MARKETING

Why is marketing such a big thing nowadays:

● Mostly mature and saturated markets
● Supply exceeds demand
● Fierce competition
→ Markets changed from a sellers market to a buyers market
→ Marketing is (more than ever) needed to make a sale

1. What is marketing
Definition: “the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return”
→ Meeting customer needs profitably

1.1. Marketing goals:

1. Attract new customers by promising superior value
2. Keep and grow current customers by delivering superior value

explain the old and new view of marketing

→ Old view of marketing: making a sale “telling and selling”
→ New view of marketing: satisfying customer needs

1.2. What is the difference between selling and marketing:

2. Model of the marketing process:

How to satisfy customers profitably:
Step 1: understanding the marketplace
→ Marketers must understand some core concepts to achieve their goals:
1. Needs, wants, and demands:
→ Definitions:
 - Needs: states of felt deprivation
- Wants: the form human needs take as they are shaped by culture and individual
personality
- Demands: human wants that are backed up by buying power
→ Types of needs:
- Physical needs: food, clothing, warmth, and safety
- Social needs: belonging and affection
- Individual needs: self-expression
→ The strategic process:
- Identify a need (what is important for people?)
- Create a product/service that satisfies this need
- Apply marketing techniques to create a real “want”

Important:
● Wants are only profitable when they are backed up by a certain demand
● E.g. many people want to have a ferrari but can not afford it

→ Hierarchy of needs - maslow pyramide

2. Market offerings (products, services, and experiences):

→ Definitions:
- Market offerings: some combination of products, services, information, or
experiences offered to a market to satisfy a need or want
→ Two different types of market offerings:
- Tangible market offerings: physical entities (products)
- Intangible market offerings: non-physical entities (services, experiences, benefits)

3. Customer perceived value and satisfaction:

To build a strong relationships with customers the following two concepts have to be
understood:
→ Definitions:
 - Customer perceived value: the customers evaluation of the difference between all of
the benefits and all of the costs of a marketing offer relative to those of competing
offers
→ Determinants of customer perceived value:
- Value drivers: total benefits
- Value killers: total costs
→ Definitions:
- Customer satisfaction: the extent to which the products perceived performance
matches a buyers expectations
→ Expectation-management problem:
- If marketers set expectations too high, they may attract consumers, but buyers will be
disappointed
- If marketers set expectation too low, they may satisfy those who buy, but fail to attract
enough consumers
→ Kano Model from the japanese Noriaki Kano is a tool that can be used to prioritise the
critical to satisfaction characteristics of a product/service (as defined by the customer):
- Must be: these quality characteristics must be present or the customer will go
elsewhere (example: every hotel has to have a bed)
- Performance: the better you are at meeting these needs, the happier the customer is
(example: the friendlier the hotel staff, the more satisfied the customer)
- Delighters: those characteristics that the customer was not expecting but received as a
bonus (example: super fancy restrooms, free parking, free welcome drink)

3. Marketing and corporate strategic planning

Different levels of strategic planning

Marketing and corporate strategies

● On the one hand Marketing follows decisions made on the corporate level.
● On the other hand Marketing advices strategic corporate planning:
- Marketing provides a customer-driven value system which focuses on building
and maintaining long-term customer relationships
 - Thereby it influences as well corporate strategic planning

Steps in strategic planning

Step 1. Defining the company mission

→ Mission statement:
● A statement of the organisation what i wants to accomplish in the larger environment
→ Components of a customer driven mission statement
1. What do we offer? Market offering
2. Who is our customer? Target group
3. What do consumers value? Point of differentiation

Step 2. Setting objectives and goals

→ Setting company objectives (SMART):
● The (long-term) mission should be translated into supporting objectives and goals for
the current period
● Customer-Driven vs. Shareholder-Oriented objectives are:
- Increase Customer Satisfaction (vs. decrease costs)
- Increase Customer Loyalty (vs. increase profits)
- Improve Brand Image / Reputation (vs. increase market share)
Step 3. Designing the business portfolio
→ Business portfolio:
● The collection of strategic business units that make up the company
→ The company must:
● Analyse its current business portfolio and decide which SBU’s should receive more,
less, or no investment →BCG Matrix.
● Develop strategies for growth and downsizing that will shape the future business
portfolio →Ansoff Matrix

