S02: THE BIRTH OF THE SWATCH NEEDS, WANTS, & DEMANDS

• Needs – are the most basic concept that underlie

PRODUCT CATEGORIES marketing. These are motivating forces that compel
• A set of products that serve the same needs and/or action for their satisfaction (e.g. hunger).
solve the same problems • Wants – are forms taken by a human need as shaped
• Firms communicate products’ category by culture and/or personality and are described in
“membership” through referential cues terms of objects (e.g. food).
o Referential cues are described by each • Demands – are human needs that are backed by
element of the marketing mix buying power, given one’s wants and resources (e.g.
the type of food one wants to eat)
BREAKAWAY POSITIONING STRATEGY
• Technical Definition: a marketing technique in which IT IS NOT ABOUT CREATING NEEDS
customers recognize the product based on its features
such as design, functionality, appearance, feel, luxury,
distribution channel, pricing, or features.
o Involves combining features of products in
distinctly different categories
o Helps a brand create its own image or niche,
which may lead to impulsive buying and/or
repositioning a mature product for growth
• The leader is able to leverage and then borrow
associations from a different product category in order
to encourage consumers to mentally categorize the
product differently
• Development of new internal competencies: Swatch
had to develop new retail relationships and BASIC PREMISE IN MARKETING
manufacturing innovations • Value creation through improving the difference
• Companies rely on an integrated marketing plan to between a company’s offering and that of its
make the product reinvention as explicit as possible to competitors in an attribute important to customer
consumers • Differentiation is created by defining a strategy that is
based on segmentation, targeting, and positioning
KEY TAKEAWAYS
• New customer base – the watch market attracted THE MARKETING MIX & BEYOND
customers who never showed interest before • Product (Product-Centrism vs. Customer-Centrism)
• Expansion of category boundaries image – watches as o What: the product or service being sold
fashion accessories now comprise a significant portion o What matters: selling solutions beyond
of the watch market products or services
• A change of how quality and value were perceived by • Price
consumers – more emotional and less rational o What: how much a potential customer pays
• Change in consumer purchase criteria – from or is willing to pay
thoughtful to impulsive purchasing o What matters: perceived value
• Change in consumption patterns – leveraging existing • Place
patterns in other categories to transform the familiar o What: where the product or service is sold
into something different yet equally familiar o What matters: giving customers equal access
• Change in the firm's competitive set – from competing through multiple channels
against other watchmakers to competing against • Promotion
fashion accessory makers (and digital giants today) o What: how we sell (through communication
and engagement)
S03: MARKETING IN THE MANAGEMENT PROCESS o What matters: making customers a part of
the story (from storytelling to story-making)
MASLOW’S HIERARCHY OF NEEDS
• We are motivated by unsatisfied needs. As we ascend
to higher degrees, our needs change.
• Levels: Physiological, Safety, Love & Belonging,
Esteem, Self-Actualization
KEY TAKEAWAYS: MARKETING MYOPIA (READING) RESPONSE OF TRADITIONAL SELLERS: REDEFINING THEIR
• Marketing is not about selling but understanding VALUE PROPOSITION
customers • Best Buy’s key problem was “showrooming,” the
• Alternatives that can substitute our current product practice of visiting brick-and-mortar retail stores to
can always be found research merchandise before purchasing it online for a
• Consumers are constantly changing and evolving, and lower price
in response, companies must do so too • How should Best Buy respond?
• Knowing the market is obviously key; however, it is o Match prices on Amazon
equally important to anticipate the market you will o Improve its service
participate in o Reduce the size and number of stores
• Curing the myopia involves identifying new solutions o Improve the overall experience
that meet consumers’ needs sooner than any existing • Bankruptcy Hypothesis: What is the value of Best Buy
potential competitors to consumers? To manufacturers?
• How can Best Buy extract value from manufacturers?
S04: AMAZON IN 2023 Stores within stores? Fixed fees for showcasing?

