Summary lectures + parts of the papers
Session 1: Introduction, 5C’s
Customer Needs: what needs do we seek to satisfy?
Company Skills: what special competence do we possess to meet those needs?
Competition: who competes with us in meeting those needs?
Collaborators: who should we enlist to help us and how do we motive them?
Context: what cultural, technological and legal factors limit what is possible?
4P’s; Product
Value needs to be delivered. Physical product, brand name, reputation, repair service etc.
-Product Line Breadth: automobile manufacturer considers to add a mini-van/sportscar,
desktop computer manufacturer considers selling laptops too. Amount of different lines.
-Product Line Length: beer producer considers adding a cheaper option. How many items
will there be in a line. (different price options)
-Product Line Depth: how many types of a given product (different colors).
A new product in five-steps: 1. Opportunity identification 2. Design 3. Testing 4. Product
introduction 5. Life cycle management.
Place: Marketing Channels
8 generic channel functions:
2 major decision in channels are: 1. Channel design and 2. Channel Management
Peter Drucker: Marketing is a way to make products and services conveniently available.
Marketing & Innovation is key
,Promotion: Marketing Communications
Tasks in planning communication strategy: 6 M’s model:
3 types of sales promotions
- consumer promotions: to end consumer
(coupons, redeem gifts)
- trade promotions: between 2 partners (special
pricing, demonstrations)
- retail promotions: to end consumer
(display/advertise brand an offer discount)
Pricing: past 3 P’s determine the perception of the value of the product
Floor pricing: cost-based
Value based pricing: maximize short-term profit. Maximum willingness to pay
Skimming: focus on high value segment first, then reduce prices (hardcover 30$, year later
we have a 7$ softcover option)
Penetration: set low price to generate lots of sales, then up prices.
Penetration increases extent that:
1. Customers are sensitive to price
2. Economies of scale are important
3. Adequate production capacity is available
4. There is a threat of competition
Price customizations achieved by:
Develop a product line; hardcover/softcover
Controlling the availability of lower price (only in certain locations available)
Vary prices based on buyer characteristics, lower price for upgrades than new.
Vary prices based on characteristics of transaction discount on big-volume
When said NO = NO value created
Surplus: WTP (willingness to pay) – price
Margin: Price – cost
Session 2 Customer Preferences
,Conjoint analysis is a popular marketing research technique to determine what features of a
new product should have and how it should be priced. It is cheaper, don’t cost a lot of time
and is more flexible than concept testing (survey how much consumers accept the product).
PAPER, Six steps in Conjoint Analysis:
1. Select Attributes
Define the attributes to be tested.
Do not use too many attributes
Do focus on attributes upon which managerial decision need to be made.
Do not use subjective attributes / ambiguous levels
Do not use infeasible combinations.
2. Select Levels for the Attributes Included
The levels should be selected to allow effective decision making on the part of the firm
Keep the number of levels similar across attributes
Do not use highly unrealistic levels
Do not use “confounded” levels round or square: high (you don’t know which one)
Compare apples to apples. Attributes only differ on 1 dimension
3. Create Product Profiles
4. Collect Data
5. Estimate Partworths
Estimate consumers’ preferences based on data = partworths (utls)
6. Derive Insights and Make Predictions
Analyze partworths and make insights/predictions.
Lecture 2 Customer Preferences
Good measures of preference
Stated preferences: surveys, techniques that are words danger of overconfidence!
Revealed preferences: what people do, actions (sales)
Stated intention-to-buy: for non-durable consumers will buy, if they say they buy. But for
durable they don’t often buy when they say they will buy. people overestimate
themselves in buying goods (often they don’t buy when they say they will)
Also when they say we don’t buy, they will overconfidence of people is big.
, - Conjoint is survey-based research to force
customers to make tradeoffs, revealing their
true preferences
Conjoint aims to do 2 things really well:
-Willingness to pay: measures
individual consumers WTP
-Distribution of willingness to pay:
measures how consumers differ in
WTP
Conjoint is applied in Design and Testing (which price is optimal).
-Design: What do customers want? How position? Which segment? Allocating marketing mix
-Partworths can be compared to price partworth 10utls point for a HR-monitor? Look up
10utls points and know the price consumers want to pay for a HR.
Why does Conjoint Analysis work?
- Uses a regression approach: regress rating on the absence/presence of attribute levels
- Profiles are chosen such that attributes are independent: most information
Advantages of Conjoint
Avoid problem of “everything is important”
Improves ability to assess customers’ true wants and needs (about price)
- gives individual-level preferences
- can give preferences for items (or attributes) that do not exist
- can assess the value of many goods with few questions
1. Attributes: not too many, to choose right amount do focus groups & pretest
2. Attribute levels: too many = confusing
3. Profiles: relatively small number of profiles, because few choices can evaluate 1000s of
products (17 choices: 1024 possible products)
4. Utility/partworths
5. Types of Conjoint:
Rating-based conjoint: rate each of 16 profiles, more info
Rank-based conjoint: rank from best to worst
Choice-based conjoint: less info, but we know the best option
Objective: using 3C’s (Customer,
Competitor, Company) get optimal
Price&Product, by a data driven and
decision driven approach
Session 1: Introduction, 5C’s
Customer Needs: what needs do we seek to satisfy?
