Chapter 2: Brief Principles of Consumer Behavior and Marketing Strategy Consumer behavior as the basis for marketing strategy In marketing, the consumer is central
The marketing concept does not mean giving the consumer (only) what they want, because: the consumer's want can be widely divergent; the consumer's wants contradict the firm's minimum needs; and
the consumer might not know what they want. It is marketing's job to learn and understand and incentivize consumer behavior to a win-win position
The objection from product-centric marketers
Product managers focus on developing products and THEN finding consumers to buy them
Overview of consumer behavior Background of consumer behavior
What are consumers' preferences (in terms of goods/ services)? What are consumers' constraints (allocating limited budgets)? . Given limited resources, what are consumers' choices?
General assumptions of consumer preferences
preferences are complete, meaning consumers can compare and rank all products preferences are transitive the products are desirable Ceteris Paribus (holding all other things constant)
The decision Process
Need recognition: a realization that there is a 'cognitive dissonance' between some ideal state and the current state
Search for information Information processing Pre-purchase alternative evaluation purchase post purchase evaluation
Overview of marketing strategy Types of marketing strategy
5 factors The bargaining power of buyers The bargaining power of suppliers The threat of new entrants The intensity of rivalry The threat of substitute products
Strategy is a focus on consumer behavior, not competitive behavior Strategy 1: compete on cost ( be the low-cost provider) Strategy 2: differentiate and focus on high-end products Strategy 3: segment and focus on a smaller, niche part of the market
Applied to Consumer Behavior
Defensive reactions to competitor moves Bypass attack 0 encirclement attack flank attack frontal attack Offensive Actions new market segments go-to-market approaches differentiating functionality
Chapter 3: What is an insight? Insights tend not to be used by executives The job of execute, that is, to make decisions. Decisions based on data tend to be better, more accurate, and less risky. Executives ten not to use analytics because they don't trust analytics: most of what passes as analytic insights is too little or too late, very simple, very obvious.
Is this an insight? an insight is more than a mere observation
So, what is an insight? An insight has to contain new info An insight must focus on understanding consumer behavior An insight has to qualify causality An insight has to prove a competitive advantage An insight must generate financial implications
Ultimately, an insight is about action-ability Chapter 4: What drives demand? Modeling dependent variable techniques Business Case ordinary regression: a common, well understood and well-researched statistical technique that has been around for over 200 years; a statistical technique whereby a dependent variable depends on the movement of one or more independent variables (plus an error term) structural analysis: trying to understand the structure of the data-generating process R-squared is a measure of goodness of fit; it shows both explanatory power and shared variance between the actual dependent variable and th