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Management Notes > Principles of Marketing (MG314) Notes

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Explain what is meant by the term 'values' and discuss their role in marketing Introduction

* Marketing: 'Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and societies at large.' - AMA, 2007

* Value: Difference between a prospective customer's evaluation of the benefits and costs of one product when compared with others

* Meaning of value differs between individuals - marketing helps products appeal to target customer's perception of value Paragraph 1: Consumer Decision Making Journey

* Black Box: What occurs in consumer's mind leading to purchase - marketing team must work out what goes on in black box and cater stimuli (4P's) to induce desired response

* To achieve this must understand steps of Consumer Decision Making Journey: (1) Problem Recognition - Perceives difference between one's ideas and actual situation; difference big enough to trigger decision - firms need use marketing stimuli to catalyse decision making (e.g. convince customers they need the product) (2) Information Search - Value perceptions developed (3) Evaluation of Alternatives (4) Purchase Decision (5) Post-Purchase Behaviour - Fishbein's Multi-Attribute Model AttitudeK = Sbikei = sum of perception brand k possesses attribute i x importance of attribute i - depends on values of individual! Huber (1974) validates use of multi-attribute utility functions

* McKinsey Quarterly (2009) suggests alternative consumer decision making journey major changes: brand consideration, empowered customers, types of loyalty

* Toyota Corolla vs Chevy Prizm - identical make but different strategies led to different response from market (Corolla 10x more sales than Prizm; Prizm discontinued)
Importance of positioning to appeal to desired values - high multi-attribute score - Toyota used focused marketing methods i.e. Corolla as family car (safe etc.); Chevy focused on price - rebates - discounts inconsistent with idea of safety Paragraph 2: Porter's Value Chain

* Split into Primary, Secondary/Support Activities and Margin
- Primary: Distinct activities that add value e.g. inbound logistics, operations, outbound logistics, marketing and sales, service
- Secondary: Required for all primary activities - infrastructure, HR, technology development, procurement
- Margin: Shows that all chain activities are cost elements that together produce value
Comparing VCs of firms can highlight indicators of CA & improvement potential Paragraph 3: Segmentation

* Breaks consumers down into different consumer markets - geographic, demographic, psychographic, behavioural
- Psychographic: Personality, values, opinions, attitudes, interests, and lifestyles

* Can segment consumers by their values and target (choose which segments)/position (establish/communicate benefits) firm accordingly

* Value Propositions: Winning/losing proposition based on price and benefits - winning propositions create value (more for more/same/less, same for less, less for much less)

* Fork Ka Case Study - Marketing firm advocated segmentation based on values e.g. freedom lovers, attention seekers, sensible classics, no-nonsense neutrals Conclusion

* Notion of value important in marketing to target specific consumers, especially when considering international markets as culture can greatly impact values

* Understanding value provides firms with methods to obtain competitive advantage

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