Repaso Examen Mercados

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Examen Mercados I
Daiane Scaraboto
Repaso Examen
MERCADOS I
Valentina Tarzijan
I. Main concepts
Organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (investors, owners, trade unions, community, creditors, suppliers, customers, employees, government, etc.) 
What is marketed?
Goods, services, events, experiences, persons, places, properties, organizations, information, ideas, etc. 

Usually we describe Industries as a collection of sellers, while the Market is a collection of buyers. 

Needsmore global (water, food), something you have to have. “What kind of need is the enterprise appealing to?” Any difference between a consumer’s actual state and some ideal or 
desired state 

Wantsmore specific (mineral water from France), something you would like to have. Desire to 
satisfy needs in specific ways that are culturally and socially influenced. 

Demand statesnumber of products a group of people would buy at a certain price. 

Concepts: Target markets, positioning, segmentation, offerings, brands, marketing channels, 
supply chain, competition, marketing environment, marketing planning. 

Value and Satisfactionthe economic value is a perception of Quality, Service and Price. 
Satisfactions depend on expectations. We can think of MKTG as the identification, creation, communication, delivery and monitoring of customer value. If the performance falls short of expectations, the customer is disappointed; if it matches expectations, the customer is satisfied; if it exceeds them, the customer is delighted. 

MKTG channels communication, distribution and service. 

MKTG environment demographic, economic, political-legal, Socio-cultural, technological, 
natural. 

Company orientationsproduction (focusing on the product), selling (advertising, branding, 
motivate consumer to buy) and consumer orientations (market research, concentrate on 
consumers’ needs. 

New Era: make money and act ethically; benefits to customers, firm’s employees, shareholders and 
communities. Benefit the societyeconomic value, social value and environmental value. 

Corporate social responsibility. 

Marketing mix 4P: Product, Price, Promotion, Place.
New 4PPeople, Processes, Programs, Performance. 

MKTG tasks: develop market strategies and plans, capture MKTG insights, connect with costumers, 
build strong brands, shape market offerings, deliver value, communicate value, create long-term 
growth. 

New paradigms in MKTG consumers’ experiences, marketing networks and sustainable 
development. 

“People like really desire are satisfying experiences, not products.” 

Consumption experiences focused on senses and neuromarketing. 

Marketing networks focused on small scale and co-creation with customers. 

Sustainable development focused on proactive strategies (de-marketing). 

Hierarchy of needs (Maslow)physiological needs, safety needs, social needs, esteem needs, Self 
Actualization needs. 

Hierarchy of means (inverse of Maslow)discretionary income, freedom of choice (first step onto 
economic ladder), empowerment, stable employment, law & order, subsistence. 

A more complete definition for marketing mix: product planning, pricing, branding, channels of distribution, personal selling, advertising, promotions, packaging, display, servicing, physical 
handling, analysis (tests and researchs). More art than science. 

*Frontiers of the market paradigm 
* Milestones in marketing
II. Marketing strategy and business models
Create valuenot only list benefits, not only show differences, see if differences matter to customers, what are they looking for? 

· MKTG strategy is: mission, environmental analysis, goals, strategy and plan. 

Mission“marketing myopia”. Viewing business in terms of customer needs can suggest 
additional growth opportunities now and in the future. 

Environmental analysisthere are many environments, but the most common to notice or focus 
on are political/legal, technological, social, economical (all four known as PEST) and natural. 

SWOT: strengths (inside helpful), weaknesses (inside harmful), opportunities (outside helpful) and 
threats (outside harmful). 

5Cs 

· Goals: must be SMART (Specific, Measurable, Attainable, Relevant, Time-bound). Aligned with company mission. 

Strategiesreflect what a company is going to do to achieve an objective, long-term, what you actually want to do, they involve more thinking and planning. 

Tacticshow a strategy is going to be implemented, shot-term, used to get to the strategy, smaller terms, how would you do, they involve more acting and doing. 

 General MKTG strategies: 
1) Cost leadership: low costs 
2) Differentiation: a characteristic is your main focus 

3) Focus/niche: focuses on specific group of customers. 
4) Blue Ocean: create a new market, no competitors. 

ANSOFF MATRIX of growth strategies: 

Marketing plan: central instrument for directing and coordinating the MKTG effort. Strategically speaking, it involves target markets and the firm’s value proposition, based on analysis of opportunities. Tactically speaking, it must specify the marketing tactics, including features, promotion, merchandising, pricing, sales channels and service. 

MKTG plan contents: executive summary, table of contents, situation analysis, MKTG strategy, MKTG tactics, financial projections, implementation controls. 

NOTE ON MARKETING STRATEGY: 
· 5C: Customer needs, Company skills, Competition, Collaborators, Context. 

· Create valueneed to have a market segmentation, target market selection and positioning of 
product and service. 

· Capturing value4P 

· Sustaining value customer acquisition and customer retention 

· PROFITS after all this. 

Markets could be segmented by demographic bases (age, income, gender), geographic bases 
(nation, region, urban) and lifestyle bases (hedonistic, environmentally-friendly). 

Productproduct definition; product line planning decisions (line breadth, line length, line depth); individual item decisions; new product development process (design, test, product 
introduction, etc.). 

· Place marketing channels (channels design, channels management). 

Promotion marketing communications. Tasks and tools (market, mission, message, media, 
money, measurement); nonpersonal vehicles and sales promotions; personal selling; 
communication mix. 

Pricingpricing bases and objective (customers are sensitive to price, economies of scale are 
important, see competitors prices, production capacity must be considered); price customization (develop various product lines of the same products, control availability of prices per location, vary prices based on observable buyer characteristics); price leadership. 

*How to satisfy customers
III. Marketing Plan and CLV
Expectations of value v/s Performance/delivery of value. 

Benefits (perceptions of product quality) – Costs (perceptions of transaction price, life cycle and risk costs) = Customer Value 

Benefits: product itself, personal, image. 

Costs: monetary, time, energy, psychological and behavioral. 

Hygiene v/s Satisfiers 

*Customers as assets
*Cornestone of customer equity
IV. Consumer behavior
Is the study of how individuals, groups and organizations select, buy, use and dispose of products, ideas or experiences to satisfy their needs and wants. 

Mixture of theory and reality of consumer behavior. 

Stages of consumer buying process: 
Problem recognition awareness of need, deficit in assortment of products, difference between the desired state and the actual state. 

Information searchthe main part of this are sources, which could be personal, commercial, public or experiential information. MKTG tries to influence those sources. Finally you have a total choice set. 

Evaluation of Alternativesin which the consumer needs to establish criteria to evaluate. Awareness, consideration and choice sets are defined.Purchase decisionbefore the final decision, the consumer has a purchase intention, which can be influenced by the attitudes of others and the unanticipated situational factors. The compensatory decision is when the consumer compares the expected value with the cost. In non-compensatory decisions, the costumer employs a rule or mental shortcut to decide among products. 

Post-purchase consumer satisfaction (pleasure or disappointment) and usage. Customers may continue using the product or disposing it (getting rid of it forever, getting rid of it temporarily, keeping it stored or with another usage). 

High involvement these purchases include high-priced products, high-risk products and products visible to others. They are related with extended problem-solving. 