KEY THEMES WHOLE FOODS ACQUISITION: IMPROVING THE ECOSYSTEM

• Competition is very different in the digital world • In general, acquisitions make sense under these four
• New players are creating an ecosystem of products conditions:
and services to gain new competitive advantage o Buying an asset at a “good” price
• We need to analyze the reasons that led Amazon into o Having the ability to run the acquired
entering into certain unrelated products and services company better and more efficiently
• We need to understand how traditional players (e.g. o Potential to gain market power that allows
Best Buy) should compete today and how they should the buyer to generate higher margins
redefine their value proposition and business model o Potential to exploit synergies with the current
business
AMAZON: INITIALLY AN ONLINE RETAILER • However, Amazon purchased Whole Foods at a 27%
• Key competitive advantage of retailers (e.g. Barnes & premium (expensive to convert into warehouses),
Noble) were their physical stores and associated high which made it unlikely to gain enough efficiency to
fixed costs compete in an industry with narrow margins and large
• Amazon turned that competitive advantage into a brick-and-mortar retailers
disadvantage and made it difficult for traditional • The acquisition made sense due to these reasons:
players to compete o Synergies with the current business – cross
• The value proposition transcends price and takes the selling to the wealthy segment and gathering
form of trust and service data on consumer behavior
• Certain competencies such as logistics for o An opportunity for Amazon to continue
warehousing, sorting, shipping, and technology are building its ecosystem
required for success
KEY TAKEAWAYS
NEW SOURCES OF COMPETITIVE ADVANTAGE • Digital technology is fundamentally transforming the
way companies define what business they are in
• Competitive advantage results from building an
ecosystem that provides complementary products (or
services) to consumers and leverages company skills
and capabilities across the spectrum
• Creating its own ecosystem allows digital giants to
lock in its consumers
• It becomes harder to define competition in a
traditional set, as Amazon’s competitors are retailers,
media companies, search businesses, and tech
companies. Industry boundaries may no longer be
defined by traditional SIC codes
• Incumbents and traditional players such as Best Buy
need to redefine their value proposition to compete
with emerging digital giants
 S05: CONSUMER BEHAVIOR FRAMEWORKS (CONTINUED)
• High-Involvement vs. Low-Involvement (Cont’d.)
WHY STUDY CONSUMER BEHAVIOR? o High-involvement – idea is to reduce a
• We need to understand what consumers think consumer’s perceived risk (e.g. through easy
o How consumers decide what, how, and when return policies, guarantees, price
they want a product or service comparisons)
• Consumer behavior is about psychological process o Low-involvement – offerings must be readily
that underlie consumer choices available (e.g. products in checkout aisles or
“products that you may also like”)
WHY UNDERSTAND HOW CONSUMERS THINK? • Optimizing vs. Satisficing
• Organizations can use models to predict patterns of o Do we consider alternatives that are just
buying behavior “good enough” or do we prefer the best?
• These patterns are driven by a product or service o When we prefer the best, we decide under an
under consideration, the context in which buying takes optimizing dimension
place, and the people involved in the process ▪ Takes longer
• Understanding these patterns allows marketers to ▪ Requires expert advice
anticipate consumer behavior and tailor their selling ▪ May be determined by the length or
efforts to better match consumers’ buying processes the product or service usage
o Some consumers optimize while others
CONSUMER DECISION-MAKING PROCESS: PHASES satisfice (and that satisfies the bulk of their
• Pre-Purchase – a trigger, a search-and-consideration, purchases)
and an evaluation of alternatives o Go-to market strategies
• Purchase – making choices about which brand to buy, ▪ Optimizers – emphasis on the
