Marketing Management

Sixteenth Edition

Chapter 5
Conducting Marketing
Research

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The Scope of Marketing Research
• “Information is power, having too much information is a
problem”
• Marketing research: the process of systematically
collecting and analyzing data to create a connection
between the marketer and the consumer.
• This information is used to:
• identify marketing opportunities and problems
• design and evaluate marketing actions
• monitor marketing performance
• improve understanding of marketing as a process

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Who Does Marketing Research? (1 of 3)
1. Marketing Departments in Big Companies
2. Syndicated-service research firms collect information
regularly and sell their findings to other firms. Anyone
from the same industry can use the research.

 E.g.: Nielsen provides syndicated research data and

insights on media consumption, advertising
effectiveness, consumer behavior, and more.

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Who Does Marketing Research? (2 of 3)
3. Custom marketing research firms carry out specific
projects providing answers to specific questions. They
design the study and report the findings. The company
hiring the firm owns the resulting data.

 E.g.: Instead of wanting the complete market

analysis, a product manager might want to know just
how well one particular product is doing in the
market. He can then hire a custom market research
firm.

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Who Does Marketing Research? (3 of 3)
4. Specialty-line marketing research firms grip on one
specialty in a particular industry or type of research
(advertising research, product development research,
etc.) They conduct research including pilot testing, field
interviews, etc.

 E.g.: M3 Global Research specializes in healthcare

research, offering services such as physician panels,
patient research, and medical device testing.

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The Marketing Research Process

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 Defining the Problem
• Identify the research problem, shape the research objectives
and define the type of information needed to conduct:
 Exploratory Research (used to identify the problem and
the primary goal is to explore and generate ideas,
hypotheses, and insights typically in the early stages of a
research, is qualitative in nature)
 Descriptive Research (used to describe the
characteristics, behaviors, or attitudes of a specific
population, is quantitative in nature, involves collecting
data from a larger sample size using surveys,
questionnaires, or secondary data analysis followed by
statistical analysis)
 Casual Research (used to test a cause and effect
relationship, involves the manipulation of variables and
the measurement of their effects)
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 EXPLORATORY DESCRIPTIVE CASUAL
RESEARCH RESEARCH RESEARCH
Objective discovery of problems, ideas and describe the market discover cause and effect
insights characteristics or functions relationships

Characteristics • flexible • pre-planned and • one or more

• often the first part of the structured independent variables
total research • specific hypotheses manipulated
• hypotheses are designed for tested • the effect on dependent
testing in descriptive or variable(s) are
causal research measured
• control of other
variables
Examples of • focus groups • quantitative analysis of • experiments
Data Collection • in-depth interviews secondary data
• case studies • surveys
Methods used
• qualitative analysis of • observational
secondary data research
• behavioral research

Samples • small • large • large

Outcomes • generally followed by more • findings used for • findings used for
exploratory research decision making decision making
• might be followed by
descriptive or causal
research

Analysis • not meant for statistical • statistical analysis • statistical analysis

analysis methods used methods used
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Examples:
• Explatory Research: Conducting in-depth interviews or
focus groups to explore consumer attitudes and
perceptions towards a new product or service.
• Descriptive Research: Conducting a survey to
understand the demographic characteristics of
consumers who are likely to purchase a particular
product or service.
• Casual Research: Conducting an experiment to test the
effectiveness of different advertising messages on
consumer purchase behavior.

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Developing the Research Plan

• Data sources
• Research approaches
• Research instruments
• Measurement devices

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Data Sources
• Secondary data (collected for another purpose and
already exist somewhere)
▪ Advantages: time-saving, low cost, greater level of
detail, easy to access
▪ Disadvantages: quality, relevance (outdated?
purpose?), availability, reliability and biasness
• Primary data (freshly gathered for a specific purpose)
▪ Advantages: more accurate and reliable, more
control over the data, up-to-date, specific to needs
▪ Disadvantages: unwillingness to respond, sampling
& language problems, expensive, time consuming