Low involvement these purchases can be routine responses, mostly with low-cost items, require little search and decision effort. Related with an impulse buying. 

Influences on consumer behavior:

1. Social factors: consumers wants, motives and learning are influenced mainly by reference groups (which have a positive or negative influence on someone’s attitude and behavior; such as family, friends, school, membership groups, aspirational groups and dissociative groups), opinion leaders (which are usually celebrities or experts that influence the perception of the product because they are connectors) and social roles/class (which require certain activities based on the expectations of you from your position within a group. 
 Family is the most basic group a person belongs to. Understand family unit, decision making in a family, family roles and preferences model a child’s future decision, families are interpreters of social and cultural values for any individual. 

 Social class influences many aspects of a purchase, such as quality, quantity and types of products. 

2. Personal factors: these are unique to a particular person. They include age, life-cycle stage (a young consumers buys differently from an old consumer; a common 16-years-old girl buys differently from a 16-years-old pregnant girl, etc.), occupation (and economic circumstances), wealth, personality, values, lifestyles, self-concept. 
Motivation: an internal energizing force that orients a person’s activities toward satisfaction (Freud’s theory, Maslow). 

Personality: all internal traits and behaviors that make a person unique. Mixture between heredity and experience. 

Perception: process of selecting, organizing and interpreting information inputs to produce a meaning. Selective attention (select inputs to be aware), selective distortion (interpret information in a way that fits our preconception) and selective retention (we remember inputs that support our beliefs), subliminal perception (Sometimes we may be influenced by stimuli we don’t perceive (consciously)). 

Learning: a relatively permanent change in behavior that results from the past behavior. It can be behavioral learning or cognitive learning. 

Memory (how do we relate concepts to a product or brand?), emotions and situations may influence a personal decision process. 

Hedonic bias: if it was successful, it is my accomplishment; if it is a failure, it was the product’s fault. 

Behavioral decision Theory, which has an economics based model, include certain characteristics such as availability, representativeness, anchoring and adjustment, framing and Prospect theory. 

Nowadays, neuroscience is heavily entering this area.

3. Culture: is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions. We must consider subcultures and tribes. People who share the same culture feel like they belong to a group. 
Cultures change and so the decision making. Generally, it’s really difficult to try to change a culture, but it’s really useful when you understand the culture you are working in.
4. Situational factors: these involve physical environment and time.
 
DECODED 
Price is pain. 

Products and brands reward us. 

Net value = reward –pain. 

How to increase value? Explicit and implicit values (which offers a huge potential for relevant differentiation). 

Price can increase perceived value: higher quality, higher prices. 

Language can increase perceived value: it can also influence the experience and performance as well. 

Reducing perceived cost: change de perceived price (“it’s an offer!”), “pain” is perceived differently 
depending on the context. Anchoring. 

Money is not the only cost: time is also costly these days (no one wants to lose or waste time or
having no reasons to waste time). Also there are behavioral costs (create a user for a webpage). 

Value-cost relation is relative: depends on the context and personal perceptions. Consumers usually compare with the competition. Relative value is more important than absolute value. We produce a frame of reference from experiences, memory and context to judge. 

PUTTING THE SHOPPER INTO YOUR MARKETING STRATEGY 
Successful shopper marketing programs are an expression of shopper-centric thinking and a deeply rooted shopper-centric culture. Neither brand nor store-centric thinking, everything’s for the shopper. 

Effective shopper marketing programs are shaped by a company’s commitment to earn and grow shoppers’ lifetime loyalty. 

Effective shopper marketing programs are informed by an intimate, household-level understanding of shopper behavior and its influences (which shoppers matter? What, how and why do they buy? How can I grow loyalty, sales and profit?Uses data from researches. 

Successful shopper marketing programs are recognized by both retailers and manufacturers as an area of strategic collaboration. Need to use a good relationship management between them, so each participant accomplishes more by working together than by working separately. 

Successful shopper marketing programs are managed as a dynamic set of activities benefiting from continual measurement and improvement. 
 

*My plastic dream
V. Marketing research
		  Is the design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the economy. 

· Exploratory researchdon’t really know what you are looking for, you just want to try to understand a certain situation. It may help to suggest future research. 

· Descriptive researchwhen you need a description of the market or a global picture of what’s happening. It’s also when you want to quantify or describe a punctual situation. 

· Causal researchits main purpose is to test a cause-effect situation. 

· Primary datawhen you directly gather data, freshly and with a specific purpose or project. 

· Secondary dataprevious data already there, collected for another previous purpose. Usually 
marketers start here and then gather primary data when necessary. 

· Quantitative Researchmeasureable units. Uses: recommend a final course of action, results to a 
larger population, identify evidence regarding cause-effect, describe characteristics of relevant 
groups of people, test specific hypothesis, identify and size segments. 

· Qualitative Research non-measureable units. Uses: develop initial understanding of an issue or 
problem, look for a range of ideas or feelings about something, understand differences between groups/segments, uncover underlying motivations or other factors influencing the decisions, provide information needed to design a quantitative study, explains finding from a quantitative study. 

Marketing research process: 
1) Define the problem: not too wide, not too narrow. We must state research objectives. 

2) Develop the research plan: data sources, research approaches, research instruments, sampling 
plan, contact methods.
Research approaches could be: Interviews and focus groups, ethnography and projective techniques (for qualitative research) and surveys, behavioral and experimental situations (for quantitative research).
We must consider the data left by the customers in the stores andpurchases.
Satisfaction research: is the research when the consumers have already used the product in order to see their satisfaction. Surveys, mystery shoppers and observations can be considered to do this. 

3) Collect info 

4) Analyze info 

5) Present findings 

6) Make decisions 

MARKET RESEARCH
Helps to provide managers with information that assists in making decisions. 

Data could be secondary (with an internal or external source) or primary. To have primary data, we could choose between an experimental process (in laboratories or field) and non-experimental 
process (with a qualitative or quantitative focus). 

Secondary datainclude accounting records, previous studies, company sales records, census, 
salesperson call reports, market studies, databases, etc. It’s usually cheap and easy to have. 

Experimentsthe researcher manipulates the environment in order to measure the impact. The changes could be in any element of the marketing mix. Key concepts: before-treatment, after- 
treatment, control group and test group. 

Laboratory test v/s field test: laboratory is cheaper and you can have more control. Field tests are 
used to see how the consumer and the trade actually respond when the product is placed on the 
market (matched city pair, for example). 

Qualitative most common are individual depth interviews and focus groups. Interviews are 
completely open; they talk freely and in detail. There’s an important role: the interviewer. Focus 
groups are about 6-10 individuals, for an open-ended discussion. 

