Wharton Business School’s Introduction to Marketing

Course delivered by Profs. Barbara E. Kahn, Peter Fader, & David Bell IDcourserians sharing session by Andrea K. Iskandar

Scope and Limitations

Prof. Barbara E. Kahn

Marketing• Study about market.

• Seller’s market. Production: focus on company.

• Buyer’s market. Marketing: focus on customer and competition.

Marketing• 3 principles:

• Customer Value • Differentiation • Segmentation, Targeting, Positioning !

• 4 P’s: • Product • Place • Promotion • Price

Strategies for Market Leadership

• Know your markets

• Customers have the final say

• Commit to being first in the markets you serve

Strategies for Market Leadership

• Value mapping

Relative costs!to customer

Relative perceived benefits

—

+

— +

inferior value

superior valueeconomy

|

pari

ty

|

premium fair value line

Strategies for Market Leadership

operational excellence

performance superiority customer intimacy

operational competence

customer responsiveness

product differentiation

Building Strong Brands• Mental maps

• Core brand values:

• POP = point of parity

• POD = point of difference

• Brand mantras: communicate, simplify, inspire.

Consumer Behavior in an Omni-Channel World

• Information search • Consideration set / evoked set • Choice overload

• At the assortment stage, variety is good • At the choice stage, variety can become

complex • New model of satisfaction:

• f (perceived performance - expectations)

Messages that Catch On and Get Shared

• Social currency: we share what makes us look good

• Triggers: when reminded, we share

• Emotion: emotional messages are more powerful

• Public: making behavior public makes it more catching

• Practival value: we like to be useful and informative

• Stories: information travels under the guise of chatter

Prof. Peter Fader

Business Approach• Product-centric

• Customer-centric

Cracks in theProduct-Centric Approach

• Technology-enabled product development > commoditization

• Technology-enabled information flow > smart customers • Technology-enabled delivery > retail saturation • Globalization • Deregulation • Customers want “end-to-end solutions,” which may

require products/services from multiple vendors • Information systems enable customer-level tracking

Three Cheers forDirect Marketing!

• The individual customer is the unit of analysis

• Know who their customers are and what they buy

• Aim to determine marketing communication based on past purchases

• Constantly determine (and leverage) individual customer value

Strategies for Market Leadership

operational excellence

performance superiority customer intimacy

operational competence

customer responsiveness

product differentiation

Who is the customer?

Customer-Centricity• Customer centricity is a strategy that aligns a

company’s development/delivery of its products/services around the current and future needs of a select set of customers in order to maximize their long-term financial value to the firm.

• Customer centricity requires the company to be willing and able to change its organizational design, performance metrics, and employee/distributor incentive structures to focus on this long-run value creation/delivery process.

Customer-Centricity• Celebrate customer heterogeneity: distinguish

profitable customers from less profitable ones

• Focus on future profitability (CLV, customer lifetime value) rather than past profits

• Customer-centric organizational structure

• The competitive advantage: relationship expertise with respect to focal customers

Customer-Centricity• What to do with non-focal customers?

• Paradox of customer-centricity:the more that a firm tightens its central focus on a select group of customers, the more it needs its “non-focal” customers to stabilise the overall mix.

CPA vs. VPA• Metric used to guide acquisition activities?

• CPA • VPA

• VPA = CLV

Prof. David Bell

Four Unstoppable Trends• Democratization in access

• Value chain disruption

• Collaborative consumption

• Matching of supply and demand

success = product x marketing

marketing = STP and the other 3P’s (price, promotion, place)

Frictions in the Real World• Search friction

• Geographic friction

The Long Tail Concept

http://www.longtail.com/

Wrap Up

Strategies for Market Leadership

• Know your markets

• Customers have the final say

• Commit to being first in the markets you serve

Strategies for Market Leadership

• Value mapping

Relative costs!to customer

Relative perceived benefits

—

+

— +

inferior value

superior valueeconomy

|

pari

ty

|

premium fair value line

Strategies for Market Leadership

operational excellence

performance superiority customer intimacy

operational competence

customer responsiveness

product differentiation

The End

Course delivered by Profs. Barbara E. Kahn, Peter Fader, & David Bell IDcourserians sharing session by Andrea K. Iskandar