1. Current business portfolio analysis

BCG Matrix

The BCG growth-share matrix

● Purpose of portfolio analysis:
- To direct resources toward more profitable business while phasing out or
dropping weaker ones
● Basis of evaluation:
- Attractiveness of SBUs market or industry
- Strength of SBUs position within that market or industry (depends on good
marketing)
Strategies for categories of the BCG matrix:
● Stars: invest and build its share
● Cash cows: invest just enough to hold share and keep on milking
● Question marks: depends on your resources and evaluation
● Dogs: divest or sell and use resources elsewhere

2. Future business portfolio analysis

Posible pregunta explica the 4 growth strategies
→ Strategies of the product/market expansion grid (aka Ansoff Matrix)
1. Market Penetration
- Increasing sales of current products to current market segments without changing the
product, for example by advertising (not so risky)
2. Market Development
- Identifying and developing new market segments for current company products
(risky)
3. Product Development
- Offering modified or new products to current market segments (risky)
4. Diversification
- Starting up or acquiring

4. Internal analysis

Objective: Identify and analyse strengths and weaknesses

1. Value chained based approach:
- Basic idea: Products pass through different activities and at each activity the
product gains some value. The chain of activities can be illustrated in a value
chain.

2. Resource based approach:

- Resource: a source or supply from which an organisation gains profit
 - Basic idea: Profits are generated by offering superior customer value, which is
based on certain resources and capabilities which create a competitive
advantage.
- Competitive advantage: occurs when an organisation acquires or develops a
resource or combination of resources that allows it to outperform its
competitors.

These approaches do not stand in competition with each other. Moreover they complement
each other as they set a different focus on the company‘s ability to be successful and
profitable.

4.1.VRIO Framework
The VRIO framework consists of four questions that identify the competitive potential of a
resource/capability:
1. The Question of Value: Is the firm able to exploit an opportunity or neutralise an external
threat with the resource/capability?
2. The Question of Rareness: Is the resource/capability in the hands of a relative few?
3. The Question of Inimitability: Is it difficult to imitate, and will there be significant cost
disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?
4. The Question of Organisational Support: Is the firm organised, ready, and able to exploit
the resource/capability?

5. Environmental analysis (Micro)

Objective: Studying the marketing environment allows marketers to identify business
Opportunities and be prepared for potential Threats.

5.1. Actors in the Micro-environment:

● Suppliers provide resources needed to produce goods and services
- Important link in the value delivery system

❖ Marketing opportunity
- Ingredient branding: vertical branding cooperation between supplier and
manufacturer to support the strength of each brand

● Marketing Intermediaries are firms that help the company promote, sell, and distribute
its goods to final customers.
● Competitors are those who serve a target market with products and services that are
viewed by consumers as being reasonable substitutes.
- These include direct substitutes:
➢ Market offers of the same product
- But as well indirect substitutes:
➢ Market offers of the same benefit & budget
● Publics or Stakeholder are any group that has an actual or potential interest in or
impact on an organisation’s ability to achieve its objectives.
6. Environmental analysis (Macro)
6.1. Forces of the Macro-environment:
1. Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics.

Recent trends are:

• Changing age structure of the population
• Changing family structure
• Better educated population
• Increasing Cultural Diversity

❖ Implications for marketing (changing age structure):

● Opportunities:
- New market develops for „best ager products“
- Increased demand for medical services, financial services etc.
- People have more disposable income; market for value products/luxury
goods develops
● Threats:
- Marketing/Product Development has to react to values and demands of
best agers and target groups/strategies have to be revised
- In the long run less consumers (at least in Germany)

→ Retro Marketing: Revival and reconfiguration of a product or the design of an

advertisement with past-related elements. The product is usually but not always updated to
contemporary standards of performance, functioning, or taste.

