MEETING ONE: LECTURE OUTLINE
PART I: MARKETING THEMES
LEAD US INTO TEMPTATION
Americans are swimming in a consumer culture. That's where we want to be. Consumerism is the driving force of the American culture. Shopping by consumers is a quest for meaning and identity. We are supplementing luxury goods for simpler wares. We are being prodded by the mass media to imitate the spending habits of the superrich.
Our forebears went to church to find meaning. Now, we head for the mall, where we choose particular items to give out lives meaning. By selecting certain items, we are joining a particular sect, or in the lingo of the consumer culture, choosing a lifestyle. Leave your polyester past behind. Become the Polo guy.
The liturgy of this religion is advertising, branding, packaging, database marketing, and psychographics. What advertising does is add meaning to otherwise interchangeable and often unnecessary products. Example: A colorful cellophane wrapper transformed the demonstrably inferior and nutritionally challenged Wonder Bread into the top brand. After all, it's about passing the collection plate--that is, making money.
THE NEW MARKETING CONCEPT
The current view of the marketing concept is about "giving customers what they want." Marketing is essentially about discovery. The core assumption is that buyers know what they want. The evolving marketing concept challenges this view. Increasingly, strategies are being created on the assumption that, at least initially, buyers do not know what they want but instead learn what they want. Examples: wireless phones; dot.coms.
MARKETING MAKES WAR ON CULTURAL MEMORY
Disney. Targeted segments by demographic data (age groups): kids and families, and seniors. "Pretend Americans" in Japan. Do seniors go to Disney in Tokyo? Who will go to Disney in Hong Kong?
Marlboro cigarettes. Targeted segments by demographic data (income and neighborhoods): lower middle class and trendy bar scene for yuppies. "Pretend cowboys" in Istanbul. Do only the poor smoke overseas?
McDonald's. Targeted segments by benefits: fast-food. "Pretend McDo" in Paris. Is the product life cycle of hamburgers in the mature stage in France as it is in the US?
Hollywood. Targeted segments by usage: movies seen on pay-per-view TV versus in movie theaters. "Pretend fans of Mickey Rourke." Is going to the cinema more popular in France than in the US? Whose movies are the French watching?
MARKETING DOMINATES TRADITIONAL VALUES
Entertainment marketing. Mass culture includes television, internationally marketed music, video games and the Internet; it is widely available overseas.
Retail shopping. The mall culture of the US can be found overseas, too.
MARKETING REBRANDS LIFESTYLES
Service adaptation. Indian beauticians remove unwanted body hair by an ancient method involving twisted cotton thread. Their clients are Latino. Neither have adopted the All-American practice of removing hair with metal tweezers or hot wax. They have adopted a middle ground: a place where Indian practices are performed to the accompaniment of salsa music.
Product standardization. Some Latinos still want to drink Mexican Pepsi because it is sweeter than the American version.
Retail merchandising. Most Chinese and Korean "green grocers" display five out of six vegetables that are unrecognizable to Americans, Indians and Latinos.
MARKETING OFFERS NO PLACE TO HIDE
Latin music. Targeted market segment by ethnic and societal data: bilingual, bicultural kids and Anglo kids. "Pretend Americans" in Latin America. Is Ricky Martin popular in Mexico? In Chile?
Economics. Latinos' buying power in billions of 1997 dollars equals US $500 billion; Latinos as a percentage of total US population equals 17%; and the growth in Latin music sales is US $570.9 million in 1998.
Latinos are a marketing opportunity in the US and in Latin America.
MARKETING DELIVERS A STANDARD OF LIVING
Divide the population into age-period cohort or age groups based on when the group's members became 20 and when they became financially independent of their parents.
Study each age group based on the role it played yesterday (the period eye) or is playing in society today. Do not put the present into the past (presentism).
Recognize the brand names of new products, and ask why they were introduced by firms. Do these products have an ethical or social value? Are they pure consumerism?