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 PRIMARY DATA SECONDARY DATA
DEFINITION Directly collected from the first Already available somewhere,
hand experience, gathered for collected by someone else
the purpose of a particular before for other purposes
purpose/research project
SOURCE Interviews, surveys, Previous research, mass
questionnaires, field media, government reports,
observation, experiments, official statistics, historical
focus groups, etc. data, web information, etc.
COST Expensive Low-cost or free
DATA Real-time data Past data
LEVEL OF CONTROL High level of control over the Lack of control over the quality
quality
SPECIFIC TO NEEDS Always specific to researcher’s Usually, not specific to
needs researcher’s needs
TIME More time consuming Less time consuming
CAPABILITY More capable of solving a Less capable of solving a
specific problem specific problem
AVAILABILITY Researcher is the owner, not Data available not only to the
everyone can access the data researcher, competitors have
the access too
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Researchers usually start by examining some rich variety,
low-cost and readily available secondary data.
• Availibility: When the needed data don’t exist already or
existing data are outdated or unreliable, the researcher
collects primary data.
• Benefit vs cost: If the cost exceeds the benefits of doing
the research, researchers don’t conduct the research.
• Time: When time is limited, it is not possible to conduct in-
depth marketing research, researchers might use
secondary data.
• Importance of the decision: Primary data collection is
preferred when the decision is more strategic; in tactical
decisions secondary data would be sufficient

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QUALITATIVE DATA:
• non-numerical, descriptive information (data is expressed in
words, narratives, or visual representations rather than
numbers)
• provides rich insights into the underlying meanings,
perspectives, experiences, and motivations of individuals or
groups
• is typically collected via: interviews, focus groups,
observations, and open-ended survey questions
• often involves smaller sample sizes (focus is on depth rather
than breadth)
• involves the systematic examination of textual or visual data
to identify patterns, themes, and relationships (requires
coding, categorization, and interpretation of data to generate
meaningful insights)
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QUANTITATIVE DATA:
• numerical, measurable information that can be analyzed
statistically
• provides objective and standardized measurements of
variables
• is typically collected through structured surveys, experiments,
or secondary data sources
• involves larger sample sizes to ensure statistical reliability
and generalizability (Researchers try to gather data
representing a broader population)
• data analysis involves numerical calculations, statistical tests,
and mathematical modeling

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Research Approaches (1 of 2)
• Observational research: Researcher tries to see and
record what the subjects do without influencing them
• Focus group research: 6-10 people, sit together,
discuss a topic introduced by a discussion leader,
typically recorded)
▪ In-depth interview: unstructured, participants are
selected on the basis of some criteria, done 1 to 1
• Survey research: structured questionnaires: online,
telephone or personal interview surveys

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 Research Approaches (2 of 2)
• Behavioral research: tracking the behavior of consumers
through websites, store scanning data, catalog purchases or
customer databases
Example: The store barcode scanning data might reveal
that people might prefer buying 2 items together, jelly and
peanut butter, so the store locates these items together on a
self
▪ Experiments: evaluates cause and effect
relationships, compares results after keeping
everything same but changing only one variable.
Example: Changing the price of a product or service
to test the effect on demand, sales, and revenue.

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Research Instruments (1 of 2)
• Questionnaires
– Closed-ended questions (E.g.: dichotomous, multiple
choice, likert scale, semantic differential, importance
scale, rating scale, intention to buy scale, etc.)
– Open-ended questions (E.g.: completely unstructured,
word association, sentence completion, story
completion, picture interpretation, etc.)

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Research Instruments (2 of 2)
• Qualitative measures
– Word associations (what comes to mind when...?)
– Projective techniques (“fill in the bubbles”)
– Visualization (“create a collage”)
– Brand personification (“if the brand were a person,
what would ....?”)
– Laddering (series of “why” questions)
• Technological Devices
 skin sensors, brain wave scanners, camera based
devices and full-body scanners
Neuromarketing (monitoring brain activity)
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Types of Questionnaire Questions (1 of 2)

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Types of Questionnaire Questions (2 of 2)

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 Collecting the Information (1 of 2)
• Sampling plan
– Sampling unit: Whom should we survey?
– Sample size: How many people should we survey?
– Sampling procedure: How should we choose the
respondents?
• Contact methods
– Online
– In person
– Mail and email
– Telephone

