ARTICLE 1: MARKETING STRATEGY - OVERVIEW

A strategy is a plan of action designed to achieve certain defined objectives. Objectives

give purpose and direction to strategies. Developed at many organizational levels:
corporate, divisional, business unit and departmental

Marketing strategy is the heart of a business plan. It has many elements but can be
grouped in the 4 Ps that make up a marketing mix:

1. PRODUCT / MARKET SELECTION (PRODUCT)

Commits the firm to a particular group, field and competitive environment where their
product can serve and satisfy consumer needs. Key concepts:

a) Product: Total package of attributes a customer obtains from a purchase; the benefit
and risk. Consumers place value on products:
-Perceived value: Customer existing perception of the product
-Unrealized or potential value: The unrealized area where the perceived value
can grow. Achieved through communication channels

b) Market: Pocket of latent demand that affect and are affected by societal needs and
changes.

Market segmentation: Delimitation of the market into smaller, similar groups to find
potential customers. Like in the way they perceive, value, buy and use a product. Gives
framework and always changing. Can be demographic, geographic, psychographic and
behavioural.

The selection of the segment that should be target (attractive) can be evaluated in
-Product value: Enter market that value product the highest, where it makes most
contribution and covers the most needs
-Long run growth potential: Growing market and longevity
-Competitive positioning: Some markets have more accessible competition. Still,
always better to have a differentiated product
-Company - Market fit: Assessment of market opportunities in context of
business operations; are resources available, do we have existing manufacturing
capacities, will it overshadow other products.

2. PRICING

The price of goods and services is determined by many factors:

→Supply and demand: Most basic determinant of price. Companies look to control
what they can about S/D (monopolies, lobbying, etc) within a legal framework.
→Cost factors: Costs set the ground floor for prices (margin). Cost can be
-Fixed: Constant costs. Organization (rent). If higher, aim maximize sales
volume
-Variable: Non-constant. Production. If higher, aim to maximize unit margin
(price)
For marketers, however, setting prices at which consumers will buy is more important
for determining price than cost.
→Competition: Competition sets the ceiling for prices
-Differentiation: Products with unique benefits in regard to others in the market.
The price premium customers pay must be less than the extra benefit it provides.
-Intrabrand competition: Competition between distributors or resellers of the
same brand, Price war between distributors.
-Price leaders: Industry largest firm, usually leading in technology, distribution
or production costs. They are able to set prices to an extent → competition may
halt the change by not following suit (leader becomes too expensive and loses
market)
-Conscious parallelism or market pricing: Businesses change prices to reflect
competition Legal unless there is direct communication and predatory (attack
small businesses)
→Bargaining power:
-Buyers have strength if: Seller is dependent on buyer, and they have other supplying
options (or even can manufacture)
- Sellers have strength if: Offer differentiated products and satisfy customers more
than competition
‣Product value: Real price needs to be close to the consumers’ willingness to pay:
-Lower: Losses on potential profits (producer surplus)
-Higher: Losses volume sales (Cuts consumer surplus)
Price is also reflected in the way products enter a market:
-Skimming: Enter at a high price and then lower it to reach more segments.
Maximizes early unit profits and plays at low competition levels. Apple Iphone
-Penetration: Enters at a low price and grows from there. Achieves a more
dominant market position and early traction. It's riskier as demand grows
quickly and needs to have production and distribution ready. New company
discounts

3. CHANNELS OF DISTRIBUTION (Place)

Where and how products are made available. Leading firms tend to have strong
distribution, with local market coverage, storing product lines, innovation and a large
installed base. Companies need to make a key decision:
-Sell directly through sales force (employees that sell products). Traditionally
placed closed to key locations but due to online commerce have more freedom
-Make use of intermediaries, indirect. What kind? intensively or selectively, etc?
-Or use both

Elements in distribution systems

→Direct sales representative: Employees that call on directly on customers. More
economical and better for products with high need of service and support.
→Sales agents: Independent operators (similar to sales reps) that take care of several
suppliers. More expensive than sales rep but useful for firms without in-house sales
rep or new to market
→Distributors: Chains that buy from many suppliers and have many product lines.
Exist for consumers and industrial markets. Tend to sell to wholesalers, who then sell to
retail
→Retail outlets: End market where a vast array of goods is sold for consumption rather
than reselling. Many are franchised
→The internet: Convenient → easy product information, access, support and even
cheaper.

Low income and older generations have lesser access though. Use of systems such as
EDI.

Channel support: Distributors often try to support or meddle in the channels their
products go through to increase their sales: For example, suppliers make sure that
-Their products are fully stocked and available
-Their products are displayed, advertised and promoted by retail to end-
consumers
-Price and margins do not destabilize. Prevent double marginalization

Generally, suppliers look for certain conditions in their channels.