Quantitative questionnaires. They must include a problem statement, a questionnaire design 
(format, pretest and useful questions), sampling (target population, sample selection and distribution and size) and data analysis. 
*Researching online methods
*Cognitive Neurosciende
*Big Data
VI. Segmentation 
· Not a good reason to segment markets is to charge different prices for the same product sold to different segments (unethical practice)
· Dangers of not segmentating:
· Ignores customer needs and treats all customers the same
· Wastes resources by over or under serving customers
· There is no differentiated position in the marketplace
· Sales people – and advertising agencies – do not know which customers to target
· First define your segment (remember mkt myopia) 
· Relevant differences on customers: 	
· Needs
· Their appreciation of your value creation
· Their actual customer behavior
· Their willingness to pay
· The cost to serve them
· A market segment consists of a group of customers who share a similar set of needs and wants. They have to be: (DAMAS si lo cumple esta bien segmentado)
· Differentiable: does it respond differently to marketing mix elements?
· Actionable: Can I attract it and make it buy?
· Measurable: what is its size, purchasing power, and characteristics?
· Accessible: can I reach and serve it?
· Substantial: large and profitable enough?
· Five forces determine the intrinsic long-run attractiveness of a market or market segment: industry competitors, potential entrants, substitutes, buyers, and suppliers. The threats these forces pose are as follows:
(1) Threat of intense segment rivalry—A segment is unattractive if it already contains numerous, strong, or aggressive competitors.
(2) Threat of new entrants—The most attractive segment is one in which entry barriers are high and exit barriers are low. 
(3) Threat of substitute products—A segment is unattractive when there are actual or potential substitutes for the product. 
(4) Threat of buyers’ growing bargaining power—A segment is unattractive if buyers possess strong or growing bargaining power. 
(5) Threat of suppliers’ growing bargaining power—A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. 
· Categories for segmenting Consumer Markets
· Geographic 
· Demographic (Age and life cycle, Life stage, Gender, Income, Generation influences, Social class, Race and Culture)
· Psycographic
1. Innovators —Successful, sophisticated, active, “take-charge” people with high self-esteem.
2. Thinkers —Mature, satisfied, and reflective people motivated by ideals. They seek durability, functionality, and value in products.
3. Achievers —Successful, goal-oriented people who focus on career and family. They favor premium products.
4. Experiencers —Young, enthusiastic, impulsive people who seek variety and excitement. They spend on fashion, entertainment, and socializing. 
5. Believers —Conservative, conventional, and traditional people with concrete beliefs. They prefer familiar products and are loyal to established brands.
6. Strivers —Trendy and fun-loving people who are resource-constrained. They favor stylish products.
7. Makers —Practical, down-to-earth, self-sufficient people who like to work with their hands. 
8. Survivors —Elderly, passive people concerned about change and loyal to their favorite brands
· Loyalty Status Marketers usually envision four groups based on brand loyalty status:
(1) Hard-core loyals—Consumers who buy only one brand all the time
(2) Split loyals—Consumers who are loyal to two or three brands
(3) Shifting loyals—Consumers who shift loyalty from one brand to another
(4) Switchers—Consumers who show no loyalty to any brand
A company can learn a great deal by analyzing degrees of brand loyalty: Hard-core loyals can help identify the products’ strengths; split loyals can show the firm which brands are most competitive with its own; and by looking at customers dropping its brand, the company can learn about its marketing weaknesses and attempt to correct them. One caution: What appear to be brand-loyal purchase patterns may reflect habit, indifference, a low price, a high switching cost, or the unavailability of other brands.
INTRODUCTION TO MARKET SEGMENTATION 
Market segments consist of groups of people or organizations that are similar in terms of how they respond to a particular marketing mix or in other ways that are meaningful for marketing planning purposes. 

Customer-based v/s product-based framework OR A priori v/s A posteriori framework. 

Usually the discussion focuses if companies should have a customer-based approach or product- based approach. Nowadays marketers strongly suggest that customer-based approach is the most profitable one. It involves looking at the specific characteristics of customers that differentiate 
them in ways that are meaningful for marketing planning purposes. 

There’s a common framework consisting of the following: decide on segmentation variables (need 
to see the heavy users, advertising efforts, possible product improvements, new opportunities, competitor’s management, analyzing the own brand and corporate image), decide on data analysis, apply methodology to identify several segments (maximum of 15 segments is the usual; though detailed analysis always suggest much more), describe all segments using the variables (put them names in order to characterize how the consumers are“profile” the consumers, using the variables previously chosen and add brief information), select target segment(s) to pursue (not only the heavy users, see opportunities and competitor’s segments), develop a marketing mix (4P) for each segment. 

Consider multiple variables when segmenting. 

Requirements for effective segmentation: sufficient size, distinguishable from other segments, 
accessible to the company, compatible with the company’s resources. 