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 Collecting the Information (2 of 2)
• For creating value and gaining competitive advantage,
companies use “Data Mining”:
– To identify prospects
– To decide which customers should receive a particular offer
– To deepen customer loyalty
– To reactivate customer purchases
– To avoid serious customer mistakes

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Analysis and Decision Making
• Next step involves:
– Creating a table of the data
– Developing summary measures
– Analyzing market data vs market insights
▪ “Information is not knowledge” Albert Einstein

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Marketing Management
Sixteenth Edition

Chapter 6
Identifying Market
Segments and Target
Customers

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Segmenting Consumer Markets
• Market segmentation
– divides a market into well-defined homogenous
groups (segments) with similar characteristics and
common needs
– aims to increase sales, profit, customer satisfaction
• Market segmentation can be done based on:
– Demographics
– Geography
– Behavior
– Psychography
Demographic Segmentation (1 of 3)
• Age
• Life-cycle stage, family status
• Gender
• Income
• Race and culture
Demographic segmentation examples:
 A shoe company markets its shoes based on the age,
gender, and income of its customers
 A financial institution offers personalized financial
services and segments the customers based on life
stage: Young professionals segment and empty
nesters segment
Demographic Segmentation (2 of 3)
• Age
– Our wants and abilities change with age
E.g.: Generation marketing:
Baby Boomers born between 1946-1964
Generation X born between 1965-1980
Millennials (Generation Y) born between 1981-1996
Generation Z (iGen) born between 1997-2012
Generation Alpha born after 2012
• Life cycle stage
– A person’s major concern or position in life (e.g.,
divorce, new job, entering a second marriage, taking
care of an older parent, buying a new home, etc.)
Demographic Segmentation (3 of 3)
• Gender
– men and women have different attitudes and
behave differently
• Income
– might determine which groups have the greatest
buying power
• Race and culture
– different ethnic and cultural segments have
sufficiently different needs and wants (E.g.:
Hispanic Americans, Asian Americans, African
Americans, etc.)
Geographic Segmentation
• Geographical segmentation
– divides the market into geographic units such as
nations, states, regions, counties, cities, or
neighborhoods
• Combining geographic data with demographic data
(E.g.: Nielsen’s PRIZM)
Geographic segmentation examples:
 A company targets their products to consumers living
in urban areas who are more likely to use public
transportation
 A clothing brand may promote winter jackets in colder
regions, and swimwear in warmer regions
Behavioral Segmentation (1 of 2)
• Marketers divide the market into groups based on the
actions of consumers or on specific occasions and events
• Behavioral segmentation includes segmentation based on:
– user status (nonusers, potential users, first-time users,
regular users, and ex-users)
– usage rate (heavy, medium, light users)
– buyer-readiness stage (aware, unaware, informed,
interested, some desire or intend to buy)
– loyalty status (degree of loyalty)
– occasions (special occasions like New Year, seasonal
occasions like summer, winter or events such as
weddings, concerts)
Behavioral Segmentation (2 of 2)
Behavioral segmentation examples:
 A company may market its products to frequent users
who are likely to purchase again
 A company may target its products to consumers who
are celebrating a special occasion, such as a birthday,
anniversary, wedding
 A clothing brand may introduce a holiday-themed
collection or gift sets to attract consumers seeking
presents for their loved ones
 A technology company markets its software product
based on the usage status of its customers: first-time
users, active users, ex-users
Psychographic Segmentation
• Buyers are divided into groups on the basis of interests
(hobbies), psychological traits, social status, beliefs,
lifestyle, values, opinions, activities, etc.
• They are expected to have share similar interests, tastes,
needs
Psychopgraphic segmentation examples:
 A sports-wear company may target their products to
consumers who value sustainability and eco-
friendliness
 Companies marketing their products to health and
wellness enthusiasts, luxury seekers, green
consumers, tech-savvy individuals, adventure seekers
or family-oriented consumers, etc.
Identifying Target Customers
• Targeting:
– The process of identifying customers for whom the
company will optimize its offering
Decision of which market and how to target is crucial
• There are two types of targeting strategies based on market
segmentation:
 Undifferentiated Targeting (no multiple segments)
 Differentiated Targeting (two or more segments)