-Selective or Intensive distributions: Some products benefit from the sign of
quality and prevention of intra-brand competition that selective distribution
offers, some however, benefit from intensive market coverage (such as
convenience products).
-Superior product line and quality: To give end-market resellers a competitive
advantage
-Positive interdependence: Greater pressure to work together and maximize
profits
-Salesforce at retail level: To train personnel in presentation and service, also
to monitor inventory levels and discourage price cutting
-End-market demand development: Advertising and promotion to build
demand and pull end consumers.

Commitments and uncertainty make distribution channels hard to build and change,
sometimes though, change is essential.

4. MARKET COMMUNICATION (PROMOTION)

There are many communication channels (print media, tv, influences, etc). To make use
of them though, marketers need to understand buying behaviour:

Decision-Making Process (DMP): 5 stages. Different communication channels serve

different stages best: Tv and ads created an awareness of need; Store visiting, and
influences help gather information
 -Some channels are costlier but provide + benefits (media ads vs personal sellers)

Decision making units (DMU): Participants of the DMP: Can be a complex set of
players (a family). Sellers target each DMU in the DMP, as they respond to different
stimuli
-Pull: To pull in end-consumers by creating demand via communication
channels which, although costlier, get justified by a large potential market
-Pull: To push the product via intermediaries towards the end-user. Retail and
resellers get incentives to promote (push) the product. With balance, both could
be applied.

5. MODEL FOR STRATEGIC PLANNING

1. Corporate goals: Establish objectives that give direction to strategy
2. External environment: Analysis of possible factors that facilitate a favourable
climate
3. SBUs strength and weaknesses assessment.
4. Product / Market opportunities: Analyse new market opportunities
5. Market analysis: STP process
6. Economic and risk analysis: breakeven; contingency and impact analysis
7. Ethics analysis: Possible ethical issues
8. Product / Market strategies: For each segment

ARTICLE 2. MARKETING MYOPIA

Marketing myopia: Phenomenon that occurs when a company is solely focused on

quick sales and mass production that it loses sight of its long-term goals and customer
needs. Many companies once in “growing businesses” have declined due to tunnel
vision and inability to innovate their own product according to emerging consumer
needs (railroad, Hollywood, oil…)
Myopia happens due to poor market research: companies don't know their consumer
needs and potential, arising competitors.

Certain beliefs are a sign of marketing myopia:

1. “Growth is assured by an expanding and affluent population”. Infinitely growing

businesses do not exist, only growing business opportunities that firms can capitalize on.
Automatic and expanding demand is not forever and may lead to little innovation

2.“There is no competitive substitute for the industry major product”. Firms lose
incentives to innovate and identify changing needs when there are no substitutes or
competitors. Focus on specific, limited products rather than the benefit it should offer.
New products whose benefit satisfies needs better will appear eventually

3. “Too much faith in mass production”. Mass production and declining unit costs drives
businesses to produce all they can, forgetting about valuable goods that consumers
actually want. Production should be a consequence of marketing, not vice versa.
4. “Focus on improving the technicalities of their product. Focus on improving
product via R&D optimization, product instead of customer oriented.

Consumers' needs become secondary to making a superior product that won't even sell.
From a marketing standpoint, companies should work backwards; first thinking about
customers and then production

ARTICLE 3: STRATEGY INSIGHT IN 3 CIRCLES

1st circle: Consumer needs: What the customer segment wants

2nd circle: Company offerings: How customers perceive the company's offerings

3rd circle: Competition offerings: How customers perceive competition’s offerings

Places in diagram:
A: Our points in difference (PD): What we have, that competitors don't, and consumers
want:
-How big is our advantage? What is it based on?
-Companies value ‘’A’’ the most, but to the eyes of consumer, A is miniscule
B: Points in parity (PP): What both we and competitors have that consumers want
-Are we delivering better than competition in the area of parity?
A&B: How well our offering fulfils consumers’ needs
C: Their points in difference: What competition offers, that we don't, and consumers
want
-How can we counter the competitor's advantage?
D,F,G: What value does our company (and competitors) offer that consumers don't even
want.
E: White space: Room for growth; unfulfilled needs

ARTICLE 4: THE COHERENCE PREMIUM

The coherent company concept states that the best companies are those focused on what
they do best. Simple, but not everyone does it.
-Aligns differential capabilities with operating decisions and market position

Non-coherent companies: Focus more on external positioning than internal

capabilities.