Become familiar with demographic data, such as, age groups, income, life style, values, food preferences, music choices, etc. Determine why the age group you are studying is so special for marketers. Choose a specific market segment.
Divide the market segment into a targeted market segment, e. g., Latinos who are bicultural and bilingual versus Latinos who do not speak Spanish anymore.
THE CUSTOMER IS OUR ONLY BUSINESS
What are marketers about? We are reconfiguring the value chain. We are giving content away on the Internet. We are exploiting dramatic change in technology. We are morphing products, consumers and retailers for the new world of the 21st century.
How are marketers doing their new job? We are applying a diffusion model in the creation of computer-based learning about marketing. We are shifting the responsibility for learning to the individual, to study when he or she can. We are showing you how to collect information and make more timely business decisions.
What do our customers (consumers) get? They get a new customer philosophy for consumer marketing. They get an integrated marketing organization for business-to-business marketing. They get an up-to-date marketing information system for the marketing-oriented firm. They get an improvement in the organizational efficiency among suppliers, the firm and customers.
PART II: RESEARCH METHODOLOGY ON AGE GROUPS
Each age group is defined by the decade in which its members became 20 years old and when its members become financially independent of their parents. Each age group has its own life-style; the latter is defined by the code words listed below. Each age group is financially independent when its members set up separate households and begin the formation of families. The decades have a porous beginning and a porous end; for example, the 1960's did not really begin until November 22, 1963 with the death of JFK; and the 1960's did not really end until the student protests over the Vietnam War forced LBJ from office and elected Nixon. Note: The technical marketing term for age groups is age-period cohort groups.
Age-period cohort groups
1920-1929: Roaring 20's. New products: Radio. Newspapers with sports pages. Airplanes. They are retired. the younger group (90-94) are living alone or in assisted living. The older group (95-99) are in nursing homes with families picking up the financial costs of seniors without sufficient retirement savings.
1930-1939: Depression. FDR. New products: Nylons. Ball point pens. Instant coffee. Pinball machines. They are retired. The older group (85-89) are living alone, in assisted living or nursing homes.
Note: The fastest growing age group in the US includes those between 85-100 who still live independently. This demographic fact has an impact on how the Federal government allocates the national budget.
Note: What do you call people who use to be old? At what point does the change in lives and habits require us to redefine what we mean by old age? The work of reconceiving old age, and of recrafting the language of longevity, is just beginning to find its way.
1940-1949: World War II. FDR/Truman. New products: Morton Salt. TV. Bug bombs in aerosol cans. Batteries. Contact lenses. Tupperware. Ajax. Redi Whip. Baskin-Robbins. Silly Putty. They are retired, or they might have part-time work to make ends meet. Most live independently.
Note: One-third of the people in their 70's consider themselves middle-aged. These older people do not feel old. Call them "the third age of adulthood."
1950-1959: Popular luxury or Pop-u-lux) and cheap gas. Ike. New Products: Diner's Club charge card. Minute Rice. Xerox. Coors. Barbie. The older group (65-69) are retired. The younger group (60-64) are planning retirement. Both targeted groups will use both Social Security and Medicare as part of their retirement plans.
Note: One-third of the people in their 60's consider themselves middle-aged. These older people do not feel old. Call them "the third age of adulthood."
Note: The 1950's is the end of an of the more conservative culture in the US. The 1960's is the beginning of a more permissive culture in the US. This demographic fact has an impact on what is shown on network TV, cable TV and downloaded from the Net.
1960-1969: Vietnam War, flower children, boomers. JFK/LBJ. New products: Pop Tarts. Mickey Mouse watches. Permanent Press. Affordable Microwave ovens. Disposable razors. Stove Top stuffing. Electric typewriters. They are thinking about whether they can afford to retire at 62 or 65. Most are boomers who did not put enough money away to retire and live at the current life-style; they may have to work beyond age 65 to make ends meet.