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The Logic of Targeting (1 of 2)
• Mass marketing (undifferentiated marketing)
– the firm ignores segment differences
– focuses on what is common in the needs of
consumers rather than on what is different
– goes after the whole market with one offer
• Targeted marketing (differentiated marketing)
– selling different products to all the different segments
of the market
– increases brand recognition and revenue, helps reach
a wider audience and better meet customers' needs
▪ One-to-one approach (Ultimate level of targeting:
each market segment has a single customer)
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 The Logic of Targeting (2 of 2)
Mass customization (tailoring products or services to the
tastes of individual customers on a high-volume scale)
– The ability of a company to meet each customer’s
requirements preparing individually designed products,
services, programs, and communications on a mass
basis
– If a company is implementing mass
customization, it is employing a form
of differentiated targeting because it
recognizes the heterogeneity of its
customer base and creates customized
solutions to meet the needs of each
customer segment.
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Strategic v s Tactical Targeting
ersu

• Strategic targeting
– focuses on customers whose needs the company can
fulfill by ensuring that its offerings are customized to
“their” needs
– ignores the needs of some customers to better serve
the rest
• Tactical targeting
– identifies the customers and the ways in which the
company can reach these strategically important
customers

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Strategic Targeting
• Evaluating the viability of a customer segment, through
two main questions:
– “Can the company create superior value for target
customers?” (Target compatibility: company’s ability
to outdo the competition in fulfilling the needs of target
customers)
– “Can these customers create superior value for the
company?” (Target attractiveness: is the ability of a
market segment to create superior value for the
company)
ASKS: “Who” are the customers that the company can
establish a mutually beneficial relationship with?
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Target Compatibility (1 of 2)
Target compatibility is assessed via these factors:
• Business infrastructure
• Access to scarce resources
• Skilled employees
• Technological expertise
• Strong brands
• Collaborator networks

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Target Compatibility (2 of 2)
Core Competency (defines the stregth of a company):
1. is a source of competitive advantage and makes a
significant contribution to perceived customer benefits
2. has applications in a wide variety of markets
3. is difficult for competitors to imitate

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 Target Attractiveness
Target customers can create 2 kinds of value for a company:
1. Monetary value
– Customer revenues
– Costs of serving customers
2. Strategic value (non-monetary value)
– Social value (influence of target customers on other
potential customers)
– Scale value (benefits derived from the scale of company
operations/ maximizing revenue and profits through
efficient operations and serving more customers.)
– Information value (worth of information customers
provide)
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Tactical Targeting (1 of 2)
• FIRST gets INFO on the customer profile evaluating:
– demographic factors
– geographic factors
– behavioral factors
– psychographic factors

• THEN asks: “How” can the company communicate and

deliver its offering to the selected target customers most
effectively and cost-efficiently?

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Tactical Targeting (2 of 2)
• Managers should follow the 2 principles of tactical
targeting:
– Effectiveness principle (reflects the degree to which
the company is able to reach all targeted customers)
– Cost-efficiency principle (the company’s
communication and distribution must reach only the
targeted customers: limits the waste of resources)