Pressure from top-line to grow quick and follow current trends makes them chase
businesses where they don't have the capabilities for success

Companies should not follow market signals blindly or ignore them, instead, they must
first understand what they can do well, develop those capabilities and interlock them
(mutually reinforcement). Those capabilities then should be aligned with the right market
opportunities
-Coherence premium: Market reward from a coherent company
Capabilities: Something that you do well, that adds customer value and competition
cannot beat. Component of core competency (the “why” they do well). It's a tool used
to enable companies to out-execute their rivals on important measures. Coherency comes
from answering

❖How are we going to face the market? Need a clear understanding of how they create
value for customers. Flexible yet capable of focus strategy and decision making.

❖What capabilities do we need? The engine of value creation. The article recommends
3-6 mutually reinforcing capabilities that give a competitive advantage.

❖What and to whom are we going to sell? Coherent companies build their product
around their capabilities. The external market is scanned for new opportunities that
align with them.

ARTICLE 5: TRENDS THAT SHAKE UP BUSINESSES

Trend-riding, if done correctly, can be beneficial for companies. Obvious trends are easy
to use for companies, however, the real value lies in less obvious, more complex trends
in consumer aspirations, attitudes and behaviours. Basic innovation strategies for
tackling trends
1. Infuse and augment: Aspects of the trend are infused into an existing product category
augmenting the new product while maintaining coherency. Basically, new product
retains most of its traditional functions, but new ones are added that address needs
unleashed by trend
-Still maintains product category

2. Combine and transcend: Combines existing features with new ones arising from a
trend to create a novel (new and unique) experience that transcends existing product
category. More radical approach. Ex: Nike getting into digital market

3. Counteract and reaffirm: Develops products with attributes that counteract negative
views about it, arising from new trends. Reaffirms the product as still relevant. Ex; video
games that promote physical activity.

Addressing trends:

1. Identify trends that matter: Not all trends are enough to change consumer aspirations,
attitudes and behaviours. Find trends that:
-Ripple effect: Does it affect multiple areas of consumers' lives?
-Impact: Does it profoundly impact consumer priorities?
-Scope: Does it encompass a large number of consumers?
-Endurance: Are there indications that the trend will last?
2.Conduct separate explorations
-First: How does the subtle effect of the trend affects consumers goals, beliefs
and perceptions, etc
 -Second: Consumers' existing perception of your product. Use research
techniques
Then compare results between trend and product perception, find key links
3. Isolate potential strategies: Based on the key links.
-Infuse / augment: Product connects with trends
-Combine / transcend: Somewhat disconnection between product and trend
-Counteract / Affirm: Product and trend clash → reaffirm core values.

What should not do: Superficial response, waiting too long, failure to recognize trends
that are actually from outside the product market.

ARTICLE 6: STRATEGIES TO FIGHT LOW-COST RIVALS

Low-cost businesses are becoming direct rivals to traditional businesses, who are only
experienced in competing against equals. To ignore or treat low-cost businesses as normal
rivals is a huge mistake and leads to market-segment losses.

How are low-cost sustainable? Despite generating small gross profit margins (cost-
price), their operating expenses are very low, resulting in HIGHER operating margins.
That is, smart use of energy, spending less in non-crucial benefits → structure saves
expenses
-Consumer behaviour also works in their favour, as most will choose better
prices over small benefits.

WHAT TO DO?

1. ASK: Will the low-cost competitor take away current or future customers?
Yes: Look for options that don't involve a price war. Low-cost businesses experience,
machinery, cc and structure are better suited for a price war. Better low-cost interaction
No: The new low-cost may serve a different segment. It's better to wait but still observe
how the situation develops. Example: luxury brands whose status cannot be matched by
low cost

Future customers: Need to know that low-cost changes future customers' buying
behaviour. Once cheap → chance for always cheap

2. ASK: Are a sufficient number of consumers willing to pay more for extra benefits?

Yes: Rely on product differentiation. To build an efficient differentiation:

-Interlock differentiation tactics to create a better benefit. Don't use tactics in
isolation
-Persuade customers to pay for benefits. Small premium for greater benefits
-Bring costs and benefits in line before implantation. Structural changes are a
long and hard process, be prepared.

No: May need to learn to coexist with low-cost. Due to losing market segments,
companies
may need to merge or acquire rivals. Still room for other tactics though.

3. ASK: If I set up a low-cost venture, will it generate synergy with my existing

business?

Yes: A dual strategy refers to setting up your own low-cost venture. Example of vertical
differentiation. May compete with the parent company for sale but, in the end, more
market share is covered, May need a different name and / or become independent

No: Switching to conquer: If there's no synergy options and coexisting is not an option:
-Switching to solutions: Low cost only offer basic needs, so they can’t sell
solutions. Attract customers by solving their problems and offering products /
services as an integrated package. Need understanding of consumer
-Switching to a low cost: Rarely succeed though, different capabilities are needed.
Hard to change the whole company structure.

