Marketing theory [section 2: preview]
We begin our exploration of section 2, with a discussion of the key marketing terms required to better understand the marketing theory section. This is important as definitions provide meaning and this facilitates accurate and shared meaning; words are often described as the ‘building blocks of thought’. Therefore, to think about marketing a comprehensive understanding of the key marketing terms is required.
Video - Directions
We begin by introducing the modules in section 2. Then we provide an overview of consumer and customer behaviour, the self, and customer involvement. Next, we unpack, culture, products and brands, qualities and quality, value and values, satisfaction and distinguish between products and brands. Then in preparation for the remained of the section, we provide a preview of the buyer decision process, the total product, and the circle of satisfaction.
The building blocks of thought
As you have probably already discovered – marketing scholars and marketing practitioners have their own language and construct their business conversations around a set of concepts, theories, and constructs.
Why is this important?
Having an understanding of the language, the concepts, theories and constructs enables marketing practitioners to communicate with increased clarity and effectiveness with fellow marketing practitioners and other parties.
The hierarchy of concepts
The marketing concept is the superordinate concept of marketing [highest in rank, primary and holistic], there are many, more specific, subordinate marketing concepts within this umbrella. Concepts and theories vary in significance, for example as a superordinate concept ‘the marketing concept’ has more significance than a subordinate concept ‘a marketing concept’ which conceptualises a theory. To provide a structure for the e-book 5 secondary concepts were identified and employed.  profitable exchange relationships,  the buyer decision process,  the total product,  the circle of satisfaction, and  the CADDIE business-marketing planning process.
In section 1 we explored the secondary concept of ‘profitable exchange relationships. In section 2 we continue to explore profitable exchange relationships, however, we explore it as an exchange between a customer and an organisation through the secondary concepts of the buyer decision process, the total product, and the circle of satisfaction. Each of the secondary concepts provide a conceptual umbrella for a number of marketing theories and constructs.
In this module we provide an overview of consumers and customer behaviour and customer involvement. Then, we unpack, culture, products, qualities and quality, value and values, satisfaction, and distinguish between products and brands.
BTW: please read the e-book and then consider the following slides.
If you were a billionaire?
I have often shown this picture and chat about conspicuous consumption. I ask people to select either the blue boat or the white boat. Within a few seconds people can tell me which one and why. Now for most people buying a super yacht is so far away from there financial ability that there is no involvement and decision-making is relatively easy. However, the real purpose of the discussion is not evident until we start talking about the situational factors.
Every business is unique
In marketing there will always exceptions. Whilst, theories provide guidance there will always exceptions. To understand each business requires understanding the characteristics of the business. For many years I struggled to explain how to identify and explain exceptions. Then, during my PhD research I discovered that the situational factors could be located under one of four headings [Customer, Organisation, Market, and Product]. Furthermore, I realised that the COMP factors could be viewed through the lens of a consumer or an organisation. Originally I contemplated COMPS instead of COMP – with the S for society, however, society neatly falls into Market when the CEMSTEEP framework is applied. CEMSTEEP = Competition, Economic conditions, Market attractiveness, Sociocultural factors, Technological influences, Environmental considerations, Ethical & legal factors, and Political influences – the acronym of CEMSTEEP
Types of selves
- Actual-self: the perception a person currently has about himself or herself.
- Actual-social-self: a perception a person has about how others perceive them. This is also referred to as the looking glass self; as it is based on signals received from others.
- Ideal-self: is how a person would like to perceive himself or herself in the future.
- Ideal-social-self: is how a person would like others to perceive him/herself in the future.
- continued on next slide
Types of selves
- continued from previous slide
- Possible-self: this is what the person could become with effort
- Extended-self: is how a person uses products [mainly possessions and experiences] and brands to communicate his/her image to society.
- Multiple-selves: A number of scholars suggest that people have more than oneself and that they are often revealed in different social settings [e.g., you may behave different in a place of worship than a sporting arena].
- Undesired-self: this is what a person wishes to avoid becoming
Attempting to close the gap
The self-concept according to Babin & Harris (2009, p. 116) refers to: Quote: the totality of thoughts and feelings that an individual has about him/herself …the way a person defines or gives meaning to his/her own identity.”
A pioneer marketing scholar defined involvement as:
Quote: Involvement is a person’s perceived relevance of an object based on inherent needs, values, and interests.
Zaichkowsky (1985, p. 342)
Some refer to involvement as product involvement, others suggest that generally it is the customer not the product that is involved* and therefore customer involvement is a more accurate descriptor. It should be noted that customer involvement varies according to the product, for example purchasing a snack bar on impulse is quite different to purchasing a new car. Customers can be involved with the organisation [relationships] and with the market [influence other consumers]. Therefore, involvement with all the COMP factors should be considered.
*In marketing there are always exceptions – for example when the product has a high-people- service component [e.g., nursing] or an animate product like a family pet [e.g., dog].
It is not the product but the situation
Involvement varies according to the situation, as this wine example demonstrates, however, product familiarity also influences involvement – for example – although many students have purchased a bottle of wine there are many that have never and they are unfamiliar withe the buying process.