Note: Will the boomers (or the never-say-old generation) and "the third age of adulthood" generation want to age gracefully? Or will there be an emotional, psychological, and financial train wreck at the junction of Delusion and Reality? The boomers will fight back against the limitations of getting old. Today, in 2001, boomers and "the third age of adulthood" generation are the owners of change and innovation for advertisers, not the young.
1970-1979: Me-decade, oil crisis, unemployment, double-digit inflation. Nixon/Carter. New products: VCR. Post It Notes. IBM PC. Color TV. They are dual-income families who are trying to pay their living expenses and send their children to college; little is left over for retirement savings.
Note: The 1970's age group is called "Bobo's in Paradise," or bohemians who still wear sandals in their law offices or at other high paying jobs.
1980-1989: Baby boomers. Reagan, conservatism, USSR falls apart. New products: IBM PC clones, Sony Walkman, USA Today, Ray Ban, Nintendo. They are dual-income families with or without children; some are investing savings into retirement accounts.
1990-1999: Gen X, echo-boomers, slackers become strivers, Clinton, liberalism. New products: Point and click mouse, Windows, Satellite TV, Internet, cellular telephones. Some are partners in dual-income families; some are not. Most are investing heavily into retirement accounts.
Note: The 1990's is an end of a take it or leave it approach to technology. The 2000's is the beginning of a view that if you cannot work all the new technology you should leave the work force and make room for the Net Generation.
2000-2009: Gen Y, Net-Gen, Autonomous Generation. New products: no good list available. Just a few years ago they were teenagers. In a few more years, they will become financially independent of their parents. What did they buy when they were teenagers? Will they buy the same array of products as adults? What are their values and life-style preferences? The few things we know so far are they are technologically more sophisticated and more willing to accept diversity in life-styles.
2010-2019: M-Gen, Mobile Generation, Wireless Generation. Gen Y and Gen X use mobile devices to be parents. One location-based service used by parents for their children is called "Where's Jimmy?" Children are getting mobile handsets at an earlier and earlier age. The M-Gen (who are ages 5-10 today) will be the first generation to grow up with mobile information appliances.
Note: All age groups have been affected by the role of the US in the world economy in terms of what we eat, how we dress, what products we buy, where we take our vacations, and many other attributes of our diverse life-styles. The global, largely American life-style is considered a source of strength by many, and a source of weakness by some for the US, the developed industrialized countries, and the emerging countries throughout the world.
Two notes of caution: Do not put the present in the past (or presentism). Try to understand what it was like to become an adult in the 1950's, 1960's, etc. without the technology or global perspective we have today. Interpret the past with demographic facts or life-styles from the past (or the period eye) for the 1950's, the 1960's, etc. Don't make the Ted Turner mistake and colorize the movie Casablanca.
PART III: EXECUTIVE DECISIONS
Companies build brand personalities. Ben & Jerry's. Nike
and Michael Jordan, and Michael Jordan alone.
Companies build brand mythologies. Porsche. Club Med.
Companies differentiate offerings. Charles Schwab.
Companies shift to customer-driven offerings. Wal-Mart. Pampers.
Companies shift to customer-retention marketing. Harley-Davidson.
Companies master Internet marketing. The Wall Street Journal.
PART IV: READINGS FROM TEXTBOOK
Frequently asked questions: Spot and choose segments. Differentiate offerings. Lower prices. Customize the offering. Grow the business. Build stronger brands. Customer loyalty. Most important customers. Productivity and pay back. Choice of channels. Customer orientation. New marketing concept. Is your firm asking the right questions?
Core marketing concepts.
Segmentation, targeting (target markets), and positioning (market offering), or STP.
Needs, wants, and demands. What are people willing to buy? What are they able to buy? Stated needs, real needs, unstated needs, delight needs, and secret needs.
Value of the customer offering: raise benefits, reduce costs, maximize customer satisfaction. What are the determinants of customer delivered value? How can we reconfigure the value chain? What is the cost of lost customers to the company? How do we retain repeat customers?