*Segmentation in low penetration and low involvement categories
VII. Positioning
 “Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.” (Kotler) -> Designing the company’s offering and image to occupy a distinctive place in the mind of the target market. 
 PODs -> points of difference 
 POPs -> points of parity in common with competitors 
 Positioning statement: (not slogan) it considers the target market, frame of reference, points of difference and reason to believe.
1. Target Audience2. Need description
3. Frame of Reference: as the name suggests, it is the target audience’s built-in mental frame of reference for your brand. Your frame of reference for Coca-Cola is likely “soft-drink.” Your frame of reference for Nintendo Wii is likely “gaming system.” The wrong frame of reference reduces brand awareness because your target audience doesn’t immediately get it.
4. Point of difference
5. Reason to believe
 Good positioning is: 
· Clear: Will consumers get it?
· Relevant: Do consumers care?
· Unique: Does it set us apart from our competitors?
· Credible: Will consumers believe it?
· Attainable: Can we deliver it?
· Sustainable: Can we maintain this position over time?
· Continuous innovation
· Focus on a niche that is not attractive to others
· Create barriers to competition (loyalty, expertise, monopolization of a scarce resource, etc.)
 Positioning Statement: Our (product/brand) is (single most important claim) among all (competitive frame) for (target market) because (single most important support/reason to believe).
 For 2 segments, 2 positioning statement to reach each market
Among _[target market]_, _[x]_ is the brand of _[frame of reference]_, that _[point of difference]_ because _ [reason to believe]_.”
 Target market: a que parte del mercado va dirigido el P.S
 Frame reference: contra que va a competir tu producto. (ej snickers, es una barra de chocolate, de mani con chocolate, un snack? Generalmente es el customer need.
 Point of difference: cual es el punto/característica que te diferencia de tus competidores, que cosa especial tiene tu producto, el value proposition. 
 Reason to believe: Customers have to believe that your brand can deliver the point of difference. Why should they believe you? What evidence can you offer to make your product’s point of difference believable?
(*)“Among snackers, Snickers is the brand of candy bar that satisfies your hunger because it is packed with peanuts.”
 Re-Positioning: “RE-Positioning is the act of redesigning the company’s offering and image to occupy a distinctive place in the mind of the target market.”
 Focus in continuous innovation or niche that is not attractive to others, create barriers to others (loyalty, expertise, monopolize scarce resources, etc.) 
 Positioning map – perceptual: way of putting all brands to compare the perception of the market about them (need to ask consumers). Marketers must pay attention to empty spaces in the map, PODs and POPs that can be seen, new possible markets and see whether you need to use new variables. The main ways to get info are presented with attribute ratings, attribute associations and similarity judgements. (los del centro van a tener que hacer re-positioning)
 Positioning map – factual: objective characteristics (in labs, numbers, etc.) 
* From persuasion to shared value creation
*Possitioning: the essence of marketing strategy
VIII. Branding
 Brand name, term, design, symbol or any other feature (or combination of them) that identifies one seller’s good or product from another. Nowadays is considered an intangible asset that provides value to the company. 
· Steps in strategic Brand Management
· Identifying and establishing brand positioning 
· Planning and implementing brand marketing
· Measuring and interpreting brand performance
· Growing and sustaining brand value
 Se dieron cuenta que tenían que unir la idea con un “ideal” para que así los consumidores compren esa idea y no el product en sí.
· Role of brands
· Identify the maker
· Simplify consumer decision making
· Offer legal protection (to avoid pirate) 
· Create barriers to entry
· Serve as a competitive advantage
· Secure price premium
· Masterbrands: umbrella brands, global, cross-category and cross-target. E. g.: Unilever.
 Brands offer benefits: Functional (product attribute that provides a functional utility to the customers), Self-expresive (provides the consumer the opportunity to communicate his/her selfimage), Emotional (gives positive feelings when they purchase; it adds richness and depth on the experience or using product). 
 Customers relate with a brand: behavioral loyalty, attitudinal attachment, sense of community, active engagement. These criteria affect the feeling of customers related with: perceived quality, credibility, consideration and superiority. 
 Keller’s brand equity pyramid: 
· Resonance -> what about you and me? Relationship with brand. “this brand represents who I am”
· Judgment and Feelings -> what about you? How customers perceive the brand.
· Performance -> how well the brand meets customer’s needs. 
· Imagery -> same as performance, but in a social and psychological way. What are you?
· Salience -> create awareness, identity, who are you? 
Branding ayuda a ir subiendo por la pirámide. Creamos valor al subir.
 Strategic brand management: identify and establish brand positioning, planning and implementing brand marketing, measuring and interpreting brand performance, growing and sustaining brand value.
 Brands have consequences and roles: identify quickly the maker, simplify consumers’ decisions, organize accounting, offer legal protection, signify quality, create barriers to entry, serve as a competitive advantage, secure price premium (because people say “this is more expensive because is made by X brand, which has a good quality, etc.”). 
 Strong brands -> greater loyalty, less vulnerable to new competitors and crises, larger margins and perceptions of production, increased communication effectiveness, greater trade cooperation, possible licensing, improved perceptions of product performance, enable cost savings, more inelastic consumer response.
 Branding -> is providing products and services with the power of the brand. 
 Brand Equity -> Brand Value to an organization. Is the added value endowed on products, which may be reflected in the way consumers think, feel and act with respect to the brand. It enables cost savings (low costs of sales, lower barriers to enter, facilitate word of mouth, premium pricing, etc.)
 Components of brand equity 
· Brand Awareness (affects perception and taste), 
· Perceived Quality (increases profitability),
· Brand Associations that however connect the consumer with the brand (are widely recognizable), 
· Brand Loyalty (loyal customers are more valuable). ->CLV
· Brand Equity Valuation Model:
· Brand Asset Valuator (BAV): 4 key components of brand equity:
1. Energized Differentiation
2. Relevance 
3. Esteem: how well the brand is regarded and respecte
4. Knowledge: how familiar customer are with the brand
Relevance and Differentiation combine to determine Brand Strength. These two pillars point to the brand’s future value, rather than just reflecting its past. Esteem and Knowledge together create Brand Stature, which is more of a “report card” on past performance.
· BrandZ:
· Tools to create Brand Equity
· Nowadays, we say that brands have “personalities”, they symbolize values and social elements. 
· Brand Promises: is the marketer’s vision of what the brand must be and do for consumers. (Duracell, dura más)
 Brand elements that are tangible: brand names, logo, slogans, characters, symbols, etc. (must be memorable, meaningful, likeable, transferable, adaptable, and protectable). Consumers get used to these elements. The choice criteria for these elements is
(1) Memorable
(2) Meaningful
(3) Likeable
(4) Transferable
(5) Adaptable
(6) Protectable 
 After creating Brand Equity we have to support it! 
· Measuring brand equity: brand audits, tracking, and valuation.
· Managing brand equity: brand reinforcement, revitalization. 
· Terms: 
· A brand line consists of all products—original as well as line and category extensions—sold under a particular brand. 
· A brand mix (or brand assortment) is the set of all brand lines that a particular seller makes. 
· When a firm uses an established brand to introduce a new product, the product is called a brand extension. Brand extensions fall into two general categories: In a line extension,the parent brand covers a new product within a product category it currently serves, such as with new flavors, forms, colors, ingredients, and package sizes. In a category extension, marketers use the parent brand to enter a different product category, such as Swiss Army watches. 
· When marketers combine a new brand with an existing brand, the brand extension can also be called a sub-brand, such as Hershey Kisses candy, Adobe Acrobat software, Toyota Camry automobiles, and American Express Blue cards. 
· The existing brand that gives birth to a brand extension or sub-brand is the parent brand. 
· If the parent brand is already associated with multiple products through brand extensions, it can also be called a master brand or family brand. 
· Many companies are introducing branded variants, which are specific brand lines supplied to specific retailers or distribution channels. 
· A licensed product is one whose brand name has been licensed to other manufacturers that actually make the product.
UNDERSTANDING BRANDS 
Brandsintangible assets which provide value to the firm and its customers. Allow consumers to differentiate between the products of one producer and another, and to purchase from producers with whom they were familiar and who they trusted.

Brands have an informational role, adding value to the branded product beyond its functional utility by serving as a heuristic for the consumer (“shortcut” and reliable decisions). 

 “Products are made in the factory, but brands are created in the mind.” 

Brands color how consumers experience, understand and value products. They are like a web of 
associations (brand knowledge) that consumers have learned and connected to the brand in their 
memories. They exist in the mind of consumers. 

Strategic brand management know your brand in the mind of consumers; meaning-manage, 
because brands mean something; manage brand’s authors such as the media, consumer opinion leaders, cultural gatekeepers, celebrity trendsetters, etc.; balance between maintaining brand image and updating brand associations to keep a relevant brand. 

Brands are used by consumers as identity markers (identity meaning, cultural story, image, associations with status, lifestyles, social class, ideology, etc.)brands have a personality (“human” demographic, psychographic or personality characteristics). 

Consumers choose brands that are like them. Then, marketers must uncover the targeted segment’s current identity needs and who they would like to become. They also need to understand that consumers buy products to capture the meanings contained with them. There’s a need to create a convincing brand personality, so marketers must be careful about changing the identity meanings of the brand. 

 Brands also help as social glue: can create social communities and achieve social integration (customers use them to differentiate). They look to other’s information about the brand, they are networked and share positive/negative information and they enhance their relationships with the brand community and the brand itself. 

Brand equity is a measure of the brand’s value to the firm. Then, everything a firm does in relation to the brand has the capacity to impact its value to consumers. Also brands as assets can increase or decrease in value over time and companies can pull up their brand equity in several ways. 