which seller to buy from, how many of the offering to superiority of the offering
buy, and how to pay ▪ Satisfiers – make purchasing easy
• Post-Purchase – the likelihood to buy again, dealing • Compensatory vs. Non-Compensatory
with returns or complaints, and the next purchase o Decision-making can be categorized by the
amount of information used and trade-offs
CONSUMER DECISION-MAKING PROCESS: FRAMEWORKS made to arrive at consumers’ choices
• Cognitive vs. Emotional – are purchase decisions o Compensatory – involves considering all
driven by the mind versus emotions relevant attributes; a matter of trade-offs
o Cognitive – arriving at an economically o Non-compensatory – considering some but
optimal and rational choice; consumers are not all attributes; no potential trade-offs
more likely to actively seek out o Factors include the size of the choice set, the
o Emotional – feelings drive the buying process importance of various attributes to the
even when the rational decision makes little consumer, and the availability of resources
sense; placing a product where it is more o The dominant process that consumers
likely to be seen to encourage impulse buying employ should drive a firm’s marketing:
o Involves three factors – product type ▪ Dominating on a single attribute –
(involves thinking, feeling, acting), context, induce consumers to engage in non-
and individual differences compensatory decision-making
▪ Product Type – Utilitarian vs. ▪ Scoring well in all attributes –
Hedonistic/Self-Expressive compensatory; make all relevant
▪ Context – what is the context in information readily available
which the offering is consumed?
▪ Individual Differences – the same PEOPLE: THE DECISION-MAKING UNIT
products in the same context elicit • Individuals who affect, influence, and take part in a
different decision processes based purchase-making process
on individual tendencies • Consists of at least one buyer but often includes other
• High-Involvement vs. Low-Involvement individuals who can push the buyer toward (or away
from) the actual purchase decision
• Roles include buyers, influencers, gatekeepers, and
approvers
• The unique role played by each member must be
understood
CONTEXT IN WHICH THE PROCESS OCCURS THREE KEY TAKEAWAYS
• Social Media • Consumer preferences are constructed rather than
o Increase in the number of people consumers revealed
consult during pre-purchase and purchase o These are subject to marketers’ and
and the number of people involved in tastemakers’ manipulation, are unstable over
decision-making time, and are somewhat unpredictable
o In the post-purchase, social media enables o The use of big data and predictive analytics
consumers to immediately broadcast that rely on past purchase behavior as input
satisfaction or dissatisfaction are unlikely to be successful at predicting
• Co-Creation & Consumer Involvement future consumer demand for fashion
o An increasing number of companies involve • Brands in fashion must determine their role
the consumer in the co-creation of products, o Marketers can play several roles (e.g. trend
services, and marketing materials followers, trendsetters, or tastemakers)
• “Conscience” Marketing o Brands must decide which role is right for
o Many consumers report wanting to buy their market position as different positions
socially and environmentally responsible require different core competencies
products and services • Marketing is a blend of art and science
o The artists involved in marketing (e.g. creative
KEY TAKEAWAYS: A SUMMARY directors, ad agency creatives, qualitative
• Marketing aims to understand consumers, who are market researchers, brand gurus, etc.) are
complex characters still critically important in delivering products
• Any aspect of consumer behavior might serve as a and brands that create real value for
useful basis of segmentation consumers
• Understanding consumers is an art, not a simple act of
reporting S07: BRAND POSITIONING
• When it comes to quality, perception is reality;
therefore, it cannot be assessed at purchase price THE VALUE DELIVERY PROCESS