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 “PERSONAS”
• They are used by researchers to bring segments to life
• They are detailed imaginary profiles of target consumers
• They are created in terms of demographic, psychographic,
geographic, or other descriptive or behavioral information
They don't represent all target customers
– E.g.: customer personas for a computer-support service:
“Charlie”: a 50-plus male who is curious about technology
but needs an unintimidating guide; “Daryl”: a
technologically savvy, hands-on experimenter who
occasionally needs a helping hand; “Luis”: a small
business owner whose primary goal is to complete tasks
as quickly as possible
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Single-Segment Targeting
Niche marketing (concentrated marketing) is a form of
differentiated targeting
 The firm focuses on a single segment (niche) rather
than targeting the entire market
 The firm targets its products, distribution channels
and communication programs toward only consumers
who it can serve best and most profitably (allocates its
resources more effectively and develops a more
customized marketing approach)
 Niche customers have distinct needs and are likely to
pay a premium for the products best satisfying them
Examples: Eco-friendly products, handmade items,
clothing made for certain body types,vegan food, etc.
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Targeting Multiple Segments
• As markets become more fragmented, companies develop
offerings targeting a greater number of smaller customer
segments => They use the multi-segment strategy
– Advantage: minimizing the firm’s risk by diversifying its
offerings across different customer segments
• A firm can increase the appeal of its offerings to target
customers by focusing on different products and/or
markets.
• Multiple segmentation helps identify smaller, better-defined
target groups
– E.g.: A car manufacturer targets multiple market
segments (Luxury, Family and Eco-conscious) with its
product line.
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Product vs Market Specialization
• Product specialization (the firm sells a certain product to
different market segments)
 E.g.: a company selling cameras that are targeted at
professional photographers, hobbyists or security
companies.
 Or selling only beds; to hotels, hospitals, dormitories, etc.
• Market specialization (the firm concentrates on serving
many needs of a particular customer group/specific market)
 E.g.: A company developing its product line to meet the
specific nutritional needs of infants
 OR a company selling different types of medical products
only to hospitals
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NEXT WEEK:
CHAPTER 7
Crafting A Customer Value Proposition and Positioning

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Marketing Management
Sixteenth Edition

Chapter 7
Crafting a Customer
Value Proposition and
Positioning

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 Developing a Value Proposition (1 of 3)
• An offering can create value across three domains:
– Functional value (E.g.: performance, reliability,
durability, compatibility, ease of use, customization,
form, style, and packaging) A laundry detergent that
effectively removes stains and odors
– Psychological value (E.g : emotional benefits like the
joy of having a product and the social status or lifestyle
its ownership provides) A luxury watch that makes the
wearer feel prestigious and successful
– Monetary value (E.g.: price, fees, discounts, monetary
bonuses, cash-back offers, cash prizes, financial
rewards, and low-interest financing) A promotional code
that gives customers a discount on a purchase
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Developing a Value Proposition (2 of 3)
• Total customer benefit
The perceived value of the bundle (total) of functional,
psychological, and monetary benefits customers
expect from a given market offering because of the
product, service, and image
• Total customer cost
The perceived bundle of functional, psychological,
and monetary costs customers will incur in evaluating,
obtaining, using, and disposing of the given market
offering

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Developing a Value Proposition (3 of 3)
• Customer value proposition
– is company’s promise about the experience that
customers can expect from the offering
– is based on the difference between benefits the
customer gets and the costs he or she assumes for
different choices
• Customer value analysis
– reveals the company’s strengths and weaknesses
relative to those of various competitors

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Customer Value Analysis Steps
1. Identify the relevant attributes and benefits that
customers value (Customers- usually in focus groups-
are asked what attributes, benefits, and performance
levels they expect)
2. Assess the relative importance of these attributes and
benefits (Customers are asked to rate the importance of
different attributes and benefits, usually via surveys)
3. Assess the company’s and competitors’ performance on
the key attributes/benefits (e.g.: for pricing strategies)
4. Monitor customer value over time (must be done
periodically because customer values or competitors’
position might change, as the economy, technology or
physical environment change)
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Positioning
It is the act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target market
Effective positioning is important because:
• it helps guide marketing strategy,
• it differentiates a brand from competitors (unique position),
• highlights competitive advantages,
• ensures brand consistency,
• shapes consumer perception driving customer preference,
loyalty and long-term success.

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Developing a Positioning Strategy
1. set the “Frame of Reference” (serves as a benchmark
against which customers can evaluate the benefits of a
company’s offering)
Define target customers and category membership
(products or sets of products with which a brand
competes and that function as close substitutes)
2. define the appropriate points of difference (PoD) and
points of parity (PoP)

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Points of Difference (PODs)
“Attributes/benefits that consumers strongly associate with
a brand, positively evaluate, and believe they could not
find to the same extent with a competitive brand”
• POD must be:
– desirable to consumer
– deliverable by the company
– differentiating from competitors