IX. Loyalty and Brand relationship
“The only value your company will ever create is the value that comes from customers – the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping, and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber optic lines, or engage in any business activity. Without customers, you don’t have a business.”
· Customer orientation
· Customer-oriented companies create and deliver value to customers. Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. (Total Benefits – Total Costs)
· Customer Relationship Management
· Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
· Loyalty is important?
· Attracting new customers may cost 5 times more than retaining current ones.
· Loyal customers ignore prices when choosing between different brands
X Profit rates tend to increase during a customer life due to increased purchases, reduced costs to serve, referrals, price premiums, etc. 
· Loyal customers become brand advocates
· For achieving customer loyalty:
· Improving customer experience
· Anticipating customer needs
· Making business personal
· Connecting the brand to consumer identity projects
· Consistently offering customers high perceived value
· Developing loyalty programs
· Customer loyalty is measured by:
· Retention: How likely are you to switch to another provider? 
· Advocacy: How likely are you to recommend us to your friends/colleagues? Overall, how satisfied are you with our performance? 
· Purchasing: How likely are you to purchase different solutions from us in the future? 
· Maximizing the value of your customers:
· Customer Profitability analysisCustomers are arrayed along the columns and products along the rows. Each cell contains a symbol representing the profitability of selling that product to that customer. Customer 1 is very profitable; he buys two profit-making products (P1 and P2). Customer 2 yields mixed profitability; he buys one profitable product (P1) and one unprofitable product (P3). Customer 3 is a losing customer because he buys one profitable product (P1) and two unprofitable products (P3 and P4). 
What can the company do about customers 2 and 3? 
(1) It can raise the price of its less profitable products or eliminate them, or (2) it can try to sell customers 2 and 3 its profit-making products. Unprofitable customers who defect should not concern the company. In fact, the company should encourage them to switch to competitors.
· Customer Lifetime Value: The case for maximizing long-term customer profitability is captured in the concept of customer lifetime value. Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customer’s lifetime purchases. The company must subtract from its expected revenues the expected costs of attracting, selling, and servicing the account of that customer, applying the appropriate discount rate (say, between 10 percent and 20 percent, depending on cost of capital and risk attitudes). Lifetime value calculations for a product or service can add up to tens of thousands of dollars or even into six figures. Many methods exist to measure CLV.
· Customer Equity: The profit from first-time customers - The cost of acquiring the customers + Expected profit from future sales to these newly acquired customers Added Across all customer cohorts and segments.
CUSTOMER MANAGEMENT 
 Without customers, there is no business. 
 Customer orientation: best way to attract, satisfy and retain customers. In Modern Customer-Oriented Organization, customers are first, and then all is in them function: frontline people, middle management, top management.
Customer perceived value: difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. It’s determined by product benefit, personal benefit, image benefit, monetary cost, time cost, energy cost, psychological cost. 
 Customer relationship management: deliver value -> monitor satisfaction -> cultivate relationship -> build loyalty -> maximize customer lifetime value. 
 How to analyze the customer value:
(1) See mayor attributes and benefits, 
(2) Assess the qualitative importance of them, 
(3) See the competitor’s performances, 
(4) Examine evaluationsby consumers, 
(5) Monitor customer value over time. 
 Customer management -> helps to deliver value to customers, it can monitor the satisfaction levels on them, it can help cultivate the relationships with customers, it builds loyalty upon these relationships, it can maximize Customer Lifetime Value. 
 Loyalty -> deeply held commitment to re-buy or re-patronize a preferred product in the future despite situational influences and marketing efforts having the potential to cause switching behavior. It’s important because attracting new customers may cost 5 times more than retaining old ones; the average company loses 10% of its customers per year, profit rates tend to increase during a customer lifetime, loyal customers become brand advocates. 
How loyalty is measured? Retention (how likely are you to keep with the brand?), Advocacy (how likely are you to recommend the brand?) and Purchasing (how likely are you to buy different products from the brand?) are helpful to measure loyalty. 
 Maximizing the value of customers 
1) Customer-product profitability analysis: see which product is bought by the customer and analyze if the products they buy is profitable enough. If not, they can change profitability of products, or even “fire” the customers (not wanted).
2) Customer Lifetime Value (CLV): for 1 customer. Is the net present value of future profits expected over customer’s lifetime purchases. They must subtract the costs associated and apply the appropriate discount rate. There are many methods to calculate this and it usually considers a 3-year-length gap. Loyalty impacts heavily on this measurement.
3) Customer equity: it considers all of the customers. It’s the profit from first-time customers, minus the cost of acquiring them, plus expected profit from future sales added across all customer segments and cohorts. They consider it an asset. 
Estimating CLV: the case for maximizing long-term customer profitability is captured in the concept of customer lifetime value. Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customer’s lifetime purchases. The company must subtract from its expected revenues the expected costs of attracting, selling, and servicing the account of that customer, applying the appropriate discount rate (say, between 10 percent and 20 percent, depending on cost of capital and risk attitudes). Lifetime value calculations for a product or service can add up to tens of thousands of dollars or even into six figures. Many methods exist to measure CLV.
The impact of loyalty on CLV: 
(1) Customer acquisition costs may be high, so customers may not become profitable unless they are retained for one or more years, 
(2) Customers buy more over time, so revenues go up; companies become more efficient at serving them, so costs go down, 
(3) Retained and satisfied customers may refer other potential customers, and 
(4) The relationship has a value to the customer too, so that retained customers tend to become less price sensitive
Retaining customers: reduce the rate of defection, increase longevity, enhance share of wallet, terminate low-profit customers, focus more effort on high-profit customers.
 Customer relationship management (CRM) process of carefully managing detailed info about individual customers and all customers touch point to maximize customer loyalty. A customer touch point is any occasion on which a customer meets the brand/product, from actual experience to personal/mass communication to casual observation. 
 For CRM, it’s necessary to: 
1) Identify the prospects and customers (don’t go after everybody): identify your prospects and customers. Don’t go after everyone. Build, maintain, and mine a rich customer database with information from all the channels and customer touch points.
2) Differentiate customers by needs and value to the business: spend proportionately more effort on the most valuable customers (MVCs). Apply activity-based costing and calculate customer lifetime value. Estimate net present value of all future profits from purchases, margin levels, and referrals, less customer-specific servicing costs.
3) Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships. Formulate customized offerings you can communicate in a personalized way. 
4) Customize products, services, and messages to each customer. Facilitate customer interaction through the company contact center and Web site.
· A CRM tool -> Database: To identify prospects, target offers, deepen loyalty, reactivate customers, and avoid mistakes. Don’t build a database when: the product is a once-in-a-lifetime purchase, customers do not show loyalty, the unit sale is very small or the cost of gathering information is too high.
· Retaining customers is critical: reducing the rate of defection in 5% can increase the profits by 25- 80%, the customer profit rate increases over the life of a retained customer. Must focus on high profit consumers and terminate low-profit ones. 
CORNERSTONES OF CUSTOMER EQUITY 
Customer life cycle: customer-company relationship evolves. Customers can be: prospects, first- time buyers, early repeat buyers, core customers, core defectors. 

Recency (time elapsed between two purchases) and frequency: can build an analysis matrix. 

Databases: great power to analyze situations and data to create strategies. Provides insights across the categories that customers buy, allowing companies to understand and sell to the “whole 
customer”. It can capture a greater customer asset value, while targeting more effectively. 