MARKETING IN 2024
• Execution is key!
• Social media and the role of influencers are powerful
• Publicity and free advertising/conversations are
priceless
• Long-term change is unlikely
o Need to begin with a good product vision, not STRATEGIC VS. TACTICAL MARKETING
just with good execution • Strategic marketing directs marketing tactics with the
company’s short- and long-term goals in mind
S06: PREDICTING CONSUMER TASTES WITH BIG DATA AT GAP • Tactical marketing brings strategies to life with
attention to detail – and measurement
MAIN DISCUSSION POINTS
• Firing creative directors and replacing them with big SEGMENTATION
data-driven creative processes • An act of “identifying variables that will maximize the
• Contribution of creative directors differences between segments while simultaneously
• Predicting consumers’ fashion preferences minimizing the differences within each segment”
• GAP’s brands
• Implementing the sale of GAP products on Amazon
• Big data and predictive analytics in marketing

COMMON MYTHS
• Consumer preferences are stable over time
• Consumer preferences are generated by consumers
themselves
• Consumer preferences guide our purchase behaviors
FRAME OF REFERENCE S08: STARBUCKS CHINA: FACING LUCKIN, THE LOCAL
• A point of comparison that helps your marketers DISRUPTOR
position and differentiate your product within the
marketplace. Specifically, it refers to how customers MAIN DISCUSSION POINTS
see your product in relation to other products of a • Growth of a new retail market in China
similar type • Segmentation and positioning for Starbucks & Luckin
• Brick-and-mortar vs. new digital business models
POINTS OF DIFFERENCE • How is one different from the other? Differentiation vs.
• The unique characteristics that distinguish low-cost strategies
a product or service from other competitors in • Why are the differences relevant? “More-for-more” vs.
the market “less-for-less”
• These added features might offer you a significant • Multinational companies vs. domestic players in
advantage over your rivals and give customers a emerging markets (incumbent vs. startup)
reason to choose you over other options
• Price, customer service, product selection, or even THE VALUE CURVES
innovative technology, are just a few factors of points
of difference
• Not necessarily a fact, but something you aim to
deliver because of a fact

VALUE CREATION

POSITIONING STATEMENT TEMPLATE

• For (target group: who buys, who uses, or both), [brand
name] is a brand of (frame of reference: with whom the
brand competes) that delivers (point of difference:
that the brand delivers better than the competition)
because (of the basis on which the difference rests) UNIQUE SELLING PROPOSITIONS (VALUE-COST MATRIX)

BRAND REPOSITIONING
• The current brand positioning is not working
• Often indicated by declining sales and profitability
• Challenge lies in avoiding to alienate and lose existing
customers while attracting new target markets
• Can be effectively accomplished by seeking new
markets, new segments, new competitors, new
product uses, or new products and services
• Often accompanied by a new (or improved) claim

CONCLUSION: MARKETING ENTAILS

• Segmenting markets (as a group of consumers)
• Targeting segments (that must be accessible,
substantial, differentiable, and actionable)
• Positioning brands
VALUE PROPOSITIONS TACTICAL MARKETING ADDITIONS TO STARBUCKS
• Starbucks
o “Dine-in” experience in the form of a third
place where consumers can socialize, relax,
and indulge themselves
o Gives customers the status of sitting and
being part of an iconic US global brand, and
customers are willing to pay for it
• Luckin Coffee
o “Dine-out” experience, offering affordability
and the convenience of enjoying coffee KEY TAKEAWAYS
wherever the consumer wants, at the office • A sustainable business model rests on two pillars –
or university (second place) or at home (first profitability and value creation – and the absence or
place) decline in one will ultimately erode the other
o Aggressive and customized discounting • High value creation requires high investments
brings down effective price per cup to • Low costs to customers would not allow companies to
become one of the lowest in the country earn adequate returns on investments if there is no
high customer or transaction volume and low
TWO DIFFERENT COMPANIES expenses
• In an emerging market, players should focus on
growing the pie rather than competing against each
other

S09: PRODUCT MANAGEMENT

THREE LEVELS OF A PRODUCT

• Core Product – the core need that the product intends
to satisfy and that defines the category
• Actual Product – the overall product design and
product features (i.e. shape, taste, size, ingredients,
name, brand, color, etc.)
• Augmented Product – the set of benefits that, with no
actual product modifications, increase the offering to
consumers (e.g. donation of percentage to charity,
EVALUATION OF LUCKIN’S KEY RESOURCES free replacements, free trials, access codes, etc.)