ARTICLE 7: BRANDING IN THE DIGITAL AGE

The internet has changed how consumers engage with brands; many traditional ways of
marketing are no longer sustainable. An example is seen in buying behaviour:

Funnel metaphor:

Traditional way of viewing the DMP. Consumers start at a wide disposal of options
and narrow them down to a final choice. Marketers use push strategies via paid media
to build brand awareness and inspire purchase. Outdated: Too rational and does not
capture consumer engagement

Consumer decision journey:

Instead of a systematic selection of brands, consumers go through different stages before

deciding. Main difference lies in the after-purchase; consumers enter an open-ended
relationship with the brand and share their experience through the internet
-Awareness of need, consider, evaluate, purchase and “post choice evaluation”

Post choice evaluation: “Enjoy, advocate and bond’’. After a purchase, a deeper
connection between the product and consumer begins as they use it. When consumers are
pleased, they advocate it word of mouth or online → shifting others evaluation
towards said product.

May produce a loyalty loop: Consumers skip early stages and directly buy that product.
The consumer decision journey also highlights the importance: (added to traditional paid
media)
-Owned media: Channels that the brand controls
-Earned media: Consumer created channels (review sites)

CDJ driven strategy

Focuses on determining which touch points are priorities, how to leverage on them and
allocate resources accordingly. This is done via a customer plan that aims to create a
coherent customer experience via shopping experience, social media, after-purchase
interaction, etc

ARTICLE 8: A NOTE ON CONSUMER MARKETING SEGMENTATION

Goal of marketing segmentation: Parts total market of a product into smaller,

targetable groups based on their characteristics. Segments help identify targetable
customers, avoid trial-error strategies, address consumer needs and build consumer data
for planning

Based on underlying assumptions:

-Consumer behaviour is not random: Isolated groups have similar patterns and
needs
-Efforts should be concentrated (targeted) in segments yo can fulfill best
-Unique marketing strategy, for each segment

1. Choosing segments: Segment dimensions can be generally separated into 2 broad

classes:
-Consumer background characteristics: Who the consumer is
-Geographic, demographic, psychographic general lifestyle
-Consumer factor history: What consumer do with the product
-Product usage, product benefit and decision process

Dimensions are subjective, other authors place history under consumer behaviour and
lifestyle as a psychographic factor. Companies should also address attractiveness:
-Homogenous, identifiable, reachable and large-enough

GENERAL PROCESS for segment application:

1. Define purpose and scope of segmentation
2. Analyse market data
3. Develop segment profiles
4. Evaluate segmentation
5. Select target segments
6. Design marketing strategy for each
7. Revaluation of segmentation

ARTICLE 9: SEGMENTING THE BASE OF THE PYRAMID

The base of the economical pyramid represents a market opportunity, due to its size,
but also a risk; profit-focused companies tend to face resistance by base population

To be successful at the base, companies should address their social (civic) responsibility.
This benefits both the population and your company → building private (directly) and
public value (indirectly). Therefore, communities should benefit from your product,
usually in terms of better living conditions and opportunities. The base is divided in 3
segments:

1. Low income (3–5$ day): Most have some secondary education and basic skills to enter
the job market. Able to make some purchases and cover some needs
-Value-Creation role: Consumers: Companies should offer affordable / low-cost
products to cover their needs. Have ability to buy

2. Sustenance (1-3$ day): Poor education and skills → unstable earnings. Present in
informal markets and rural areas.
-Value-creation role: Co-producers: With training and job conditions, they can
be integrated into the workforce. Have some, but lower, consumer value

3. Extreme poverty (>1$ day) Extreme lack of basic necessities and living conditions.
Almost non-existent education and skills. Present in even more informal markets.
Reliant on help from non-profit organizations
-Value-creation role: Clients: Companies can work in partnerships with NGOs
and government. Public relation marketing channel

ARTICLE 10: REDISCOVERING MARKET SEGMENTATION

Smart segmentation refers to an effective use of all segmentation domains to find

potential consumers who we can create an emotional connection with.