The situation influences involvement
For many people, purchasing a FMCG product like Baked Beans may be low involvement – routine decision, however, if you were the parent of a child with food allergies then the level of involvement would increase.
Involvement and self identity
Imagine, you are a member of the Ford Mustang vintage car club, you attend the meetings and you are an active member, your car is your pride and joy. How would this be different to your everyday car – a Hyundai i30?
Sometimes buying is more involving
Imagine you are purchasing an established home and it is a serious investment and years of repayments – consumers would estimate the risks.
How would this influence involvement?
Should the real estate agent be mindful of the level of involvement for individual home buyers?
Managing COMP involvement
In a previous slide we introduced the concept of ‘COMP involvement’. And it is the marketing practitioner’s task to manage the customer and the organisation and the influence of involvement. This will include internal and external marketing communication.
How would the level of involvement influence the design and development of product promotional brochures?
Would customer involvement increase due to an episode of dissatisfaction and when a complaint is made?
Some products require consequential purchases
Imagine the house or the car and then consider the products that are purchased as a consequence of the purchase – think insurance and all the maintenance related products. Also imagine you are building a new home and you are engaing with an an architect and a builder – in many ways you are co-producing the home and your involvement is extensive – see the e-book for more on the grades of involvement.
Involvement can be enduring
Some product [e.g., wine as a present] may have high involvement, but when you consider it against all the different types of product decisions it is soon forgotten. However, as you can see from the photograph when someone supports a team it is often multi-generational, and as people do not change their team often it is a type of enduring involvement. The same may apply to brands of cars and we can see with the demise of Holden in Australia there is often a type of involvement that is related to nostalgia.
Reducing the cost of sales as a %
One way in which involvement influences an organisation is through recommendations. Sometimes people are advocates for a product or brand.
Services are two way
We tend to think of services as ‘acts, deeds, or efforts’ by the organisation, however, one of the key determinants of satisfaction is the involvement of customers and the services of recommendation and repeat purchasing that they provide to an organisation. Services are two-way.
Culture is a double metaphor
The word culture is a little difficult to define as opposing meanings are often implied. A reason to approach evolution and a reason to avoid evolution. Earlier we stated that a culture will develop, therefore it is better to nurture a culture that is congruent with the organisational philosophy. Let’s discuss culture in greater detail.
Culture is what we value - a preferred state
There are two importan words on this slide – enculturation and acculturation. In brief, enculturation refers to learning one’s own culture and acculturation refers to learning another culture. However, marketing practitioners in multicultural marketplaces should always question their world view as enculturation often leads to a scotoma [or inability to see another view]. Also it is important to realise that new employees are often enculturated to a previous organisation and need a process of acculturation to ensure the organisational philosophy and culture are adopted.
An organisational culture will develop
An exemplar of nurturing a culture is the Ritz Hotel in London. Of course a culture starts at the top and this is true for the Ritz. However, there are often ‘cultural champions’ who manage staff and are constant communicators of the organisational philosphy and nurture the staff. In this picture we see brothers Louis and Michael De Cozar who are cultural champions. Michael is the concierge and directs a large front-stage staff and attends to the needs of the guests.
A marketing culture
Earlier we studied the marketing concept – the marketing concept becomes a culture through the repetition of a philosophy and actions. As we now know the marketing concept is customer centric, however, this does not ignore the needs of the organisation. At this stage it may pay to revisit profitable exchange relationships – often if you search the web you find statements like ‘the customer is king’ ‘the customer is always right’ and if this is you you may have to consider these statements a little more as it may confuse your staff.
This culture as in Horticulture
In this slide we list some of the qualities of a marketing culture and ask you to think culture as in horticulture always nurturing and seeking improvements and taking an holistic view.
Culture as strategy
When we think of organisations with a marketing culture they are both collaborative internally and competitive externally. In a conversation with a former marketing practitioner of a large well known but now extinct business he stated that ‘the people were always competing for attention and resources and it was a culture where personal careers dominated every decision’… ‘It is now obvious why the failed so spectacularly’.
What is a poduct?
The purpose of this slide is to debunk a few myths. Some say ‘products and services’ – yet a service dominant product is also a product. Maybe they were referring to products as goods, however, no goods ever reach the market without services. Today we refer to the ‘total product’ and go beyond goods and services to include goods, services, ideas, experiences, people and place components. The Latin roots of the word product suggests that a product is the sum of all efforts. Also if we think of a country’s Gross Domestic Product we are considering all economic activity of the country. You may also note that in this slide the duct in product has been highlighted – this is discussed further in the next few slides.
The word product comes from the Latin productum – it means to deliver, to bring forth, the result – the sum of the parts – the sum of efforts. It may be worthwhile to consider related words [e.g., production, produce, producer]. It is interesting to note how the word product in marketing is consistent/similar to product in mathematics – the sum or total. In marketing, a product is the sum of the qualities. And just as in mathematics the equation can have positive and/or negative elements within the equation
What have the Romans ever done for us?
Some may recognise this line from the Life of Brian, however, I employ the acquaduct, viaduct, and airconditioning duct examples to emphasise a point.