THREE DECISIONS TO BE MADE

EVALUATION OF STARBUCKS’ KEY RESOURCES

CONCLUSION
PRODUCT LINE CONSIDERATIONS
• Starbucks, having developed delivery capabilities with
• Customer heterogeneity & requirement specification
a tie-up with Alibaba and its high profitability margins
to sustain it, will eventually catch up with Luckin in • Ability to configure the offering to the segment
terms of delivery • Competitive impact
• Luckin’s low prices could continue to sustain its value • Legitimization
creation, but due to its continued lack of profitability, it • Category size impact
will have no choice but to increase prices in the future • Net impact on own margins (cannibalization)
• Brand equity
• Cost of variety vs. scale opportunity
• Collaborator reaction (e.g. distributor/retail)
MANAGING PRODUCT & GROWTH: OBJECTIVES THE BCG MATRIX (CONTINUED)
• Stars: high-growth businesses, high-share products
o Need heavy investments to finance rapid
growth
o Eventually, growth slows down and the
company becomes a cash cow
• Cash Cows: low-growth businesses, high-share
products
o Need less investment to hold market share
o Produces cash (used to support other BUs)
• Question Marks: high-growth businesses, low-share
products
o Require a lot of cash to hold their share
o The question is which “?” should be built into
TYPES OF NEW PRODUCTS stars and should be phased out
• A new product based on an existing product (i.e. “new • Dogs: low-growth businesses, low-share products
and improved” models under the same brand name); o May generate enough cash to support
model changes may come at a regular interval or as themselves but do not promise to be large
technology develops cash sources
• A company’s initial entry into a product category that
already exists THE BGC MATRIX: OUR MARKETING STRATEGY
• An addition to an existing product line • Move our products or business towards the left
quadrants of the matrix (as it is easier in growing than
NEW PRODUCT SPECTRUM remaining in stagnant markets)
• Incremental improvements of an existing product o Gaining share in growing markets usually
• Expansion of an existing product line require high investments
• New product to the firm but not to the world • Our competitors’ strategy might cause the business or
• New-to-the-world (radical innovations) products to move to the right quadrants of the matrix
o Strong impact on the market or the company • Businesses or products have their own life cycle and
as time passes, market growth falls and changes their
THE BCG MATRIX position in the growth-share matrix
• Companies classify their products based on 2 factors o Tendency is to fall towards the bottom
o Market Growth Rate (x-axis) – provides a
measure of market attractiveness; different LIMITATIONS TO THE BGC MATRIX APPROACH
criteria might be applied based on the market • Implementation might be difficult, time-consuming,
▪ What’s high/low? and may incur significant costs
o Relative Market Share (y-axis) – a measure or • Measurement of market share and growth might be
ratio of company strength in the market with difficult
respect to its main competitors • Provides little advice for future planning
▪ RMS > 1 = generally high
▪ Problem lies in defining the market THE PRODUCT LIFE CYCLE: A DIAGRAM
THE PRODUCT LIFE CYCLE: CHARACTERISTICS & OBJECTIVES BRANDING IN THE AGE OF SOCMED (CONT’D).
• Most brands chase after trends but hundreds of
companies are doing the same. By targeting novel
ideologies flowing out of crowdculture, brands can
assert a point-of-view that stands out

KEY CONCEPTS
• Brand Purpose: what brands exist for
o Why a brand exists beyond making profit
o “...the way a company or brand behaves and
acts - as well as what they do and what they
make - has greater impact on people’s
interest and involvement than any individual
product or service they sell.”
• Distinctive Signs: brand name, logo, tagline
o Brand name
o Logo
o Tagline: about the brand as a whole and used
consistently by the company
o Claims: refer to specific moments,
FOUR ISSUES AN ORGANIZATION MUST ADDRESS WHEN
campaigns, products, business units
DEVELOPING PRODUCT POLICY
• Brand Personality: how a brand speaks and behaves
• Product Mix Breadth – refers to the variety and number
o Human characteristics attributed to a brand
of product or service lines offered
name
• Product Line Depth – the number of items in a given
o There is no evidence to support that brand
product line
personality can be measured, yet brands
• Product Item Design – refers to each individual’s have certain human attributes
product specifications o Individuals tend to relate to brands that share
• Product Life Cycle – designates where a particular some real or desired attributes of our
product or service is in the product life cycle personality
o We want a brand that speaks and behaves
S10: BRAND MANAGEMENT the way we do
o Can be described along five core dimensions:
CROWDCULTURE (CULTURAL BRANDING) sincerity, excitement, competence,
• The community that connects around authentic, sophistication, ruggedness
purposeful business, and ideologies • Brand Identity
o Brand identity vs. image: who you would like
BRANDING IN THE AGE OF SOCIAL MEDIA: TAKEAWAYS to be vs. who you really are
• Cultural Branding: social media has transformed how o Represents the desired meaning that the
culture works and digital crowds have become company authors for the brand
powerful cultural innovators o How the brand wants to be seen
• Digital crowds are effective at producing creative o Translates values and strategic vision of a
entertainment that companies can’t compete company into a consistent image that
o Mapping the cultural orthodoxy consumers become familiar with
o Locating the cultural opportunity o Right and clear brand identity can be a strong
o Targeting the crowdculture marketing tool for a company
o Diffusing the new ideology o Brand Identity Prism (Kapferer) – allows
o Innovating continually using cultural marketers to evaluate strengths and
flashpoints weaknesses of the brand
• Most social media marketing fails because of the ▪ Two dimensions: sender-and-
outdated notion of creating branded content; large recipient, externalization and
social advertisers fail to get a fraction of the internalization
mindshare of social media celebrities
• Disintermediation of traditional entertainment –
crowdculture brings together enthusiasts and
advocates of beliefs and interests
• To brand effectively with social media, companies
should target crowdcultures
 KEY CONCEPTS (CONTINUED)
• Brand Equity (continued)
o Brand Awareness: who knows you?
▪ Recognition and identification;
customers know about the
existence of the brand and can
recall the category it belongs to
▪ Two components: top-of-mind
(unaided) and aided recalls
o Brand Associations
▪ Anything connected to the
customer’s memory of the brand
▪ Associations are not formed not
only due to our interactions with the
organizations; many are formed
KEY CONCEPTS (CONTINUED)
from what others tell us about it
• Brand Image
▪ Stay aware of interactions – priority
o Concerned with what a brand stands for and
is to eliminate slightest chance of
the implied promises it delivers
any negative associations
o Developed over time through marketing
tactics (usually advertising and other
communication tools) with a consistent
theme
o Authenticated through the consumers’ direct
experience
• Brand Identity vs. Brand Image
o Brand Identity: answers the question of who
you really are; a promise framed by
marketers
o Brand Image: how the brand is actually seen
by those who interact with it, in the mind of
consumers
o The balancing art: brand image being
consistent with brand identity
o Brand Building Blocks

