Consumer behavior

• Marketing


  The activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large

  
• Needs


  • Physical
  • Social
  • Individual
• Wants


  Shaped by culture and experience
• Demand


  Desire and buying power
• Value


  All benefits - All costs
• Value is the difference between all perceived benefits and all perceived costs (not actual benefits and costs)
• Perceptions are shaped by external and internal factors. Perceptions are subjective and not all customers see the same value and react the same way to a brand's marketing mix
• Need to segment the market based on how customers react to marketing mix

  
• Marketing manager

  Responsible for managing (identify/generate) the demand → He needs to influence its intensity, times and composition in order to achieve all company objectives
• The main objective of the marketing manager is to make the sales process easy and smooth, not to sell more (marketing is not about sales, that is responsibility of salespeople)
• In luxury, 30% goods and 70% services
• By definition, the main selling point of each brand is about the hedonic experience
• 98% of what marketers do today is Data Science
• Creativity, vision etc… still play a role but are losing ground to data, AI, metaverse etc…
• Drivers of change


  • Network technologies (access to secondary information)
  • Globalization
  • Privatization (not government ownership anymore, all in hands of private companies)
  • Deregulation
  • Retail trade transformation
  • Disintermediation (connect directly to final customer)
  • More competition
  • Convergence between sectors
  • Consumer participation (don't want to be a passive receiver of actions)
  • Purchasing power of customers (growing especially in Asia)
  • Information (the more information you get, the less rational you are)
  • Consumer resistance to traditional advertising
  • Social responsibility
  • Sharing economy
• Today the consumer is considered as an active part of a social dimension within which he acts and influences its behavior. The consumer is no longer rational, but is driven by unconscious processes which lead to highly illogical behavior
• Example of orange juice

  • Producer can use two types of promotional offers to make you buy the orange juice, either 30% price discount on one glass or 30% more quantity of orange juice for the original price
• For companies, 1% increase in price translates into 35% increase in net profit
• Human decision-making deviates from a rational, deliberate and conscious process
• Marketing orientation - Production

  1950s → Focus on production, efficiency, economies of scale
• Marketing orientation - Product


  1970/80s → Differentiate, improve quality and performance, work on the image
• Marketing orientation - Sales

  1990/2000s → Hard selling: a sales strategy that uses direct and insistent arguments to get a buyer to purchase in a short amount of time - no improvisation (no creativity), it's all about framing and how you say things, give a benchmark to people (reference price because people have no idea)
• Marketing orientation - Customer

  Today → Data driven, customer oriented marketing - we don't start from our experience or vision, we start from the customer. We learn about the customer through primary and secondary data
• Modern marketing management 4 Ps

  • People
  • Processes
  • Programs
  • Performance

  
• Holistic marketing dimensions


  • Relationship marketing
  • Integrated marketing
  • Internal marketing
  • Performance marketing

  
• Relationship marketing


  Marketing network that helps with your value, establish long term relations, extended perspective to all stakeholders, customer relationship management (CRM): customer equity, customer engagement
• Integrated marketing


  Integration both in terms of communication and distribution, integrated marketing communication, multichannel and omnichannel to create brand equity, aim is to keep consumers engaged

  
• Internal marketing


  Integrate customer expectations into organizational processes, hire, train and motivate capable employees (retain quality employees), demand management, resource management, business system management

  
• Performance marketing


  Predict the impact and quality of marketing investment using metrics depending on the objective, realization as an element of differentiation (strategy is nothing without execution), measures as a prerequisite for implementation (marketing metrics)
• How to create and deliver value in luxury

  1. Understand the value proposition

  2. Determine the value proposition, different customers want

  3. Develop the value proposition for the customer

  4. Deliver and communicate the value proposition
• Tasks for a successful marketing manager: Understand the marketplace and customer needs and wants
• Biggest trend in global luxury marketing is that of exporting and going global if successful in home country - made possible by globalization
• Going global is a 4 step process

  1. Whether to go global

  2. Which market(s) to enter

  3. Level of commitment

  4. How to adapt marketing mix strategies
• Whether to go global

  • Consider your competitive advantage, home-court advantage, factor conditions, demand conditions, competitive intensity in focal industry, related and supporting industries
• Elements of the external environment

  • Population Growth
  • Resource depletion and pollution
  • New rules and laws
  • New technological solutions
  • Changing consumer behaviour
• The Economic Environment


  • Overall economic health
  • Current stage of the business cycle of each industry
  • Economic infrastructure
  • Purchasing power parity
  • Consumer Confidence Index
  • Environmental threats
  • Lipstick effect
• Sociocultural Environment


  • Demographic trends
  • Ethnicity
  • Changing Family and Household Makeup
• The competitive macroenvironment


  Consider competition: are you operating in a monopolistic, oligopolistic, monopolistic competition or perfect competition market?
• Market-Entry Strategies


  • Exporting
  • Strategic alliances (licensing, JV and Franchising)
  • Subsidiary (acquisition, greenfield)
• Standardization vs Localization

  To what extent will company need to adapt marketing communications to local market, will the same product appeal to people there, will it have to be priced differently, how will the company get the product into people's hands