Customer valuecustomer’s equity are the returns on acquisition plus returns on retention plus returns on add-on selling across a firm’s entire customer portfolio over time. The firm can determine how pricing, advertising, and channel decisions affect the long-term value of the 
customer. 

Customer equity management is built around 3 core strategies: acquisition, retention and add-on
selling. Companies should try not to treat them separately. 

*Brand leadership
X. Product Strategy
· A product is the totality of the customer’s experience. It can be a combination of tangible goods, services, people, the company, ideas, places, etc. 

· Product layers: 
· Core benefit (the main benefit, it’s obvious) 

· Basic product (the product itself, more than the core benefit) 

· Expected product (what the customer expects) 

· Augmented product (what extra feature the product has that differentiates from the basic)

· Potential product (what new features the product could have in the future) 

· Product can be classified: 
· Durability (nondurable goods [shampoo], durable goods [refrigerator], services [cleaning service] services are always intangible but can be “tangible” because they use people, places, equipment, symbols, communicational material, etc. They are also perishable, variable and inseparability), 
· Tangibility (tangible, intangible), 
· Use. 

· Products can be classified also if they are more “goods” or more “services” Good-services continuum. Most of the products are a mixture of “good” and “service”. 

· Consumer good classification: 
· Convenience; staples/ impulse/ emergency
· Shopping, 
· Specialty, 
· Unsought. 

· Product Differentiation: it can differentiate in many aspects, such as product form, features, 
customization, performance, style, durability, reliability, repairability, conformance. 

· Service Differentiation: ordering ease, delivery, installation, customer training, customer 
consulting, maintenance and repair, returns.
 Services Characteristics: 

· Intangibility: Can be reduced with: place, people, equipment, symbols, communication material, price
· Perishability
· Need to manage demand: differential pricing,
· Manage supply: part-time employees, shareequipment/facilities
· Variability: Can be reduced with training, standardization, monitor satisfaction
· Inseparability
· Product life cycle: usually products havea life cycle which consists of: 
· Introduction (low sales) 

· Growth (increasing sales) 

· Maturity (maximum sales) 

· Decline (sales decrease a little). After this, products can be removed, abandoned or renewed 
because of the obsolesce, end-of-life products or market change. 

· Product mixes: under the same brand, different products. Sometimes is necessary to use the ansoff matrix. 

· Line stretching: this is a way of expanding the brand. 
· Down-market stretch, you introduce a new 
product in the lower-priced line. 
· Up-market stretch, you introduce an upscale product. 
· Two-way stretch, you introduce products in both directions. 

· Adoption is an individual’s decision to become a regular user of a product. Stages:
(1) Awareness
(2) Interest
(3) Evaluation
(4) Trial
(5) Adoption 
(6) Confirmation
DEVELOPING NEW PRODUCTS AND SERVICES 

Two types of products: breakthrough products and incremental products. The first ones bring a new set of performance features, many times greater than those found in the market and reduced costs for the same features offered by other products. They are new, usually have and advanced performance, they carry a higher risk, they are infrequent, costly to do and target a new or previous market. Marketers should try to create demand and educate and envision the market. The second ones exploit existing forms or technologies. They either improve upon something that already exists or reconfigure an existing form or technology to serve another purpose (represent innovation in the margins). They derivate of existing products and forms of technology, they carry lower risks, are more frequent, less costly and targeted to existing or adjacent markets. Marketers should try to listen to the existing market and accommodate to the current demand. 
 Extending product lines: Horizontal  seek to appeal to different customer tastes. Vertical  aim to offer a product for every different level of needs. 

Creating a new product: Idea generation and opportunity recognition (is it valuable for customers?, will it work?, consider different perspectives such as economical, technological, etc.) developmenttestingcommercializationproduct management. 

Marketer’s role: answer continuously questions such as what is the market size for the proposed product, which segment, which channel of distribution, what are the costs, what are the requirements must be satisfied, what are the price range, who are the competitors, how to articulate a value proposition. 

Marketers should provide ideas and feedback at all stages. They go into high gear as the product approaches and enter the commercialization phase. 

*Customer value propositions in business markets 
XI. Placement/Distribution Channel
· “You can’t sell what it’s not there!” 

· Distribution channels are entities that facilitate the movement of a product from producer to final
customer. 

· Channel intermediaries are entities that help move a product (between the manufacturers and the customer or business user). They might not exist in certain markets. 

· Supply chain: before the manufacturer, when they give raw materials to the producers. 

· Channel objective: to make products available when, where and in the quantities customers want and at the minimum cost. Channels can also attract customers, build advantages with competition, 
branding differentiation, build loyalty. 
· They are useful for customers as they give form, time, place and information. 

· For customers, they increase efficiency: bulk breaking (introduce to new mass segments), create
assortments (variety), facilitates functioning (don’t need to go to the factory itself). 

· Before choosing a distribution channel: Evaluate the environment: use SWOT and remember PESTO (politics, economy, social issues, tech, organizational issues and others). 

Decisions: 

1) Direct or indirect? direct is without intermediaries, indirect uses retailers and wholesalers. If a company decides to use retailers and wholesalers, there should be some perceived value.
2)  Channel levels/tiersfrom 0 to 3 levels, they can include retailers, wholesalers and jobbers to get to the consumer. They add mark-ups to “upgrade” the prices per tier. 

3)  Distribution System
· Conventional MS: members work independently of one another, each one tries to increase its own profits
· Vertical MS: formal cooperation among channel members, work as a unit.
· Corporate system: One own the whole distribution channel
· Contractual system: Operate as individual identities with contracts
· Administered system: A member of the distribution channel has a lot of power to control the activities of the others.
· Horizontal MS: two or more firms at the same channel level agree to work together 
4)  Distribution intensity or Breadth
· Intensive distribution: consumers won’t put much effort to get the product like gum, a can of soda, etc. (convenience produts, impulse items)
· Selective distribution: using fewer outlets than intensive but more than exclusive distribution
· Exclusive distribution: selling only through a single outlet in a region; a compromise
Many factors can influence this decision, depending on the characteristics of the product and/or market. 

5)  Single or multiple channelswith multiple channels, you take the most value of customers adapting (reach more, scale economics, more mentions and visibility, but you could fight more with competitors to get the segments and have different costs for each channel). 

6)  Selecting partners a long-term commitment, needs managing: a channel leader that supervises everything, but conflicts can occur (who’s in charge, roles given, rights, goal incompatibility, dependence, etc).
Channel power: coercive (threat of force), reward (offer or deny rewards for doing what is wanted or expected), legitimate (administer to anothers feeling or obligations), expert (base on knowledge), referent (sense of community used by the leader). 

7)  Push or Pull Strategythey are both related with promotion. 
· Push is when it gives benefits to induce intermediaries to sell my product (B2B). Taking the product directly to the customer via whatever it means ensuring the custumer is aware.
· Pull is when it advertises and persuades consumers to demand (B2C). Motivating customers to seek the product in an active process.
WHY BUSINESS MODELS MATTER
Half the price of the product is absorbed by activities involved in getting that product to the customers. 
Routes to market help to control access and to reach your target market. It also helps to control the brand elements and product differentiation. 

Distribution systems: direct, one-tier, two-tier distribution. Less often are multiple-tier distribution and original equipment manufacturer channel (“intel inside”). 

