. Water has a great functional
value, but lacks the other four. Whereas diamonds have zero functional
value, but score high in the other three.
Consumer decision-making process
o Need recognition
Customers come to recognize a need by deprivation, context, product
or direct highlighting such as word-of-mouth, social media or
advertising.
o Information search
Customers’ needs are mostly memory-based or stimulus-based. There
are either memories that associate with brands or there are many
attention-grabbers.
The process by which every person selects, organizes and information
interprets, perception, is different for everybody.
Selective retention: people retain points to support attitudes.
Selective distortion: people interpret to support beliefs.
Selective attention: consumers screen out most information
Basic perception: our brains alter or compress sensory
information.
Sometimes, attention grabbing tactics can be a problem, they will
catch the audience’s attention, but the audience will not focus on the
organization. So, mission failed.
o Evaluation and choice
Traditional multi-attribute model: consumers evaluate products
by weighting beliefs about products’ attributes according to
importance.
Change consumer beliefs about attributes, either redesign a
product or change their perceptions.
Change consumer beliefs about competitors attributes.
Change consumers’ importance weights: encourage consumers
to attach more importance to the attributes that a certain
organization excels in.
Call attention to neglected attributes or shift the buyer’s ideals.
The compromise effect: the share of a product is enhanced when it
is the intermediate option in a choice set and diminished when it is the
extreme option.
o Post-choice evaluation
Consumers will evaluate whether the
product satisfied their initial need and
other benefits and goals that came up
during the decision process.
Traditional view: consumers winnow
options from a set of brands, finally choosing one to buy.
Loss on consumers’ connection with a brand (downstream competitive
advantage) would always be worse than the loss of all upstream assets
(upstream competitive advantage). The bond between the brand and consumer
wouldn’t be built again that fast, however, the loss of assets will still keep the
connection.
What is Marketing?
Marketing is identifying and serving customer needs profitably, by means of
goods and services, but also people, ideas, places and events.
What should marketing be?
Marketing should be creating value for ALL stakeholders. Its orientation should be
external, so customer-focused. Its goal should be profit through customer
satisfaction. People can achieve this to determine the needs and wants of
customers. The outcome should be to deliver the desired benefits more
effectively than the competitors.
“There are only two important functions in business: marketing and innovation,
everything else is cost.”
Peter Drucker
There are three alternative business orientations:
Production orientation: businesses take a look at production capabilities and
see how they can manufacture a product, as cheap and superior as possible.
Sales orientation: businesses use aggressive sales effort to sell their products
and services to the customer.
Customer orientation: critical! Business explore the potential market
opportunities and see where they can satisfy potential customers.
Focusing on customer needs, however, is proven to be difficult. Businesses often
focus on themselves or focus on competitors narrowly defined. Insights into
needs are often hard do discover, whether they are stated (asked for) or latent
(not asked for) needs.
Functional needs = Needs for customers that are provide comfort,
performance, durability,
protection and efficiency. It should be easy to use.
Emotional needs = Needs for customers that might be symbols for them, it
can represent their
individualism, perseverance, status, striving for excellence or
they can just
simply be part of something.
What is customer value?
Customer value is the perceived benefits minus the perceived sacrifice.
Benefits can be tangible (physical) and intangible (non-physical), but most of the
time the intangible benefits attribute to a better atmosphere and thus are a
greater benefit. Costs include costs of acquiring and use.
Lecture 2
What is the study of consumer behaviour?
Consumer behaviour is the study of the
processes involved when consumers select,
purchase, use and dispose of products, services,
ideas and experiences. Consumer behaviour exists
out of value creation and customer needs,
consumer decision-making process and attitudes
and perceptions.
Value creation and customer needs
o What gives objects value?
Diamond-Water Paradox
, Labour Theory of Value: Labour is the real measure of the
exchangeable value of all commodities.
o Value is subjective, everyone has different economic, functional, social
and experiential values. Products with more values, are likely more
purchased than products with less values. Water has a great functional
value, but lacks the other four. Whereas diamonds have zero functional
value, but score high in the other three.
Consumer decision-making process
o Need recognition
Customers come to recognize a need by deprivation, context, product
or direct highlighting such as word-of-mouth, social media or
advertising.
o Information search
Customers’ needs are mostly memory-based or stimulus-based. There
are either memories that associate with brands or there are many
attention-grabbers.
The process by which every person selects, organizes and information
interprets, perception, is different for everybody.
Selective retention: people retain points to support attitudes.
Selective distortion: people interpret to support beliefs.
Selective attention: consumers screen out most information
Basic perception: our brains alter or compress sensory
information.
Sometimes, attention grabbing tactics can be a problem, they will
catch the audience’s attention, but the audience will not focus on the
organization. So, mission failed.
o Evaluation and choice
Traditional multi-attribute model: consumers evaluate products
by weighting beliefs about products’ attributes according to
importance.
Change consumer beliefs about attributes, either redesign a
product or change their perceptions.
Change consumer beliefs about competitors attributes.
Change consumers’ importance weights: encourage consumers
to attach more importance to the attributes that a certain
organization excels in.
Call attention to neglected attributes or shift the buyer’s ideals.
The compromise effect: the share of a product is enhanced when it
is the intermediate option in a choice set and diminished when it is the
extreme option.
o Post-choice evaluation
Consumers will evaluate whether the
product satisfied their initial need and
other benefits and goals that came up
during the decision process.
Traditional view: consumers winnow
options from a set of brands, finally choosing one to buy.
Loss on consumers’ connection with a brand (downstream competitive
advantage) would always be worse than the loss of all upstream assets
(upstream competitive advantage). The bond between the brand and consumer
wouldn’t be built again that fast, however, the loss of assets will still keep the
connection.