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Points of Parity (POPs)
“Attribute/benefit associations that are not necessarily unique
to the brand; may be shared with other brands”
Category POPs :necessary to be considered as a credible
player in a particular category (typically shared by all
brands) E.g.: A smart phone’s ability to make phone calls or a
gym’s locker rooms and showers)
Correlational POPs: negative associations that arise from
positive associations E.g.: A fast food brand might be seen as
convenient but also as unhealthy
Competitive POPs: associations designed to overcome
competitors’ points-of-difference, so these at the end
become similarities. E.g.: Let’s say, a smart phone brand has a
point-of-difference: a highly secure operating system. A
competitive point-of-parity for the other brand could be the
introduction of a similarly secure system.
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Points of Difference vs Points of Parity
EXAMPLES:
• Points of difference for Tesla electric cars: advanced
battery technology and autonomous driving features,
which differentiate them from traditional gasoline-
powered vehicles.
• Points of parity for fast food restaurants may include
offering affordable prices and quick service, as these are
the expected features of the category.

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MULTIPLE FRAMES OF REFERENCE (1 of 2)

A brand may identify more than one actual or potential

competitive frame of reference,
WHEN?
- if competition widens or the firm plans to expand into new
categories.

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MULTIPLE FRAMES OF REFERENCE (2 of 2)
FOR EXAMPLE, Starbucks could define very distinct sets
of competitors:
• Quick-serve restaurants and convenience shops
(McDonald’s, Dunkin’ Donuts): Intended PODs of
Starbucks: quality, image, experience, and variety;
intended POPs of Starbucks: convenience and value
• Home and office consumption (Jacobs, NESCAFÉ
instant): Intended PODs of Starbucks: quality, image,
experience, variety, and freshness; intended POPs of
Starbucks: convenience and value
• Local cafés: Intended PODs of Starbucks: convenience
and service quality; intended POPs of Starbucks: product
quality, variety, price, and community
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 STRADDLE POSITIONING
The points-of-difference for one category become points-
of-parity for the other and vice versa
EXAMPLE:
• Subway restaurants (positioned as offering healthy, good
tasting sandwiches)
- POP on taste and a POD on health with respect to
quick-serve restaurants (McDonald’s, Burger King)
- POP on health and a POD on taste with respect to
health food restaurants and cafés

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PERCEPTUAL MAPS
• visual representations of consumer perceptions and
preferences
• provide quantitative pictures of market situations and the
way consumers view different products, services, and
brands along various dimensions
• marketers can reveal “holes”
or “openings” that suggest
unmet consumer needs and
marketing opportunities

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Creating a Sustainable Advantage (1 of 2)
• Competitive advantage
– the ability to perform in one or more ways that
competitors cannot or will not match
– may be a leverageable advantage, that a company
can use as a springboard to new advantages
Sustainable competitive advantage is very important for a
strong brand. It:
 helps the company differentiate itself from competitors,
 fosters customer loyalty and profitability,
 increases pricing power and brand equity (the value
and strength of the brand in the minds of consumers),
 creates barriers to entry for new competitors
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Creating a Sustainable Advantage (2 of 2)
• Three core strategies to create a sustainable advantage:
1. Differentiate on an existing attribute (E.g.: Volvo
differentiates itself from other car brands by
emphasizing its superior safety features)
2. Introduce a new attribute (E.g.: Uber streamlined
the monetary transaction between riders and drivers
by introducing cash-free payment)
3. Build a strong brand (E.g.: Apple has built a strong
brand around its innovative products, design, and
user experience. This differentiates Apple and
creates a loyal customer base)

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Positioning Statement:
- communicates an offering’s category membership along with
points of parity and points of difference
- clearly points out the offering's target customers and the
key benefits or specific attributes that will provide
customers with a reason to choose the company's offering
- develops a narrative to convey the offering’s positioning
 “For safety-conscious upscale families (target
customers), Volvo offers the safest, most durable
automobile in which your family can ride (value
proposition).”
 “For convenience-minded pizza lovers (target
customers), Domino’s offers a delicious hot pizza,
delivered promptly to your door (value proposition).”
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Positioning Statement Example:
For (fashion-forward individuals seeking carefully chosen
style and convenience (TARGET)), (MAX E-commerce
Fashion Store (BRAND)) is the (online fashion
destination(CATEGORY)) that delivers (exclusive access to
the latest trends and effortless shopping experience (POINT
OF DIFFERENCE)) so they can (express their unique style
and be noticed (END BENEFIT)) because (of MAX E-
commerce Fashion Store's commitment to a diverse
selection of trendy fashion, providing hassle-free shopping
through its excellent website, making every fashion moment
feel like a personal runway experience (REASON TO
BELIEVE)).