Companies use a mixture of distribution systems in order to cover the market completely and reach more and various clients. Business models are key to value propositions. The intermediaries in a channel have great customer benefits. 

There’s a structured approach to positioning your value proposition: analyse channel’s business modelidentify own unique strengths identify opportunitiesdevelop and sell value proposition. 

* Aspects of Sales Management 
XII. Communication and promotion
Communication objectives create awareness (not necessary showing the products, but creating an environment where they are potentially needed), inform the market (give info about the product, educate the segments), create desire (make people want the product), encourage trial (encourage people to buy for the first time or to try without buying), build loyalty (keep track of what customers want and respond to their questions and needs). 

·  Models of communication: AIDA, hierarchy of effects, innovation-adoption, communications. 

· AIDA modelAttention (cognitive stage), Interest & Desire (affective stage), Action (behavior 
stage). 

Communication process: Sender Encoding Message (surrounded by Media) DecodingReceiver (gives response andfeedback to sender). 

Time factorsHistorical (what has happened in the past, personal and with the brand), Future 
(gives info about future consequences). 

· Situational factors External (related with the context), Internal (personal emotions that the communication brings up). 

· 
· Modes of MKTG communication: 
1)  Advertising: nonpersonal, paid presentation and promotion of products and anything related with them. 

2)  Sales promotion: short-term incentives to encourage trial or purchase of a product. 

3)  Events/Experiences: company-sponsored activities to create daily or special brand-related interactions with consumers. 
· 4)  Public Relations/Publicity: variety of programs directed internally to employees of the company or externally to consumers, other firms and media. 

· 5)  Direct MKTG: use of mail, phone, email, internet to communicate directly with or ask response from specific customers or prospects. 

· 6)  Interactive MKTG: online activities and programs designed to engage customers or prospects. 

· 7)  Word-of-mouth: people-to-people oral, written or electronic communication about the brand. 

· 8)  Personal selling: face-to-face interaction with one or more purchasers in order to make
presentations, answer questions and obtain actual sales. 

· 
Characteristics of the mix: 
1)  Advertising pervasiveness, amplified expressiveness, impersonality. 

2)  Sales promotion communication, incentive to purchase, customizable. 

3)  Public relationshigh credibility, ability to catch buyers, dramatization. 

4)  Events/Experiences relevant, involving, implicit. 

5)  Direct customized, up-to-date, interactive. 

6)  Personal selling personal interaction, cultivation, response. 

7)  WOM credible, personal, timely. 

· Ideal Communicational campaign: message at the right time and place, consumers pay attention, show POPs and PODs, reflect behavior of the consumer, motivates consumers (resonance), create strong brand associations. 

· Steps in developing effective communication: identify target, determine objectives, design communications, select channels, establish budget, decide on media mix, measure results. 

· Designing communications: first we need to make sure what the message is going to be about (message strategyPOPs and PODs; emotional or rational appeal). Then how to communicate with creativity (creative strategyoriginality, flexibility, elaboration, synthesis, artistic value), finally choose the source of the messagepublic figure, scientific origin, etc. 

· Establish the budget: know if it’s affordable, the needed percentage of sales. 

· Evaluating effectiveness: you can post-test the impact of advertising and communicational strategies, especially with attitudinal behavior measures. You can also have embedded feedback 
elements (coupons, 800-lines, QR codes, visits on the webpage, etc.) 

Critique of advertising: 
		-  Target audience is the target audience clear? 

		-  Communication are the objectives clear? 

		-  Overall strategy how appropriate is? 

		-  Positioning does the ad position the product? 

		-  Tactics is the approach appropriate? 

		-  Mix/Media is this the most effective way? 

		-  Creative is the creative concept appropriate? 

		-  Evaluation is there a call to action? 

Factors in setting communication mix: type of product, type of market, AIDA, product life cycle stage. 

Cost effectiveness / Buyer stage: 

CREATIVITY IN ADVERTISING: WHEN IT WORKS AND WHEN IT DOESN’T 
 “Nothing is more efficient than creative advertising. Is more memorable, longer lasting, works with less media spending and builds a fan community faster.” 

Creativity consists on fluency, originality, elaboration, abstractness and resistance to premature close. Concretely, the official elements are: 

Originality: compromises elements that are rare or surprising or that move away from the obvious. 

Flexibility: smoothly links the product to a range of different uses or ideas. 

Elaboration: unexpected details or extend simple ideas so that then become more intricate and 
complicated. 

Synthesis: blending or connecting normally unrelated objects or ideas. 

Artistic value: aesthetical appealing verbal, visual or sounds elements. 

Lab experiments show that creative ads get attention and lead to positive attitudes about the 
products being marketed. But there’s no evidence showing how those messages influence purchase behavior. Originality and elaboration have the most influence, also originality and artistic value and elaboration and artistic value. 

* Rethinking marketing communication: From integrated marketing communication to relationship communication 
XIII. Pricing strategies
Synonyms for price: rent, tuition, fee, fare, rate, toll, premium, honorarium, bribe, dues, salary, commission, wage, tax. 

Consumer psychology and pricing reference prices, price-quality inferences, price endings, price bundles. 

Reference prices“Fair price” (what it’s socially considered as fair), typical price (what we’re used to buy), last price paid, upper-bound price (if we know that the top brand has X price, we won’t pay more than that), lower-bound price, competitor price (what are the prices of other brands?), expected future price (will increase or decrease?), usual discounted price. 

Steps in setting prices: 
1)  Selecting the pricing objective: survival (the minimum price), maximum current profit (skimming or being exclusive in tech and development), maximum market share (needs 
penetration strategy), product quality leadership. 

2)  Determining demand: price sensitivity (demand curves and price elasticity of demand), how to reduce price sensitivity? Distinctiveness, less awareness of substitutes, when they can’t compare the quality of substitutes, part of the cost is paid by another party, product is viewed as a high quality item, buyers can’t store the product. 

3)  Estimate costs: fixed, variable and average costs; total costs might depend on the levels of production (per stretch). 

4)  Analyzing competitor’s costs, prices and offers: how do competitors use prices? Do they differentiate, give discounts or anything else? Target costing is when you charge differently according to the segment that you target (more exclusive segments might actually need higher prices because of the price-quality relation). Tiers in pricing is when a master brand has small brands that target and price differently depending on the segments. 
5)  Selecting a pricing method: markup pricing (based on desired return on sales), target return pricing (based on invested capital), perceived value pricing (the value pricing approach). could measure the willingness to pay. 

6)  Selecting the final price: needs to take account of other marketing activities, the company 
pricing policies and impact of price on channel members. 

· Other aspects of pricing: pricing could vary by location, price discounts (to attract consumers), 
promotional pricing techniques (to increase frequency and recency). 

· Price wars and ethical considerations: sometimes the law and governments need to act in the 
markets to avoid collusion, overpricing or demand-supply problems. 

· Internet has changed the pricing environment because is giving more and easier information to 
compare. 

· Dynamic prices are adjustments that enterprises do to compete and have a better targeting 
strategy. 

· Common prices mistakes: determine costs and take traditional industry margins; failure to revise 
price to capitalize on market changes; setting price separately from other marketing mix; failure to vary prices by product item, market segment, distribution channel and purchase occasion. 