❖ Implications for marketing (changing household structure):

● Opportunities:
- New Target Groups Develop: e.g. „Hedonist“ / Career-oriented women
(no kids) / „DINKS“ (double income no kids)
- New Products/services are needed: e.g. Travel industry, Luxury goods,
High quality convenience food
● Threats:
- Some Products/services might get outdated

❖ Implications for marketing (higher educated population): The rising number of

educated people will affect not just what people buy but also what they accept as
being appropriate business behaviour.
Key Trend:
• More demanding and critical consumers

2. The economic environment includes all factors that affect consumer purchasing power and
spending patterns
● Recent trends:
 - Consumers continue to spend carefully (result of economic crisis)
- Markets in emerging countries are the new fields for growth.

3. The natural Environment involves the natural resources that are needed as inputs by
marketers or that are affected by marketing activities.
● Key trends include:
- Shortages Of Raw Materials
- Increased Pollution (air and water pollution, global warming)
- Increased Government Intervention (Green movement)

4. The Technological Environment describes forces that create new technologies for new
products and new market opportunities.
● Implications:
- Companies have to keep up with technological change, otherwise they will
find their products outdated.
- Business will decline if companies fight new technologies.
❖ Opportunities/threat
Shorter Product Life Cycles
Important Trend:
➢The time for marketing/selling to pay off for R&D cost has gone down from about
4 years to only 2 years.

5. The Political Environment includes laws, government agencies, and pressure groups that
influence or limit various organisations and individuals in a given society.
● Implications:
- Laws and regulation have to be respected.
- Not everything that is possible and profitable is allowed.
● Aims of the law in general:
1. To protect companies from each other
→ §6 - Comparative Advertising:
● Was completely forbidden until 2000
● Now legal if:
- Statements are objective and true.
- Statements do not insult competitors.
2. To protect consumers from unfair and business practices
→ §7 - Direct Marketing
● Illegal to call consumer without previous consent (Fine of up to 50.000 Euro)
● Illegal to call with withheld number (Fine of up to 10.000 Euro)
● No long-term contracts can be made via phone (E.g. mobile, utility contracts)
● Any contract can be cancelled within 14 days
→ §16 - Misleading Advertising

● Ethics and advertising

 - Sexism / Discrimination / Stereotypes are largest number of complaints (at
Deutscher Werberat)
- But declining due to liberalisation of society

6. The Cultural Environment are institutions and other forces that affect society’s basic
values, perceptions, preferences, and behaviours

6.2 Cause-related marketing

Definition: Promotional strategy in which a firm's sales are linked to a charity or other public
cause.

7. Consumer buying behaviour

Definition: The buying behaviour of individuals and households who buy goods and services
for personal consumption.

→Concept:
● Consumer behaviour describes how consumers make purchase decisions and how
they use the purchased goods.
● We look at the consumer because we want to...
- understand why consumers make the decisions that they do, so that we will be
able…
- …to predict what they will do in a given situation, so that ultimately, we will
be able…
- ...to influence that process.

→Basic model:

7.1 Factors that influence consumer behaviour

Name three factors influencing Consumer Behavior and describe their influential effect by
the help of examples
1. Cultural factors
Culture is the most basic cause of a person’s wants and behaviour:
● Culture is learned from society, family, and other institutions.
● Culture reflects basic values, perceptions, wants, and behaviours.
Basic structure:
● Core beliefs and values (Ideas of desirable conditions)
- Passed on from parents to children
- Reinforced by schools, churches, business, and government
● Secondary beliefs and values (Derivation of the core beliefs)
- Your interpretation of the core beliefs
- The “why” you do something
- More open to change than core beliefs
→Subculture
Groups of people within a culture with shared value systems based on common life
experiences and situations.
→Social class
Different social classes can be distinguished by inequalities in such areas as income,
education, occupation, wealth, authority and power.

2. Social factors
→Reference Groups & Opinion Leaders
Reference groups have an influence on buying behaviour:
● Opinion leaders (Influencers) are individuals within a reference group, who obtain
more media coverage than others and are especially educated on a certain issue
● Marketers attempt to reach opinion leaders (influencers) who are important to the
target market
● The importance of group influence varies across products and brands.
● The importance tends to be stronger..
- when the product & its consumption are regarded to be of high risk (financial,
social, health etc.)
 - Social risk is higher, the more people identify with the product (the higher the
involvement).
Related concepts:
● Brand ambassador is a celebrity employed by a company to promote its products or
services.
● Brand advocate is a loyal customer who is engaged in active promotion of a brand or
a product without being paid to do so.