This term is used to oppose the traditional segmentation, which is solely focused on
geographic and demographic segmentations. When consumers started being less
predictable, psychographic segmentation started to be used; still wasn't enough (too
focused on identities that forgot useful product features). Smart segmentation started
relying in behaviour domain and also looked for certain criteria:
a. Reflect the company strategy: What are we trying to do? Segmentation should
follow the company strategy.
b. Reveal sources of revenue: Which consumers drive profit? Potential
consumers should be ranked by profitability. Efforts should be concentrated in
those that drive profits → use characteristics of best customers to find similar
profiles.
c. Pinpoint consumer value, attitudes and beliefs. Attitudes matter in buying
decisions? People's lifestyle, attitudes, self-image and aspiration should be related
to product → so target them. They change over time
d. Focus on actual consumer behaviour. What are consumers actually doing?
Focus on consumer behaviour and perform lab simulations
e. Make sense to top executives: Does it make sense? Segmentation should be
clearly stated; top-brass needs to know what is happening and goals
f. Anticipate changes. Can our segmentation register change? Segmentation
should be an ongoing search for answers. Dynamic in consumer needs, attitudes
behaviour and market conditions (fluctuation, new tech)
Levels of importance in consumer expectations:
-The shallow end: Just want products that will save them time, money and
effort.
-In the middle: Concern about quality, design, complexity and potential status
-The deep end: Concerned about core values and emotional investment
(football shirt)

ARTICLE 11: CONSUMER VALUE PROPOSITIONS

Value propositions are statements that describe the value a product offers to the

consumer: Types:

1. All benefits: Why should you buy our product? Lists all the benefits a product offers,
the more the better. Easiest, cheapest and most common, as it requires little knowledge
about consumer and competitor
-Drawback: Benefit assertion: Advertise features that actually provide no
benefit or value to targeted consumers.
-Also, heavily illustrated points in parity with competition. It's better to focus
on Points in Difference, what stands out about you.

2. Favourable points in difference: Why purchase from us instead of competition?

Lists all the favourable PD between product and competition. Explicitly recognized that
consumers have alternatives, but that we offer a unique benefit.
-Drawback: Value presumption: Assumption that our PD is favourable to
customers, we often stress benefits that consumers actually don't care about.

3. Resonating focus preposition: What worthwhile attribute do we offer that others

don't? Stress only a few PD that consumers actually care about and bring value. May
even show a PP to correct incorrect assumptions. Requires high consumer and
competition knowledge.

-Drawback: Mistaking points of contentions (PC): Elements which the company

believes are PD, but consumers think are PP. Need to address positioning

ARTICLE 12: ANALYZING CONSUMER PERCEPTIONS

Understanding consumer’s perception of the product compared to competitors is

necessary to achieve a desired product positioning

1. DATA AND PROFILE ANALYSIS

First, companies must collect data about their users. Many ways, surveys, questionnaires,
etc; usually rating attributes in a quantitative scale. Note difference between:
-Perception data: How consumers see the product. Ex: Volvo is safe.
Homogenous
-Preference data: What consumers like. Ex: I like Volvo. Heterogenous
Using the acquired data, profile analysis of consumers can be built. Can display
information in different forms, such as an average or by using a graph. Also known as
‘’snake pot’’ given that the more brands involved, the messier the results → may need
more powerful techniques:

2. PERCEPTUAL MAPPING

One such better technique is perceptual mapping; a map that locates brands based on the
perceived value consumers have on certain attributes. Two types

❖Attribute Rating Method: Includes rating of items on pre-specified attributes. Uses

attributes that can be verbalized and accurately rated in a similar context (objective).
Uses various graphs

❖Overall similarity method: Rates overall similarity between brands. Uses attributes
that cannot really be verbalized and rated in similar context between users
(subjective). MDS graph (2D)

3. APPLYING THE MAPS

There are 3 major ways in which perceptual maps are used in marketing:
-Understanding of current positioning: Of you and competitors. Also show
unfulfilled niches.
-Test perception on new product: Helps see if new product will be well received.
Should it be introduced or not
-Provide direction for R&D: Helps find ideal combination of product
attributes in market

ARTICLE 13: STOP CONSUMERS FIXATING ON PRICE.

Within saturated markets, it is common to see commoditized users; people that treat
shopping goods as commodities and, therefore, only focus on price. The natural response
of companies is to cut prices, which reduces brand equity, profit margins, develops low
consumer expectations and cannot even always be done (low-cost fighting). This article
focuses on how to make consumers care again about quality, differentiation and personal
relevance using, ironically, price as its main lever.

Why does commoditization occur?