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Communicating the Positioning (1 of 4)
• Communicating attributes of benefits
Crafting a positioning statement, marketers must decide
on whether to promote:
 attributes that describe the offering (E.g.: Nike
shoes: durable materials, superior design)
OR
 benefits delivered by the attributes (E.g.:L'Oreal
products: improved skin texture, reduced fine lines,
and increased hydration)

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 Communicating the Positioning (2 of 4)
• Communicating category membership
Category membership may be obvious for well-known
brands (Mac in cosmetics, ING in banking, etc) but NOT
when the brand is new E.g.: Apple launched the iPod in
2001. It was a new product category: a portable digital
music player. Apple had to educate consumers
A brand can communicate category membership in 3 ways:
1. Announce category benefits Duracell batteries: "Lasts longer,
much longer”
2. Compare to exemplars associating the new brand with already
recognized brands (E.g.: Mentioning the brand’s name alongside the
well-known brand names in advertising campaigns)
3. Rely on the product descriptor E.g.: For “Lululemon Athletica”, the
word “Athletica” communicates the category membership as a
clothing brand that specializes in athletic wear
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 Communicating the Positioning (3 of 4)
• Communicating conflicting benefits
Challenge: many of the benefits that make up points of
parity and points of difference are negatively
correlated and consumers want to maximize both of the
attributes or benefits
 E.g.: low price vs high quality, durability vs aesthetics, taste vs
low calories, nutritious vs good tasting, etc.
 E.g.: Tesla must convince consumers that its cars are both
environmentally responsible and thrilling to drive OR
A smart-phone company may have to convince consumers
that its products have sleek design and are also durable

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Communicating the Positioning (4 of 4)
• “Storytelling”
 Some marketing experts describe positioning a brand
as “telling a narrative or story”
 Consumers like the richness and imagination they can
derive from thinking of the story behind a product or
service.
DOVE “Real Beauty Sketches”:
https://www.youtube.com/watch?v=XpaOjMXyJGk
“We want to redefine beauty standards and help everyone
experience beauty and body image positively.”

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NEXT WEEK:
Chapter 17
Driving Growth in Competitive Markets

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Marketing Management
Sixteenth Edition

Chapter 21
Socially Responsible
Marketing

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Companies Engage in Social
Responsibility...
• when creating societal benefits is a key element of the
corporate culture and the company’s value system
• to differentiate themselves by appealing to consumers
who favor companies that exhibit civic virtues
• for their collaborators, who prefer to deal with
companies that care about creating value for society
• to build a bank of public goodwill to offset potential
criticisms and deal with eventual marketing crises
• to increase employee loyalty and create investor
goodwill

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TRIPPLE BOTTOM LINE
• Tripple bottom line is a broader definition of bottom line:
Societal and environmental benefits are added as key
components next to financial performance of a
company
• Organizations should consider not only their financial
performance but also their impact on people and the
planet.
• “Triple Bottom Line” measures a business’ success
in three areas:
– People (community/social component)
– Planet (sustainability component)
– Profit (market profit/monetary component)
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 Community-Based
Corporate Social Responsibility
• There are several domains in which community-based
corporate social responsibility typically occurs:
- improving the workplace,
- engaging in corporate philanthropy,
- supporting low-income communities,
- fostering cause marketing,
- engaging in social marketing

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IMPROVING THE WORKPLACE
– Fair compensation
– Work–life balance
– Diversity
– Safe and healthy working environment
– Employee development
If the company values corporate social responsibility:
- employees are more likely to do so themselves
- the company can recruit, motivate, and retain key
employees, for whom social responsibility can be as
important as the financial compensation