How to get influencers to be brand advocates? Choose the correct influencers, show
them that the product is about them and that they identify with the product. Integrate
them in the product development or even give them a product line. Invite them to
launch parties etc.

→Family & Roles and Status

Roles & Status can influence buying behaviour:
● Definition of a role = Expected activities
● Definition of status = Esteem given to role by society
● Gender/marital roles exist for certain types of purchases
● Role-oriented Marketing is very common but can be very stereotype

3. Personal factors
→Lifecycle
People change the goods and services they buy over their lifetimes.
● Thinking in life cycles can help to identify what people need and thus can be used for
marketing.
→Occupation
A person’s occupation affects the goods and services bought:
● Marketers try to identify the occupational groups that have an above average in their
products and services.
● A company can even specialise in making products needed by a given occupational
group.
● The advantage is, that you have very targeted products with a clearly defined niche
→Place of birth
Explain the AIO concept and its strategic importance for marketing
→Lifestyle – AIO Concept
● People buy products or services that represent their lifestyle.
● Lifestyle is a person’s pattern of living as expressed in his or her psychographics:
- Activities: How a person spends his or her time at work and leisure.
- Interests: What someone places importance on in his or her immediate
surroundings.
- Opinions: Where a person stands on issues, society and himself or herself.
→Personality and self-concept
Personality refers to the unique psychological characteristics that distinguish a person or
group.
● The personality concept be useful in analysing consumer behaviour for certain
products or brand choices
● Hypothesis: People buy brands that fit their personality!

Self congruity concept→ Hypothesis: The greater the self-congruence, the greater the
likelihood of purchase.

Theory of animism: we give objects names because its easier to connect and relate to them
(for example alexa)

Different self-concepts:
1. Actual Self: The personality traits that describe who I am..
2. Ideal Self: The person who I want to be.

Example: cosmetic products

● Ideal Self-Concept: I want to be more attractive and more beautiful!
→ Marketing Approach: Offer brands / products that symbolise „beauty“. Products
are bought to boost self-esteem.
● Self-Concept: I like myself although I know that I‘m not perfect →Marketing
Approach: Offer brands / products that are „real“ (like you). Products are bought to
feel self-consistent.

The big 5 model (OCEAN)

1. Openness: The depth and complexity of an individual’s mental life and experiences.
2. Conscientiousness: Described as the tendency to control impulses.
3. Extraversion: Described as where an individual draws their energy and how they interact
with others.
4. Agreeableness: Concerns how well people get along with others.
5. Neuroticism: Encompasses one’s emotional stability and general temper.

4. Psychological
→ Important realities about perception
Perception is selective
● People are exposed to great amount of stimuli every day
● It is impossible to pay attention to all these stimuli (information overload)
→ Therefore most of the information to which we are exposed is screened out.
Managing Information Overloads

→ Learning
Changes in an individual’s behaviour arising from experience.
Behavioural Theories: Theories of learning that focus on how consumer behaviour is changed
by external events or stimuli (conditioning).
1. Classical Conditioning: Pawlow Experiment 1905
Learning occurs when a stimulus eliciting a response is paired with another stimulus that
initially does not elicit a response on its own, but will cause a similar response over time
because of its association with the first stimulus.
2. Operant Conditioning (Instrumental Conditioning)
Learning that occurs as a result of rewards or punishments.
→Rewards reinforce the desired behaviour, thus encouraging its continuance. Examples are:
● Loyalty programs such as Payback or Miles & More reward frequent purchases.
● You get a discount on your fitness studio membership if you bring a friend.
→ Punishment is charged negatively, thus discourages the continuance of the behaviour.
● Extreme penalties for returning the car too late or without a full tank.
● Extreme fees if you do not check in online.

→ Belief & Attitude

● Belief: a descriptive thought that a person holds about something.
● Attitude: a person’s consistently favourable or unfavourable evaluations, feelings, and
tendencies toward an object or idea.
→ Involvement
Degree of intensity of interest that a buyer shows for a certain product in a particular
purchase decision.