-Logically: Product starts competing with other products, undistinguishable in
terms of tangible features and capabilities.
-Marketers: Psychological state; where buyers display scepticisms, routine
behaviour, low expectations and effortless transactions

Because the sole focus on price, marketing and innovation alone won't catch their
attention, therefore, it's better to change what they care more about → price. 4 key
strategies
1. Price structure to clarify advantage
Use pricing to draw attention to the value and benefit your product delivers. This is
done by aligning the pricing structure (the basis in which you price products) with the
main benefit
Makes consumers actually think about the need for the extra benefit, rather than just
price
-Example: Price on miles driven → frequent drivers get interested

2. Wilfully overprice to stimulate curiosity

Consumers know that price is a sign of quality; charging a distinct premium on a
homogenous-priced product makes consumers ask why it is more → making them think
about the benefit of the product. This changes their “cheap is best” ideas into “what
do I actually need” → cutting prices does the opposite

3. Partition Prices to highlight overlooked benefits

Price partitioning refers to breaking price into component charges. This allows
consumers to dissect and give thought to individual benefits.
-Example: tv offering channel, internet, etc bundles.

4. Equalize Price points to crystallize personal relevance

When a company offers a large number of products, commoditized users will often just
choose the cheapest option (instead of the one that would give them more satisfaction)
Equalizing the products may affect product margins (so it's not common), but it
motivates consumers to choose what they actually want; giving them a more pleasant
time with product → sales volume and frequent customers that appreciate the variety.
-Example: Apple music charging the same for all music regardless of popularity,
consumers started listening more.
In general, price can shape product valuing and appreciation; challenging consumers to
actually think about the product they are paying for.

ARTICLE 14: PRICING TO CREATE SHARED VALUE.

This article highlights that profit focused firms that look for highest margins in each
transaction are outdated and don’t work with modern customers.

It states that “charging max” makes companies lose customers (feel abused) and also
fail to create new value - short term results only. Of course, financial management is still
important as

companies need profit. Instead, they should treat the market as a win-win situation for
them and consumers, a collaborative process where both gain value (shared value:
long term).

The pricing strategy should engage customers in value creation and in customer
perception about what they want. Share value strategies:
1. Focus on relationships, not transactions: Firms should strive to identify consumers
with the brand, building a loyal base and not consumers that just come and go. Not
treated as just wallets.

2. Be proactive, not reactive. Reactive pricing sets price according to consumer

complaints or competition. However, proactive pricing aims to discover consumers'
needs and price accordingly. Use of market research. Encourage customer behaviour
that benefits both.
3. Use flexible pricing. Each customer values a product differently, and pricing should
reflect that. Prices should be flexible to shifting consumer needs, ensuring value
creation.

4. Promote transparency. Transparent companies generate goodwill, trust and

customer engagement (loyalty); cheaper to retain, make more expensive purchases, give
valuable feedback and are more forgiving of mistakes. Lack of transparency distances the
firm from consumers.

5. Manage the market standards for fairness. Pricing should be fair in the market and
meet consumer expectations, ensuring a shared value. In summary, to be able to create
shared value, companies aim to build relationships with the consumer and be proactive,
flexible, transparent and fair in their pricing.

ARTICLE 15: PRINCIPLES OF PRODUCT POLICY

Product: Anything that's offered to a market and satisfies a need. Dimensions:

→Nature of consumer buying behaviour
-Convenience goods: Purchased without much consideration. Wide available
-Shopping goods: Involve more planning and some comparison
-Speciality goods: Rather inelastic demand, only available in selected outlets
→Level of involvement in purchase process
-High involvement: Spend more time and energy on purchasing
-Low involvement: Spend less time and energy on purchasing
→Type of benefit:
-Functional benefit: Logical advantage
-Emotional benefits: Psychological advantage
→Substance: Most products have both, as they are a bundle of benefits
-Tangible
-Intangible
→Need satisfaction:
-Core product: Serves a direct, primary benefit. What consumers actually buy
-Augmented product: Additional benefits of the product, such as feeling of
belonging.
Enhanced by brand equity (positive effect brand has on customers, affects willingness
to pay).
1. PRODUCT MIXES.

A product line is a group of similar products sold by the same company (ex; coca cola
light and normal). A product mix refers to all the product lines a company has.
Productions can be analysed in terms of length (# items) and depth (# of versions).

Product lines can also stretch:

-Horizontally: More offerings that don't differ in an objective sense, but on
preference (normal coca cola vs vanilla coca cola)
-Vertically: Offerings differ in an objective sense → price and performance
(normal coca cola vs premium coca cola - hypothetical)
Product lines should be carefully planned to avoid intra-brand competition or insufficient
market coverage. Removing negative product lines is not ideal, but impact possibly long-
term.

ARTICLE 16: STRATEGIC BRAND VALUATION.