o Perceived Quality
▪ General approval not tied to specific
performance benefits
• Brand Equity (Brand Health) ▪ Quality is a perceptual entity
o A set of assets and liabilities linked to a ▪ Customers consider brand
brand, being rational/symbolic, linked to the performance on important
name/symbol, derived from positioning parameters
▪ Customers may skip a detailed
competitive comparison – they
make a relative judgment about
quality by assessing competition
▪ Quality perceptions influence
pricing decisions; consumers
support a premium price
KEY CONCEPTS (CONTINUED) KEY CONCEPTS (CONTINUED)
• Brand Equity (continued) • Brand Equity (continued)
o Brand Loyalty o Outcomes
▪ Loyal customers are willing to ▪ Increased loyalty
provide feedback, give time to ▪ Less vulnerability to competitive
respond to competitors’ innovation, marketing actions and crises
have less price-sensitive demand to ▪ Larger margins
competitor pricing, give the benefit ▪ Possible licensing opportunities
of the doubt, forgive an error, and ▪ Brand extension opportunities
are more profitable to serve • Brand Equity vs. Value: A Complex Link
o Measuring brand loyalty o Brand value: NPV of future cash flows from a
▪ Net Promoter Score (NPS) – three product/service less the NPV or future cash
categories: detractors, passives, flows from a similar unbranded product
promoters ▪ What the brand is worth to
▪ Repurchase ratio: repeat management and shareholders
purchasers vs. one-time purchasers o Brand equity: what the brand’s worth is to
▪ Upselling ratio: purchasing other consumers as they interact with it
products under the same brand o While measuring brand value has its
▪ Customer Loyalty Index (CLI): how usefulness, the act of measurement itself will
likely are you to recommend to not make a brand more valuable or less risky
peers? To buy again? To try other o Quantifying and managing brand equity is
products or service? critical to transferring value to shareholders
▪ Customer Engagement Numbers: o Both value and equity expressed in monetary
hard to track offline, but online units
encompasses activity time, visiting
frequency, core user actions

o Net Promoter Score (NPS)

▪ A measure used to gauge customer
loyalty, satisfaction, and
enthusiasm with a company that’s
calculated by asking customers one
question: “On a scale from 0 to 10,
how likely are you to recommend
this product/company to a friend or
colleague?”
▪ Aggregate NPS scores help
businesses improve upon service,
customer support, delivery, etc. for
increased customer loyalty
▪ NPS is important because it reduces
customer churn (more expensive to
acquire new customers),
encourages positive customer
behaviors (likely to buy when
referred by a person they trust), and
identify changes in CX and loyalty