Company Skills: what special competence do we possess to meet those needs?
Competition: who competes with us in meeting those needs?
Collaborators: who should we enlist to help us and how do we motive them?
Context: what cultural, technological and legal factors limit what is possible?
4P’s; Product
Value needs to be delivered. Physical product, brand name, reputation, repair service etc.
-Product Line Breadth: automobile manufacturer considers to add a mini-van/sportscar,
desktop computer manufacturer considers selling laptops too. Amount of different lines.
-Product Line Length: beer producer considers adding a cheaper option. How many items
will there be in a line. (different price options)
-Product Line Depth: how many types of a given product (different colors).
A new product in five-steps: 1. Opportunity identification 2. Design 3. Testing 4. Product
introduction 5. Life cycle management.
Place: Marketing Channels
8 generic channel functions:
2 major decision in channels are: 1. Channel design and 2. Channel Management
Peter Drucker: Marketing is a way to make products and services conveniently available.
Marketing & Innovation is key
,Promotion: Marketing Communications
Tasks in planning communication strategy: 6 M’s model:
3 types of sales promotions
- consumer promotions: to end consumer
(coupons, redeem gifts)
- trade promotions: between 2 partners (special
pricing, demonstrations)
- retail promotions: to end consumer
(display/advertise brand an offer discount)
Pricing: past 3 P’s determine the perception of the value of the product
Floor pricing: cost-based
Value based pricing: maximize short-term profit. Maximum willingness to pay
Skimming: focus on high value segment first, then reduce prices (hardcover 30$, year later
we have a 7$ softcover option)
Penetration: set low price to generate lots of sales, then up prices.
Penetration increases extent that:
1. Customers are sensitive to price
2. Economies of scale are important
3. Adequate production capacity is available
4. There is a threat of competition
Price customizations achieved by:
Develop a product line; hardcover/softcover
Controlling the availability of lower price (only in certain locations available)
Vary prices based on buyer characteristics, lower price for upgrades than new.
Vary prices based on characteristics of transaction discount on big-volume
When said NO = NO value created
Surplus: WTP (willingness to pay) – price
Margin: Price – cost
Session 2 Customer Preferences
,Conjoint analysis is a popular marketing research technique to determine what features of a
new product should have and how it should be priced. It is cheaper, don’t cost a lot of time
and is more flexible than concept testing (survey how much consumers accept the product).
PAPER, Six steps in Conjoint Analysis:
1. Select Attributes
Define the attributes to be tested.
Do not use too many attributes
Do focus on attributes upon which managerial decision need to be made.
Do not use subjective attributes / ambiguous levels
Do not use infeasible combinations.
2. Select Levels for the Attributes Included
The levels should be selected to allow effective decision making on the part of the firm
Keep the number of levels similar across attributes
Do not use highly unrealistic levels
Do not use “confounded” levels round or square: high (you don’t know which one)
Compare apples to apples. Attributes only differ on 1 dimension
3. Create Product Profiles
4. Collect Data
5. Estimate Partworths
Estimate consumers’ preferences based on data = partworths (utls)
6. Derive Insights and Make Predictions
Analyze partworths and make insights/predictions.
Lecture 2 Customer Preferences
Good measures of preference
Stated preferences: surveys, techniques that are words danger of overconfidence!
Revealed preferences: what people do, actions (sales)
Stated intention-to-buy: for non-durable consumers will buy, if they say they buy. But for
durable they don’t often buy when they say they will buy. people overestimate
themselves in buying goods (often they don’t buy when they say they will)
Also when they say we don’t buy, they will overconfidence of people is big.
, - Conjoint is survey-based research to force
customers to make tradeoffs, revealing their
true preferences
Conjoint aims to do 2 things really well:
-Willingness to pay: measures
individual consumers WTP
-Distribution of willingness to pay:
measures how consumers differ in
WTP
Conjoint is applied in Design and Testing (which price is optimal).
-Design: What do customers want? How position? Which segment? Allocating marketing mix
-Partworths can be compared to price partworth 10utls point for a HR-monitor? Look up
10utls points and know the price consumers want to pay for a HR.
Why does Conjoint Analysis work?
- Uses a regression approach: regress rating on the absence/presence of attribute levels
- Profiles are chosen such that attributes are independent: most information
Advantages of Conjoint
Avoid problem of “everything is important”
Improves ability to assess customers’ true wants and needs (about price)
- gives individual-level preferences
- can give preferences for items (or attributes) that do not exist
- can assess the value of many goods with few questions
1. Attributes: not too many, to choose right amount do focus groups & pretest
2. Attribute levels: too many = confusing
3. Profiles: relatively small number of profiles, because few choices can evaluate 1000s of
products (17 choices: 1024 possible products)
4. Utility/partworths
5. Types of Conjoint:
Rating-based conjoint: rate each of 16 profiles, more info
Rank-based conjoint: rank from best to worst
Choice-based conjoint: less info, but we know the best option
Objective: using 3C’s (Customer,
Competitor, Company) get optimal
Price&Product, by a data driven and
decision driven approach