Brand valuation: Process of calculating the brand´s financial value. Essential for
offering a competitive advantage. Management usually relies on marketers for this
information, but the reality is that it is computed - and used for - by many departments.
An example can be seen in accountants, traditionally focused on history rather than
future, and normally lacking an external market perspective. On the contrary marketers
focus on future sales and use of external information. This has led many to believe that
there’s no connection between the two, which is totally false. Examples are seen in:
-Lifecycle costing: Compilation of asset costs during lifetime
-Target costing: Estimate of production costs based on forecast
-Customer costing; Determines profitability by consumer segment
Moreover, a disconnection between marketing and accounting leads to the creation of
surplus information channels that even overlap with each other; wasting resources and
creating miscommunication between branches.

Brand valuing is a more comprehensive example of cooperation not only between

marketers and accountants, but other departments. Here, accountants assign financial
value to the brand in a standardized manner compared to other assets (legitimize it),
which they then use for managerial accounting and analysing short-term expenses and
investments on the brand in the long-term. As for marketers, it helps analyse future sales,
promotions, importance of brand during consumer DMP, etc. Effective brand valuation
information travels through the company, making them cooperate on a common strategy
for the brand.
-Serves as a bridge between internal and external reporting.

→Brand valuation methods

-Cost based approaches: Focuses solely on costs and provides little future -
oriented info. More conservative and least useful for brand management
 -Market based approaches: Estimates the amount for which a brand can be sold.
Internally focused. Needs market value. Show goodwill
-Income based approaches: Estimates future net revenues relating to the brand.
-Formulary approaches: Several criteria for brand valuation; profitability,
strength, attributes and factors (leadership, stability, trend support, etc)

ARTICLE 17: STRATEGIC CHANNEL DESIGN.

Distribution channel: Chain of intermediaries through which a product goes before it

reaches end-users. When choosing their channels, they must use design principles that
are aligned with their overall competitive strategy and objectives

Nowadays, shifts in contexts are forcing companies to reconsider their distribution

channels. These changes are slow due to the complexity of current channels , as a
consequence, many managers decide to keep outdated channels or make few customary
changes, resulting in growing mismatch between firm's strategy and distribution.

1. FORCES FOR CHANGE

Most firms usually try to use their established distribution channels, rarely changing.
However, there are forces that force change: 3 keys:

→1. Proliferation (increase) of customer needs:

Traditionally, companies relied on more direct distribution for small groups of customers
and intermediaries for selling to larger groups, wide coverage. However, the
fragmentation of the market presents a need for more complex distribution. Factors that
promote mass customization (products offered that are customized to fit specific needs):
-Expanding capabilities for addressing variety: Firms are more able to address
each customer individually due to technical advances
-Channel diversity: Distribution has now more possible channels and is flexible
-Customer expectations: Customers have gotten used to customized products
and greater services.

→2. Shifts in the balance of channel power. When intermediaries gain a lot of power
of control, it affects suppliers negatively. Elements that contributed to buyer’s power:
-Enhanced bargaining power
-More knowledgeable buyers
-Threat of backwards integration

→3. Changing strategic priorities

A change in the company's strategy needs a change in distribution. Effects on

distributions:
-Vertical compression: Take out a distribution channel (such as wholesaler) to
reduce risks and cost. May change to a third party for this.
-Horizontal diversity: Channels start conflict between each other.
Designing a better channel strategy: Aim to enhance the delivery of customer value
proposition. May need to do a SWOT analysis, assess consumer needs, align channels
with competitive strategy, decompose and recompose channels, invest in learning, etc.

Good distribution channels have:

-Effectiveness: On consumer requirements
-Coverage
-Cost-efficiency
-Long-run and change adaptability

ARTICLE 18: THE FUTURE OF SHOPPING.

Omnichannel retailing: Business strategy where multiple channels (touching points)

become integrated to give customers a more seamless experience. The article states that
e-commerce giants (such as Amazon) are overpowering traditional retailers because
of their use of omnichannel retailing and inherit benefits of digital shopping.

The retail business has experienced many descriptive changes during the years, the newest
one arising from the development of digital technology. Traditional retailers must adapt
to the new context, and that means adopting an omnichannel retailing strategy that
includes a mix of digital and traditional communication channels → they need to
facilitate the customer experience.