In his classic work, Boodin (1911) argued that a ‘thing’ is the sum of its qualities and that if all of the qualities were removed then we would be left with nothing; he reasoned that ‘the quality’ of something is the sum of the embedded qualities. We could therefore conclude that, ‘a quality’ is an element, a feature, a property or a characteristic of a product and that a product’s qualities are what are received in an exchange. A product is therefore the sum of the product qualities.
Quality is the sum of the qualities
A product such as this fine bottle of wine is considered a quality wine, and it retails for around $1500 per bottle. It is judged as a quality wine as wine experts assess the wine qualities. However, the fact that it is a quality wine does not mean that everyone will purchase this wine – a product can be viewed as a quality product but not be of value to every consumer.
The list of consumption qualities that consumers search for is interesting, few products have all 8. You may notice that Contiki and Kiwi Experience products are often employed as an exemplar – the reason is that these products have more identifiable qualities than most products. What you may also notice is that when we are assessing qualities prior to purchase it is often the risks associated with product qualities. For that reason risks and qualities could be considered two sides of the same coin.
Categorising qualities - an organisational perspective
Although we have identified 8 consumption qualities as we continue we will discover that from an organisational perspective the literature categorises qualities as functional, technical, relational, and place qualities – the what, how, why and where.
You can have quality without value
There are many products that are seen as ‘quality’ products, however, there are two factors that need to be considered ability to purchase and willingness to purchase. Ability to purchase is having access to the funds and willingness to purchase means that they want the product more than they want the money. Some may have the financial resources, however, prefer not to purchase. Therefore, quality is important but it must also be of value before a consumer would enter and exchange.
3 types of value
Value is a preferred state. Wen we talk about value we are discussing a preferred state. The term value is employed in 3 ways. They are all related but it is worthwhile to be able to differentiate between the different meanings.
Values as our belief system
Value1 – as in a value1 or values1 – a person’s principles, beliefs or standards; a person’s judgment of what is preferred or important in their life; as in a philosophy. In day to day conversation people of say that something conflicts with their values1 . Widing, Sheth, Pulendran, Mittal, and Newman (2003) propose a hierarchy of values1 you will see that each value1 having an influence on product selection:
- Human [values1 that all people share]
- Cultural [values1 that we share with some people]
- Personal [values1 that an individual has]
Values and needs are similar
Earlier when we were discussing needs we saw how humans have similar needs, human values are similar to Maslow’s extended hierarchy of needs. We then look at how members of a cuture or a sub-culture have similar needs [e.g., members of a golf club], however, at another level we are all individuals and needs are personal, for example if you have a sibling you would realise how much you have in common, but on some issues you differ.
Value2 - is value for money
Value2 – is value for money – the outcome of a calculative process where the total qualities [what we get] and the total consumption costs [what we give] are calculated. There is also perceived value when we estimate what we are likely to get and give – a process that consumers do every time they are considering entering an exchange.
Previously, we stated that value is a preferred state. When we talk about value regarding a purchase – product value – we are discussing the relationship between the qualities we recieved and the costs incurred. We refer to a product being of value when the relationship between the qualities received and the costs incurred represents a preferred outcome.
Product value is subjective
Given that value is relative to a person’s ability and willingness to purchase. Therefore, a product may be perceived a quality product, however, value will be determined by a person’s ability and willingness to purchase.
Understanding value is the basis of segmentation
Value is subjective, however, often people share the same preferences – a group of people that share the same preferences is referred to as a market segment. Understanding product value is important as this is the basis of developing a market segmentation strategy. There are many ways to segment the market – but the one thing they share in common is product value.
Segment, Target, and Position [STP]
Marketing practitioners devote considerable effort to market segmentation, firstly they identify the basis of segmenting the market, develop profiles for the various segments, identify the attractiveness of the segment and the organisation’s ability to compete within the segment, identify a segment positioning strategy, and then include this strategy when designing and developing the marketing plan and the relevant marketing action plans.
A clear segmentation strategy
In Arrowtown in New Zealand there is a beautifully presented store that caters to knitters and quilters, I have to come clean here – I am not a quilter or a knitter, but I do recognise when retailers have designed and developed a clear segmentation strategy.
Segmenting by values [12&3]
Sometimes when we look at segmentation strategies we find it hard to go beyond the traditional demographic segmentation techniques, A visit to the caravan and camping show suggest that sometimes the segmentation is about values and lifestyle and crosses the entire family life cycle.
Products and brands
Often people use the terms products and brands interchangeably, however, there are distinctions
Branding is older than we may first think
We often assume that branding is a new phenomenon, however, it is an ancient practice. According to Eckhardt and Bengtsson (2010) the first evidence of branding was uncovered by archaeologists in India, dated around 2,000 years BC and the first evidence of branding as packaging, an embossed seal, was uncovered by archaeologists, working in the ancient region of Mesopatamia [now Iraq] is dated around 600 years BC.
Brands are a longitudinal representation
A brand is a longitudinal representation of the unique product value proposition of an organisation’s products [or lack off].