8. Market segmentation
Definition → Market segmentation is dividing the whole market into - according to their
market reaction - internally homogeneous and externally heterogeneous subgroups (market
segments).
Basic concepts:
1. No Segmentation (Undifferentiated Targeting Strategy)
● Marketing strategy that views the market as one big market with no individual needs
and wants of customers and thus a single marketing mix is sufficient.
● Concentrates on similarities of customers and not their differences.
→ Advantages: Potential savings on production and marketing costs (Economies of Scale)
→ Disadvantages:
- Unimaginative product offer
- Company more susceptible to competition
2. Segmentation(Differentiated Targeting Strategy)
● Marketing strategy that chooses two or more well-defined market segments and
develops a distinct marketing mix for each.
● It concentrates on differences between individual customers.
→ Advantages:
- More satisfied customers
- Greater financial success
→ Disadvantages:
- High costs
- Cannibalization

8.1. Types of Market Segmentation

1. Geographic Segmentation
• Dividing a market into different geographical units, such as nations, states, regions,
counties, or cities
• Companies are localising their price, products, promotion, and sales and distribution efforts
to fit the needs of individual regions.
2. Demographic Segmentation
Dividing the market into segments based on variables such as age, gender, income,
occupation, education, religion, ethnicity, and generation.
→ Age Segmentation
• Dividing a market into different age and life-cycle groups
• Marketers must guard against using stereotypes
Not all people of the same age, gender etc. have the same needs & wants
→ Gender Segmentation
→ Income segmentation
3. Psychographic Segmentation
Dividing a market into different segments based on social class, lifestyle, or personality
characteristics.
• The products people buy often reflect their lifestyle / personality.As a result marketers often
segment their markets by consumer lifestyles (AIO Concept).

4. Behavioural Segmentation
Dividing a market into segments based on the behaviour of consumers.
→ Occasion Segmentation
Dividing the market into segments according to occasions when buyers get the idea to buy,
actually make their purchase, or use the purchased item.
→ Usage Rate Segmentation
Markets can also be segmented into light, medium, and heavy product users.
→ User Status and Loyalty Status Segmentation
This segmentation is especially important for customer relationship management (CRM).
➢User Status: Segments include nonusers, ex-users, potential users, first-time users, and
regular users.
➢Loyalty Status: Buyers can be divided into groups according to their degree of loyalty.

5. Benefit Segmentation
Dividing the market according to the different benefits that consumers seek from the product.
➢Benefits: The needs and wants that are satisfied by the market offer

There are so many ways how to segment a market. Which one is the „best“..?
→ Choosing the right Segmentation Criteria
1. Relevancy for Buying Behavior:
Is there a causal relationship between the segmentation criteria and buying behaviour?
2. Measurability: Is the criteria (cost efficiently) measurable?
3. Accessibility: Can consumers of the segment be reached (cost efficiently) by marketing
communications and distribution?
4. Enabling Capability: Does the segmentation give useful advice for the design of the
marketing mix?
5. Temporal Stability: Is the criteria beneficial in identifying segments which are temporarily
stable (e.g. in relation to size of segment)?

Designing a Customer-Driven Marketing Strategy

Value Proposition
• The set of values (benefits)
a company promises to deliver to consumers to satisfy their needs.

Differentiation and Positioning

Positioning Maps
● Positioning maps display relative performance of competing firms on key attributes
(benefits)
● They can be used to check the degree of a companies uniqueness (differentiation)

Strategic Marketing (Summary)

● Market Segmentation: Dividing a market into smaller segments of buyers with
distinct needs, characteristics, or behaviours that might require separate marketing
strategies or mixes
● Market Targeting: The process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter
● Differentiation: Differentiating the market offering to create superior customer value
● Positioning: Arranging for a market offering to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target consumers

9. Strategic brand management

General Functions of Brands
→ Consumer Perspective
1. Brands give orientation:
● Help to identify a product/service.
● Bundle information and thereby facilitate buying decisions.
2. Brands minimise risk:
● Build trust and reduce the risk of a wrong purchase decision.
3. Brands add (symbolic) value to the product:
● Can give Prestige, Group Membership, Social acceptance etc.

