Assessment Activity: Marketing Concepts

Aamer Adam

Response to Business Application Question 1

Successful businesses depend on brand loyalty for their success and make brand loyalty one of the

top priorities of the enterprise. Brand loyalty means working to build a customer’s commitment to

the brand so that the customers keep returning to the brand and choose the brand over the

competition. Brand loyalty evokes the emotion of the customer such that the customer begins to

care for the brand and is invested in the brand’s success as much as the enterprise is; high brand

loyalty means the existence of customers that root for the brand’s success. Loyal customers engage

in recurring purchases and are also more likely to recommend the brand to others leading to potent

word of mouth marketing. Studies show that engaged customers purchase 90% more frequently,

spend 60% more per transactions, and are 5% more likely to stick with a brand over the

competition. Repeat customers also have the potential to become brand ambassadors when they

start to refer the brand to others because of their secure attachment to the brand. No other

advertising or marketing tactic or strategy is as strong as word of mouth marketing; it is the most

reliable and credible source of marketing. Once brand loyalty is established, marketing and the

advertising spend of a company can be reduced.

In today’s world of ever-increasing competition, brand loyalty is what provides a competitive edge

and allows a company to grow in the face of intense competition. Reducing customer attrition and

increasing customer loyalty and trust improves the bottom line dramatically. If customers are loyal

to the brand, they are less sensitive to price increases and are willing to pay higher margins to be

part of a unique value proposition offered by the brand. Brand loyalty also makes the customers
immune from competition leading to lower operating costs as the cost of competitive promotions

can be reduced. Brand loyalty not only affects the bottom line in the short term but also affords an

enterprise a platform for long term and sustainable growth.

A large part of generating brand loyalty is increasing customer engagement. Increasing customer

engagement can give the company an opportunity to have an ongoing dialogue with their customer

base; positive interactions during the dialogue lead to positive experiences; these positive

experiences reduce the friction during sales. Uber exhibits the fostering of customer engagement

all the time: customers experience new features and refreshed user interfaces regularly while

interacting with the company’s mobile applications; this keeps the interaction fresh. The

company’s mobile applications also do an excellent job of reminding customers about the previous

interaction they had to extend the positive value of that interaction such as popping up their last

few food delivery orders and recommending additional choices based on a customer’s past

preference. Uber also strives to personalize the customer interaction as much as possible making

the customer feel like the company knows them and cares about them; the company achieves this

through sophisticated machine learning and artificial intelligence algorithms that work to

understand the customer’s preference and predict their next need-based. Uber strives to keep the

customer dialogue open through other channels as well; such as periodic e-mail communications

to inform customers about new promotions, recommendations as well as payment activity on their

accounts.

Moreover, the dialogue is not limited to Uber sending information to customers; the dialogue is

bidirectional; Uber often solicits customer feedback by asking how one of their drivers did after a

ride or how the food was and whether it arrived on time. Providing real-time information on where

a customer’s ride is or where their food is another way Uber keeps the customer dialogue open;
providing and pushing accurate information to a customer helps them build credibility in the minds

of customers thus leading to increased brand loyalty. Frequent releases of new features aimed to

increase customer delight drive additional customer loyalty; examples of this are the ability to

schedule rides; requesting Spanish-speaking drivers or having the ability to request wheelchair-

accessible rides. These features and the ongoing customer engagement embed positive experiences

in the minds of the customers building a secure attachment between them and the Uber brand.

Uber leverages this brand loyalty by prompting customers to refer the company’s services to their

friends and family, generating the much-coveted customer acquisition through word-of-mouth.

Nike has built its brand by listening to and incorporating athletes’ feedback into their products.

This allows Nike to also closely associate itself with successful athletes, sharing in their success

and passion and thereby making itself into a brand that people want and desire. Nike also

emphasizes quality and comfort more so than its competitors; doing this over a sustained period

of mind has ingrained these values in customers’ minds about Nike’s products. When customers

use Nike’s products, they are reminded through brand messaging and marketing that they are

experiencing the same superior quality and comfort that professional and famous athletes that are

at the top of their game demand. Nike has also branded itself as a brand of inspiration and has been

incorporating athletic heroism into its marketing messages. This leads to increased brand loyalty,

and it inspires people to act and do better in life; this is clearly and directly reflected in the brand’s

tag line: Just do it! Customers are motivated to be more fit, and these customers remember and

associate the motivation with Nike; this positive experience increases brand loyalty. Consistency

also plays a vital role in building brand loyalty, and Nike strives to keep the quality consistent

across all of its product lines; customers are willing to pay more as a result. What they get in return

is a guarantee of a high-quality product and the pedigree associated with the brand. Nike also
engages its customers with its real-life activities and campaigns, like its ‘Breaking2’ project which

involved famous marathon runners or the ‘Equity’ campaign with LeBron James and Serena

Williams, YouTube series ‘Margot vs Lily’, the Nike phenomenal shot, community outreach

programs, and personalized social media engagement. These interactive campaigns drive up

customer engagement and increase customer loyalty and enable a deep relationship to be forged

between Nike and its customers. These marketing campaigns uplift Nike to be more than an athletic

footwear company in the mind of consumers and evoke feelings of inspiration as well as generates

a unique storyline for the brand. All of this serves to generate a long term and positive imprint

about the brand in the minds of consumers.