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CORPORATE PHILANTHROPY

• Corporate Philanthropy (corporate giving) can have a

positive impact in at least three domains by enhancing:
– company image
– customer loyalty
– perceived product performance
E.g.:The Ronald Donald Houses that McDonald's
operates to help families while their children are
hospitalized is an example of corporate philanthropy
Turkcell Digital Skills Training Program, aims to bridge
the digital skills gap by providing training to individuals
from underserved communities
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SERVING LOW-INCOME COMMUNITIES
Bottom of the pyramid (BOP): A socioeconomic concept
used in reference to the largest but poorest group of the
world’s population living on a daily income of less than $2.50
 Business model: “low-price, low-margin, high-volume”
 Companies focus on BOP to profitably serve these
customers, while at the same time promoting social
change
Reverse Innovation: Transferring innovations from a
developing market to create an inexpensive product that can
be introduced as a cheaper alternative in developed markets
E.g.: Nestlé repositioned its low-fat Maggi brand dried
noodles—a popular, low-priced meal in rural Pakistan and
India—as a budget-friendly health food in Australia
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CAUSE MARKETING
Cause marketing:
• links the firm’s contributions toward a designated cause,
to customers engaging directly or indirectly in revenue-
producing transactions with the firm
• involves aligning a company's marketing efforts with
a social or environmental cause
• done by for-profit organizations (!) (they can come
together with a non-for profit organization)
 E.g.: Patagonia donates 1% of their sales to support
environmental organizations through their "1% for the
Planet" initiative.
 E.g : Coca-Cola partnering with organizations like the World
Wildlife Fund (WWF) to protect water resources and
promote sustainable agriculture.
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Cause Marketing Can…
• improve social welfare
• create differentiated brand positioning for companies
• build strong consumer bonds
• enhance the company’s public image (positive reputation)
AND increase its market value
• drive sales
• create a reservoir of goodwill
• boost internal morale
• motivate and inspire employees

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SOCIAL MARKETING
Social marketing:
• aims to further a cause not directly related to business
activities (unlike cause marketing which supports a cause
related to its business activities)
• typically done by non-profit or government
organizations (!) E.g.: World Wildlife Fund, UNICEF, TEGV to
raise awareness, change attitudes or promote positive
behaviors
 E.g.: “exercise more”, “no to drugs”, “safe driving”
 E.g.: Campaigns to promote gender equality, racial justice,
LGBTQ+ rights
 E.g.: Campaigns to promote recycling, reduce energy
consumption, conserve water, promote public transportation,
and protect natural habitats
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SUSTAINABILITY-FOCUS
• Sustainability is the ability to meet humanity’s needs
without harming future generations
E.g.: Whole Foods no longer sells fish caught in areas subject
to overfishing OR 20% of the denim material in Levi’s new
“Waste<Less” jeans and jackets comes from plastic bottles

• Greenwashing is providing misleading information or giving

a false impression that products or practices are
environmentally friendly without living up to that promise
E.g.: An car manufacturer promoting its cars as being
environmentally friendly when the company is in fact a major
polluter
E.g.: A cosmetic company labeling its products as "natural" and
"chemical-free" while still using synthetic ingredients that are
harmful to the environment and not revealing their true
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Corporate Responsibility and Trends

• Socially responsible marketing recognizes the need to

integrate environmental issues into the firm’s strategic
plans.
– Some key trends for marketers to be aware of:
▪ Shortage of raw materials
▪ Increased cost of energy
▪ Increased pollution levels
▪ Changing role of governments

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Balancing Social Responsibility and
Corporate Profitability
• Developing ethical marketing communications
 Advertisers must not make false claims, use false
demonstrations or create ads with the capacity to
deceive, even if no one is actually deceived
E.g.: A floor wax advertiser can’t say the product gives six
months’ protection unless it does so under typical conditions.
OR a baker can’t say its diet bread has fewer calories because
its slices are thinner

• Managing customer privacy (transparency concern)

 concern that marketers may know too much about
consumers, too much data are captured and used by
companies (risk for consumers)

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