PRINCIPLES OF PRICING  
Pricing’s role in the MKTG mix is to tap in to the value created and generate revenues to fund the firm’s current value-creation activities, to support research that will lead to future value creation and to generate a profit from the firm’s activities.
Profits = [unit price – cost of goods sold] * Unit sales volume 
Thevalue-pricing approach: 
		-  Perceived value (thanks to marketing efforts and price of the substitutes) 

		-  Product price 

		-  Cost of goods sold The firm’s incentive to sell is the difference between the product price and the COGS. The consumer’s incentive to purchase is the difference between the perceived value and the product price. 

Determining Objective value: TRUE ECONOMIC VALUE = cost of the next best alternative + value of performance differential. Determining Perceived value: using survey methods. 

Assessing price sensitivitysensitivity varies across customers, time and products. Tends to be far 
greater in high-cost than in low-cost product categories. It also depends if the customer pays the entire product (insurance is paid by the company and the user). It also depends on competitive factors such as alternative product availability, information of prices and switching costs. 
Price customizationmight be useful in some cases (cars, bank services, etc.) a pricing program should consider whether to customize price according to the value received (higher price to those who value more). Know high-end products and basic products; control availability (different amounts); check up demographics and transaction characteristics (online, cash, credit, where they 
live, etc.) 

Integrate price with other marketing mix elements 


Legal/ethical issuespredatory pricing is when you price low for a time to drive a competitor out of the market; price fixing is collusion with others; price maintenance is requiring that distributors or retailers sell only at a specified price. 
*Free 101
*Rethinking marketing communication: From integrated marketing communication to relationship communication. 
XIV. Social Media
· Social media is more about sociology and psychology rather than technology.
 SM are internet-based platforms offering opportunities for interpersonal engagement, interactivity, content creation, and collaboration that are qualitatively and quantitatively different from traditional media. 
· tan message, use engagement instead of interruption-disrruption, authenticity is more important than authority, communication is all around, up and down, know the 5thP: PARTICIPATION/PEOPLE. 

· Social media platforms: FB, TW, YT, LinkedIn, etc. 

· What can you do with social media: listen to customers and learn about them, make your 
customers work directly or indirectly for your brand or company (influencers, WOM, co-create, content). 

· Netnography: you observe what’s happening online in the social media platforms. The main goal is 
to obtain cultural insight (get relevant information and patters of behavior). 

· Influencers: individual consumers who spread their voice to other customers and potential 
customers. They could be celebrities, authorities, sharers, intimates, people of goodwill, etc. 

· Brand communities: group of consumers that share experiences and thoughts. There could be roles within the community. There’s a special way of WOM inside them (anonymously can share experience). 
· Pools: Shared activities, goals or values Ej. Republicans, Apple enthusiast
· Webs: Personal relationships Ej. Facebook, Cancer survivors network
· Hubs: Charismatic figure Ej. Hannnah Montana, Oprah
· Co-creation of value: developers and marketers contact or request creation from the users and 
consumers. 

· Social media affect businesses because they give big opportunities to improve and expand, though 
social media people usually don’t like advertising and MKTG, unless is good content (creative, 
unusual). 

· Similar to offline MKTG in the way they approach to communication and evaluation of impact. 

FOUR WAYS TO GET MORE VALUE FROM DIGITAL MKTG 
 Consumers now read online reviews, compare features and prices on websites and discuss via social-networking sites. 
1) Orchestrate an integrated consumer experience: continuously interact with brands, but need consistency. 

2) Inspire costumers to help you stretch your marketing budget: more money to create content rather than placement. 
3) Adopt a publisher’s discipline to curb costs: requirements of vast and growing range of content. Multiple info and interactions should focus on giving the essential content with a disciplined way of giving it. 

4) Use intelligence wisely to drive performance: customers need to optimize so they must receive the right message in the right moment and location. Take account on the tracking and how consumers behave online. 

*Brand public
XV. Non-for profit and social marketing 
· Nonprofit organizations do not exist in isolation. In order to survive and thrive, they need to access many types of resources from their environment. Unfortunately, all too many nonprofit administrators are placed into the position of “living hand to mouth” and having to focus more on getting money just to keep their heads above water. However, just as human beings need air to survive, they also need many other resources as well. 

· Resources: tangible (funding, clients, staff, board members, volunteers, infrastructure) and intangible (support, sense of making a difference, hope of sustainability). 

· Challenges to NPO: increase numbers of nonprofits (competition), gov giving responsibility, “donor fatigue” (people tired of hearing the same message and don’t care anymore), skepticism, “slacktivism” (people believe that are activist but they’re not at all), economic cycle. 

· MKTG helps in: attracting fund, volunteers, building relationships, communicating a message. 

· Segm, Targ, Pos for NPO: donors, media and volunteers mainly. 

· They usually create value by increasing perceived value and/or reducing perceived costs. 

· Social Marketing: Application of marketing concepts and techniques to promote changes in diverse socially important behaviors such as drug use, smoking, sexual behavior and family planning. 

· Cause Marketing: A business relationship in which a corporation and a nonprofit form a partnership that results in increased business for the corporation and a financial or marketing return for the nonprofit. Also referred to as Cause Alliances, Cause Branding, Cause Partnership, 
Strategic Philanthropy. 

· Corporate Social Responsibility or CSR: refers to operating a business in a manner that accounts 
for the social and environmental impact created by the business. CSR means a commitment to developing policies that integrate responsible practices into daily business operations, and to reporting on progress made toward implementing these practices. It is the sum of all activities including Cause Marketing, Community Affairs and Responsible Business Practices. 

ETHICAL CHALLENGES OF SOCIAL MARKETING 
Social marketing: Effort to reduce or solve social problems. The application of comercial marketing technologies to the analysis, planning, execution and evaluation of programs designed to influence the voluntary behavior of target audiences in order to improve their personal welfare and that of their society.
Different from comercial marketing (uses social issues to accomplish its for-profit purposes)
Social market target the people who do not believe, at least at the outset, that they suffer from a problema or any defficiency in their welfare.
Social marketing has suffered ethical challenges.
1. The ends of social MARKETING
2. Analysis of social problems
3. The subjects of social problems
VALUING SOCIAL RESPONSIBILITY PROGRAMS
Environmental, social, and governance programs can create value in many other ways that support growth, improve returns on capital, reduce risk, or improve management quality.
Companies need broad legitimacy in the societies where they operate if they are to sustain their long- term ability to create shareholder value. Equally important, society depends upon big business to provide critical economic and other benefits. 
This relationship forms the basis of an overarching contract between business and society. Over
the past few years, responses to the social, environ- mental, and governanceconcerns of politicians, regulators, lawyers, and consumers have reshaped the core businesses of major companies in many sectors: agribusiness, chemicals, fast food, mining, oil, pharmaceuticals, and tobacco, to name just 
a few. As the social contract has come under more and more pressure, companies are realizing that they just can’t ignore environmental, social, and governance issues. 
Deliver value 
Monitor Satisfaction
Cultivate relationships
Build loyalty
Maximize Customer Lifetime Value (CLV)