Consumer Behaviour: Implications For Marketing Strategy 6e.pdf

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Chapter 1: Basic concepts of marketingChapter 2: Strategic marketing partnersChapter 3: The marketing environmentChapter 4: Customer insightsChapter 5: Consumer buyer behaviourChapter 6: Business marketsChapter 7: Customer-driven strategy Chapter 8: Building customer valueChapter 9: The product life cycleChapter 10: Pricing strategiesChapter 11: Pricing considerationsChapter 12: Marketing channelsChapter 13: Retailing and wholesalingChapter 14: Communications strategyChapter 15: Advertising and PRChapter 16: Personal sellingChapter 17: Direct customer relationshipsChapter 18: Competitive advantageChapter 19: Global marketplaceChapter 20: Sustainable marketingBack to topChapter 1: Basic concepts of marketingSimply put, marketing is managing profitable relationships, by attracting new customers by superior value and keeping current customers by delivering satisfaction. Marketing must be understood in the sense of satisfying customer needs. Marketing can be defined as the process by which companies create value for customers and build strong customer relationships to capture value from customers in return. A five-step model of the marketing process will provide the structure of this chapter.

A marketing strategy outlines which customers it will serve and how it will create value. The marketer develops an integrated marketing plan that will deliver value to customers. It contains the marketing mix: the tools used to implement the strategy, which are the four Ps: product, price, place and promotion.

Marketing strategy is the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. The company must choose which customers to serve and how to serve them. This process involves four steps:

Market segmentation: dividing a market into distinct groups of buyers who have different, needs, characteristics or behaviour and who might require separate products or marketing programmes. A market segment is a group of consumers who respond in a similar way to a given set of marketing efforts.

The economic environment consists of economic factors that affect consumer purchasing power and spending patterns. Countries vary in characteristics, some can be considered industrial economies, while others can be subsistence economies, consuming most of their own output. In between are developing economies that offer marketing opportunities. The BRIC (Brazil, Russia, India, China) countries are a leading group of fast expanding nations.

Internal databases are electronic collections of consumer and market information obtained from data sources within the company network. Internal data can be a strong base for a competitive advantage, because of the potential of this information. Competitive marketing intelligence is the systematic collection and analysis of publicly available information about consumers, competitors and developments in the marketing environment. Good marketing intelligence helps gain insights in how consumers think of and connect with the brand.

Word-of-mouth influence of friends and other consumers can have a strong influence on buying behaviour. An opinion leader is a person within a reference group who, because of skills, knowledge, personality or other characteristics, exerts social influence on others. Marketers try to identify the opinion leader and aim their marketing efforts towards this person. Buzz marketing involves creating opinion leaders to serve as brand ambassadors. Online social networks are online communities, such as blogs, social networking sites or even virtual worlds, where people socialize or exchange information and opinions.

Today, most companies moved from mass marketing to target marketing: identifying market segments and selecting a few to produce for. There are four major steps in designing a customer-driven marketing strategy.

Brand equity is the differential effect that knowing the brand name has on customer response to the product or its marketing. Brand equity can be a powerful asset. Brand valuation is the process of estimating the total financial value of a brand. In order to build a strong brand, there are some major brand strategy decisions to be made. Brand positioning involves positioning the brand in the mind of the consumer. Brand name selection is important in order to select a good name. The brand name should say something about the service benefits and should be easy to pronounce and remember. It needs to be distinctive and extendable, easily translated and should be capable of legal protection.

Marketing strategy development: designing an initial marketing strategy for a new product based on the product concept. It consists of three parts: describing the target market and value proposition, outlining the budgets and lastly describing the long-term marketing mix strategy.

Beyond customer value perceptions, costs and competitor prices, the firm must also think of other factors. Price is only one element of the marketing mix and the overall marketing strategy must be determined first. Target costing is pricing that starts with an ideal selling price and then targets costs that ensure the price is met. Good pricing is based on an understanding of the relationship between price and demand for the product.

In order to produce a product, relationships with others in the supply chain are necessary. The term demand chain might be better, because it suggests a sense-and-respond view of the market. A value delivery network is composed of the company, suppliers, distributors and ultimately the customers, who partner with each other to improve the performance of the entire system in delivering customer value. The marketing channel (distribution channel) is a set of interdependent organisations that help make a product or service available for use or consumption by the consumer or business user. Channel members can add value by providing more efficiency and specialization in making goods. Some of the key function channel members do are: information gathering, promotion, contacting buyers, matching products and needs and negotiating agreements. But also physical distribution, financing and taking over risks of carrying out the work.

Marketing channel design means designing effective marketing channels by analysing customer needs, setting channel objectives, identifying major channel alternatives and evaluating those alternatives. The base is analysing consumer needs, since marketing channels are actually customer value delivery networks. Next comes setting the channel objectives. When identifying major channel alternatives, the company should look at three things:

Direct marketing means connecting directly with carefully targeted segments of individual consumers, often on a one-to-one, interactive basis. For most companies, direct marketing is a supplemental channel, but for others it is a complete way of doing business. Direct marketing is expanding, it is key to the trend towards building close and interactive customer relationships. Direct marketing has certain benefits for buyers: it is convenient, private, easy and gives a lot of comparative information. It also has benefits for sellers: it is an important tool for building customer relationships and is a low-cost and efficient way of reaching target markets. Direct marketing begins with a good customer database.

3. Consumer-to-consumer (C-to-C) online marketing: online exchanges of goods and information between final consumers. Blogs are online journal where people post their thoughts, usually on a narrowly defined topic. Companies can also advertise on blogs and influence content there.

4. Consumer-to-business (C-to-B) online marketing: online exchanges in which consumers search out sellers, learn about their offers and initiate purchases, sometimes even driving transaction terms.

The direct-marketing industry has been facing some privacy concerns and cases of unfair practices. Direct marketing can sometimes annoy customers. Internet fraud has become a serious problem. Phishing, a type of online identity theft uses deceptive emails to fool users into divulging their personal data. Customers also worry about online security and their privacy. Many online marketers have become skilled at obtaining detailed consumer information. Because of these challenges, various governments are putting up legislation to protect customers.

A competitive advantage is an advantage over competitors gained by offering consumers greater value than competitors do. Competitive marketing strategies exist of competitor analysis and developing competitive marketing strategies. Competitive marketing strategies are strategies that strongly position the company against competitors and give the company the strongest possible strategic advantage. Competitor analysis is the process of identifying key competitors, assessing their objectives, strategies, strengths and weaknesses and reaction patterns, and selecting which competitors to attack or avoid. It consists of three steps.

When the competitors are identified and evaluated, the firm must design a competitive strategy. Strategies differ for every company. Approaches to marketing strategy often pass through three stages: entrepreneurial marketing, formulated marketing and intrepreneurial marketing.

Entrepreneurial marketing: most companies are started by individuals who have no explicit strategy. Formulated marketing: as small companies are more successful, they move to more formulated strategies. Intrepreneurial marketing: many large companies get stuck in formulated marketing and should re-establish their entrepreneurial spirit. 2b1af7f3a8

Consumer Behaviour: Implications For Marketing Strategy 6e.pdf

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