Exchange and transactions among firms (the market), and within the firm (intra-firm transfers).
Relationships and networks: partnerships, alliances, non equity joint ventures, equity joint ventures. Partnerships and "marriages made in heaven."
Marketing channels: traditional wholesale and retail channels; alternative e-commerce channels.
Brand competition is most important to marketing.
Environments: demographic, economic, natural resource, technological, political-legal, socio-cultural.
Marketing mix: 4 Ps (or product, price, promotion, and place. What marketing strategy produces profitable customers?
Selling concept or profits through sales volume.
Marketing concept or profits through customer satisfaction.
New marketing concept or profits through teaching customers how to use products that enhance life-styles.
Integrated marketing or bringing other departments into new marketing initiatives.
Societal marketing and creating brand personalities.
Benchmarking marketing initiatives against those from the most successful companies.
Stakeholders: Who are they? Why are they important? What decisions to they make?
Processes: Retaining customer loyalty is particularly important in marketing.
Resources: Core competency, distinctive capabilities, market sensing, customer loyalty, and channel bonding.
PART V: CASE ANALYSES ON AGE GROUPS
Disney: Rural Orlando obliterated as Team Rodent bulldozed the cow pastures and drained the marshes. Today, 50 million tourists visit Orlando. Disney wants us all to be dependable consumers with predictable attitudes. Disney tapped into America's nostalgia for small-town life; Disney made a mind meld with the masses. Disney offers fee-based entertainment and this has become the dominant market segment for those who came of age after the late 1960's. The free home and family entertainment (reading, story telling, 4th of July picnics) is the traditional, declining market segment, and it is now labeled as nostalgia marketing for the age groups who came of age before the late 1960's.
Titanic: Women and children of the upper classes went first into the lifeboats. Men of the upper classes practiced the pre-World War I Anglo-American values; they played cards and went down with the ship. There was no need to guard the lifeboats with guns as was shown in the film. This is an example of presentism.
The Windsors: Both Queen Elizabeth and Prince Charles rebranded themselves after the death of Princess Diana.
Changes in life-style.
Clothes and the workplace: Three-piece business suits. Business and power suits. Casual Fridays. Everyday casual dress. Grunge. Impact on Levi's jeans, and Dockers slacks. Food and change in socio-cultural make up of the US: Americanization of Mexican food. Most Midwestern Americans who came of age before the 1990's will never eat sushi. Music: Most Americans who came of age before the 1980's will never listen to rap music. Assignment: Bring to class press clippings from magazines and newspapers about changes in life-style.
PART VI: APPLICATION OF REAL OPTIONS TO MARKETING M-COMMERCE
Positioning is the discipline of matching up the expectations of target groups with the product offerings of business firms. Together, they depend upon the awareness of brand names and the relevance of these products to the habits, attitudes and life styles of customers. Positioning forms brand communities among like users. Can marketers take this information to make their product or service the dominant one in the product-attribute category? The positioning options for content providers are as follows:
Option 1: Pursue younger upwardly mobile professionals and invest in providers that buy or lease interactive content.
First, pursue those target groups (e.g., teenagers and young upwardly mobile twentysomething professionals) that are the best set of potential customers for new fixed-wireless service. Second, recognize these users as a brand community. Letís call them AOL buddies and their new DoCoMo and KPN friends. Third, use the new 4 Ps marketing strategy to gain sales from members of the AOL-DoCoMo-KPN brand community.
First round investments
Fourth, invest in those content providers who can
accomplish the following marketing tasks:
These are the ingredients of a new marketing strategy for those providers who buy or lease content for users, and they form the backbone of all alliances or acquisitions among wired and wireless providers for the new 3G fixed-wireless service. Build this base first before moving on to other target groups.
Option 2: Postpone the pursuit of other, slightly older thirtysomething professionals until it is clear they will switch to the new 3G technology and go interactive, too.