Factors holding traditional retailers back:

-Computer literacy: Many retail managers lack the technology expertise and
interest to adapt to the new needs. Technophobia
-The dot.com bubble affected many businesses, who then decided to separate
from the online environment.
-See digital retailing as a competition, a threat, instead of as a tool
-Focus on profit margins rather than the return on investment on equity (roe)
and growth
-Not used to breakthrough innovation, comfortable with incremental
improvements

Customer needs: According to the article, customers are now looking for both the
advantages of digital (broad selection, information access, etc) and physical shopping
(personal service, direct interaction with products, instant gratification). Omnichannel
strategy for traditional retailers allows this, giving them an edge over digital competition.
Some other benefits:
-Product can be more easily customized
-Information is easier to get
-Advertisements and coupons are easier to offer, etc
“Certain experiences are impossible to get in digital-only retailers”
Building an omnichannel organization: Not easy; needs innovation, creativity,
technologically skilled employers, consumer research and taking risks. Benefits
outweigh though. Mainly:
-Innovation needs to be adopted early, frequently and broadly
-Skills need to be up to date to leading edge

ARTICLE 19: THE ONE THING YOU MUST GET RIGHT WHEN BUILDING
A BRAND

Social media has now become a key factor in marketing and consumer engagement. Many
view it as a replacement for traditional marketing, however, the article concludes
differently

New brands (or start-ups) should exploit the advantages of social media while staying
true to their basics, that is, developing and delivering an effective brand promise.
-Many views social media as a replacement for traditional marketing, which is
not, it is a tool for delivering the basics even more effectively.
-Losing sight of the fundamental always hurt companies
-Marketing playbook should be revised, not rewritten

Recently, successful companies have taken a shift from product to consumer-oriented

business:

They use social media as a tool for engagement and collaboration: Boosting brand
awareness, sales and, most importantly, gaining a (better and faster) understanding of
consumer insights → how they fit into consumers' lives. Capitalize on social media

This consumer understanding should add value to the fundamental marketing

playbook:
-Offering and communicating a clear customer promise
-Deliver it to build trust
-Continually improve on the promise
-Innovate beyond

Customers want engaging, authentic and trustworthy brands; this can only be done by
actually delivering the product / experience promised; that's why fundamentals
shouldn’t be abandoned.
-Fast propagation: Undelivered and dissatisfying customers is now more
dangerous than ever: backlash prophages online and gains traction faster and
wider.

How to avoid failures:

-Stay firm to brand promise (playbook).
-Use social media for customer insight
- Strive to go viral, but protect brand
-Engage with customers within social (unwritten rules). Internet savvy
 ARTICLE 20: MOBILE USERS → APPS, NOT ADS

Consumers spend a lot of time on their phones, and companies look to take advantage of
it. A common marketing tactic in this context is mobile advertisements. They are
straightforward, mass targetable and easy to make; they may not be the best option:
-People dislike mobile ads because they are too pushy and intrusive
-Take a lot of space and are hard to close (small x). This is why phone ads are
disliked more than computer ads, smaller and easier to close

Instead, the article states the idea that building an app might be a better marketing
communicator, as they not only promote the brand better (more engaging) but add value
to customers. Might even become a new revenue stream. Strategies for apps:
-Add convenience: Apps that give consumers a more seamless experience Ex:
airplane apps for check-in and flight monitoring. They strengthen consumer
relationships but don't really attract new customers (also hard to differentiate)
-Offer unique value: Apps use phone-advantages to offer unique values not in
store or computer. Ex: Nike + live tracking. Also promote customers to buy
products for better experience (trackable shoes)
-Provide social value: Apps that promote themselves via social interaction →
strengthening communities. Ex: Facebook users sending others Starbucks gift
cards
-Offer incentives: Apps that offer incentives for customers to get a product.
Specific promotions for app-users. Ex: H&M app offers discounts
-Entertain: Games are one of the most engaging marketing channels. Brands can
create associated games to promote themselves indirectly. Ex: Red bull sports
game or fate grand order.

ARTICLE 21: CONSUMER NEUROSCIENCE

This article explores 5 concrete ways in which neuroscience methods can be applied to
marketing, to better understand decision making and related processes. Many businesses
have neuromarketing tools and divisions.

1. Identifying mechanism: Neuromarketing can serve as an information source to

validate, refine or extend existing marketing theories. Provide psychological / underlying
sources

2. Measuring implicit processes: Provide information about implicit processes usually

hard to assess using traditional approaches

3. Dissociating between psychological processes: Traditionally, the relationship

between psychological processes and behaviour / decisions has been heavily simplified.
Neuromarketing offers a more complex approach.

4. Understanding individual differences: People are fundamentally different, and the

traditional approach grouped them in very specific goods, which is not quite accurate.
Understand individual differences.
5. Improving predictions of behaviour: Incorporating neuromarketing into the decision-
making models can improve the predictions of customer actions

Neuromarketing challenges:
-Provide little casual evidence on their own. The understanding of brain
behaviour, on its own, is useless. Traditional marketing and behavioural studies
must complement neuroscience research.
-Backward inference: Infer behaviour from brain / psychological signals. Contrary
to traditional, forward inference (infer psychological signals from behaviour).
Both need to work together
-Much smaller sample → less reliability.