→ Identity-based Brand Concept

Definition
● A brand is a bundle of benefits with sustainable differentiation potential.
● Definition underlines real value (benefits) instead of illusionary images.
The bundle consists of Functional benefits:
- E.g. good technique (intuitive software, high quality camera etc.)
Symbolic benefits:
- E.g. Status symbol, group acceptance

9.1. Importance and Challenges of Branding

Market Trends
1. Increasing functional parity of products:
- Result of saturated markets and hyper competition
- Brands are needed to differentiate
2. Critical Consumers:
- Result of increased market transparency and customer power through internet and social
media
- Brands have to be authentic

9.2. Strategic Brand Management

→ Identity-Based Brand Management Approach
State of the art in terms of Brand Management is the Identity-Based Brand Management
Approach.
→ Model of the Identity-Based Brand Management Approach:
1. Brand identity: Who are we? Internal Perspective (Management, Employees)
Components of brand identity:
● Brand Origin → Where do we come from?
● Brand Vision → What do we want to achieve in the future (5-10 years)?
● Brand competences → Where are we really good at?
● Brand values → What do we believe in?
● Brand personality → How do we communicate?
● Brand offer → What do we offer at the market (products/services)?

Mock exam
1. Explain the difference between the “old” and “new” view of marketing. (10 points)
2. Explain the four growth strategies in marketing in consideration of “The Product/Market
Expansion Grid” (Ansoff Matrix). (10 points)
3. Name three factors influencing Consumer Behavior and describe their influential effect by
the help of examples. (15 points)
4. Explain the AIO concept and its strategic importance for marketing. (10 points)
5. Name the 4 P’s of marketing. For the instrument “Product” please explain the individual
product decisions the marketing manager has to take. How important do you perceive
packaging and labelling in today’s markets? (20 points)

10. Marketing instruments

Constructing an integrated Marketing Plan and Program
The 4 Ps
The 4 Marketing Mix Instruments:
● Product
● Price
● Place(Distribution)
● Promotion
→ The firm must blend each marketing mix instrument into a
comprehensive integrated marketing program.
Types of Consumer Products

How consumers buy them

Marketing Considerations
Individual Product Decisions (to make your Product desirable)

Product Attributes
1. Product Features (Many/Only few):
•Differentiate the company’s product from competitors’ products
→ Often important to be the first to offer a new feature
2. Product Quality (High/Low):
• Level of satisfying stated or implied customer needs
→ Quality = No defects (performance measure)
→ Quality = Reliable and maintainable (temporal measure)
→ High Quality = Non-inferiority or superiority (comparative measure)
3. Product Design Elements:
• Appearance of the product
→Catches attention and differentiates the product in mature markets (can serve as the unique
selling proposition / USP)

Design Elements:
● Differentiate by Material
● Differentiate by Material
● Differentiate by Shape & Form
● Colour Codes

Branding
Identity based → Founders Name (Brand Origin)
Identity based → Ingredients (Product)
Image based → Symbolic Meaning (Benefits)

Packaging and labelling

Packaging
Designing and producing the outside container or wrapper for a product. Its functions are:
1. Protecting the product
2. Attracting customers interest
3. Differentiating the product
→ Functions of Packaging:
● Unboxing Experience
● Differentiating the Product

Labelling
What is printed on or attached to the packaging and product. Its functions are:
1. Identifying the product
2. Describing the product
3. Promoting the brand

Additional Services
Product Offering Diagram
● Core Customer Value:
- Why the consumer is buying (the benefit)
● Actual Product:
- Product, Brand name, features, design, packaging, quality
● Augmented Product:
- Additional services and benefits such as delivery and credit, warranty, after
sales service, support etc.

Marketing decision Products

→ Product Line decision
Dimensions:
● Width: The number of different product lines the company carries. When additional
product lines are added the line is extended (product line extensions).
● Depth: The number of items within a product line. When items are added the line is
filled (product line filling).

→ Product Line Extensions

Advantages & Risks:
● Advantages:
- A low-cost, low-risk way to introduce new products as an established brand
name lends instant credibility and positive associations to the line extension
(leads to extra profits).
- A way to use excess capacity in production
- A way to command more shelf space from retailers (keeps out competitors)
- Combat competitors (e.g. low cost product line is offered to combat cheaper
competitors)
● Risks:
- Overextended brand name might lose its specific meaning
- Can cause consumer frustration and confusionComplexity is increased which
leads to higher management costs