Fifth, postpone the pursuit of other target groups (e.g., thirty something mid-career professionals and forty something senior executives). Some of them may be less willing to switch to the new 3G technology because they have established their routine social patterns with existing wired or wireless services or both. Until their careers are threatened by their failure to adapt to technological change and to accept wholeheartedly the diffusion of fixed-wireless service, these target groups will remain the second best set of potential customers for new interactive telecom services.
Future rounds of investments
Sixth, if and when most other target groups are willing to accept fixed-wireless interactive 3G technology as part of their life style, which means mass market penetration, then seek additional funds for new rounds of investments in those content providers who have done the best job in rolling out the new marketing strategy for users at home and abroad.
What are investors willing to pay for?
Today, AOL Japan in alliance with Japanís NTT DoCoMo has the best chance for first round success in fixed-wireless service. The reasons are obvious. AOL has 24 million American and worldwide subscribers for dial up wired service, a very long list of buddies for instant messages, e-mail, and access to whatever content its subscribers want AOL to buy or lease; of course, AOL Japan only has about 500,000 subscribers, but it has the opportunity to gain many more Japanese subscribers. DoCoMo has 13 million Japanese subscribers for iMode wireless service, a very long list of local Japanese content providers, instant messages, and e-mail. Together, AOL and DoCoMo will be the largest fixed-wireless service in Japan, and expand their competitive service to both Europe and the US.
AOL and DoCoMo are good first round investments. Investors should take an option in their future success. If Yahoo! gets a good wireless partner and if Vodafoneís recent deal with China Mobile works out well, these will be good second or future rounds of investment. Investors should consider taking an option in their future successes, too. Why? No one knows how well all the competitors will do. Some will do very well. Others will do OK. Still others will fall by the wayside. Pacific Century Cyberworks seems to be out of the running for a competitive position in fixed-wireless service.
What do I get?
Letís look at the possible forecasts. Which ones will have doubling success, a rapid rise in the expansion phase of the product life cycle, present investors with a concave curve in sales revenue, and double-digit growth in long-term profits? Which ones will have amplifying success, a slower rise in the expansion phase of the product life cycle, present investors with an S curve in sales revenue, and single-digit growth in medium-term profits? Which ones will have continuing success, a very slow rise in the expansion phase of the product life cycle with the possibility that first-mover advantage will be lost, and almost low real growth in short-term profits?
Value creation and value delivery
AOL, NTT DoCoMo, Yahoo!, Vodafone, Deutsche Telecomís On-Line, and other fixed wired and wireless services are all fully invested in the newest information technology. Some are developing partnerships in fixed-wireless services to get ready for the boom in mobile communications. For example, the AOL-DoCoMo alliance is doing a better job in value creation than other interactive firms.
Small Hong Kong banks need to invest in the latest IT. Otherwise, they will get further behind middle-sized and big Hong Kong banks. The small banks will find themselves taken over by other Hong Kong, mainland Chinese, or foreign-owned banks. Most banks seem to be unable to do a great job in value creation and value delivery. Traditional bank practices and legacy computer systems seem to get in the way of good marketing management decisions by bankers.
Finally, Charles Schwab and other on-line stock brokerages
are fully invested in the newest IT. Some are worldwide firms that have
created new market space in the East Asia, Europe, and the US. These on-line
stock trading firms are doing a great job in both value creation and value
delivery because they have mastered IT and CRM, and put them to use in
creating their new alternative channel of distribution through m-commerce
and the wireless Internet.
DePaul University Resources
Library home page: http://www.lib.depaul.edu
MKT MGT 555 Research Guide-by Brian DeHart: http://condor.depaul.edu/~bdehart/mkt555/index.htm
MKT 555 Syllabus: http://www.depaul.edu/~mkt/courses/555wdl.htm
Professor Lamont's Web page: http://www.depaul.edu/~dlamont