I think the similarities between Uber and Nike are that both companies attempt to increase brand

loyalty effectively by driving increased customer engagement and keeping the dialog open with

their customers. At the heart of both companies’ marketing strategy is to drive engagement with

customers both emotionally and physically. Both companies also seem to understand and value

the importance of brand loyalty and are willing to sacrifice short term gains to create longer-term

brand value. Customers are more likely to recommend these brands to others as a result.

Furthermore, both Nike and Uber are continually evolving their marketing strategies to keep the

customer engagement and dialogue as fresh as possible; they both understand the need to do this

in a highly competitive landscape and know that an unengaged customer base is ripe for being

taken over by the competition.

Response to Business Application Question 2

A product life cycle is a journey a product takes from its inception to the point where it is

discontinued. The cycle consists of four stages: product development, product growth, product
maturity, and product decline. Understanding this lifecycle is very important as it helps an

enterprise organize sales, establish prices, forecast profitability, and compete against other

businesses in the same space. The correct determination of where a product is in its lifecycle leads

to increased profits as well as helps to avoid steep losses.

The first stage in the product life cycle is the development or product introduction stage. This is

when the product is first launched in the market. Product sales are generally low at this stage, as

most customers are unfamiliar with the product. At this stage, business can decide either to price

their products with lower or higher profit margins. It is typical for business to opt for lower profits

margins at this stage so that customers can be attracted and a customer base can be established. At

this stage businesses are focused on market penetration and gaining the attention of customers.

Prices can be raised once a customer base has been established. Because of lower profit margins

at this stage; profits are low, and there may even be some losses as marketing and product roll-out

costs at this stage are high. If a business decides to price its product high from the beginning, they

can make a quick profit and recoup the costs for developing the product. Businesses can do this

only if the demand of the product is high and there is a lack of competition; this may be the case

if the product is being launched in a segment of the market that does not exist yet or is relatively

new. Moreover, much marketing is required in this stage, meaning that the marketing expenses at

this stage will be higher.

The second stage is of the product life cycle is growth. This is where the demand and sales of the

product are high; this means higher revenues and profits. However, a business needs to lower its

prices in this stage as the competition starts to pick up and replicate and sell a similar product.

Therefore, to attract and retain customers, businesses need to continue to market the product and

keep prices lower. Businesses with a product in this life cycle typically adopt a competitive
marketing strategy. Profits lost due to lower prices are compensated by higher sales and

efficiencies gained by economies of scale, resulting in higher profitability.

The third stage of the product life cycle is product maturity. This is when demand and supply are

at equilibrium and growth in the rate of sales starts to level off. Market share percentages also

stabilize with respect to the competition. Businesses need to market their product and make

modifications to improve the product at this stage. Businesses may either choose to continue with

competitive pricing strategies or increase their prices if they feel that product improvements give

their version of the product a competitive edge. Some businesses use a discount pricing strategy

to make themselves preferable amongst the competition; they can do this because efficiencies

arising from economies of scale and accurate forecasting are typically at their highest at this point

to allow businesses to compete more effectively on prices. If adequate brand loyalty has been

developed at this stage, a business may also choose to increase its prices. Profitability is high but

usually starts to decline towards the end of this stage.

The final stage of the product lifecycle is the decline stage. This is where product demand starts to

fall, and sales start to decline. Businesses need to determine the threshold of demand at which it

may no longer be profitable to continue offering the product. The product might warrant

discontinuation if demand continues to drop under this threshold. Successful businesses will

reinvent the product thoroughly to reinvigorate sales before the product sales fall below the

threshold where continued offering of the product would no longer be profitable. A discount

pricing strategy or a product bundling strategy is also apt at this stage of the product lifecycle. A

discount pricing strategy is used to lure both existing as well as new customers to spur up demand

and also to free up capital tied up in the product in the form of inventory so that more room can be

created for newer products. In a product bundling strategy, the product is bundled alongside
another product that does have stronger demand; typically, products are bundled with other related

products. This too, can help increase sales. A business may choose to keep pricing stagnant during

this phase because it is not sure as to whether the product is in the decline stage or facing just a

temporary setback in sales because of other factors. There is a lot of pressure on profitability at

this stage of the product life cycle due to lower sales. When profits turn to losses, this is usually

the threshold at which the product is discontinued.

If we think of Uber’s products and services, I think generally their product of ride-sharing and

meal delivery services is reaching the maturity stage. I think it is not there wholly but fast

approaching it. This is because Uber is still experiencing growth in sales and increasing revenue

but based fast approaching the maturity stage as growth is showing early signs of tapering off. We

can conclude this from the fact that more people are using Uber, yet their growth seems to be

stagnating. This is because the competition is getting wiser and capturing more market share. Uber

is introducing newer product features to spur up additional demand. If we asses Uber’s

profitability, we see that there is none! This is because Uber’s strategy is to spend large sums of

money in their growth phase to build a global customer base and capture as much of a market share

as possible; they know that profitability will follow in the maturity phase. Merely speaking, Uber

is looking to make long-term profits and willing to sacrifice profits in the short term with this

strategy. Uber also continues to artificially keep their prices low by deploying its capital to capture

market share and stifle the competition.

Response to Business Application Question 3

Uber is a transportation company; it offers on-demand cabs, ride-sharing, and delivery services.

Uber’s cabs can be summoned through their app; their technology matches the need for a cab with
drivers registered with Uber that are in the proximity of where the customer needs the cab. If the

driver agrees to the request, the technology routes the driver towards the customer. The drivers are

everyday people, who drive their personal vehicles and are required to register themselves with

Uber. Payment is automatically collected by using the payment information that each customer

registers with the app so that there is no need to exchange cash or swipe a debit or credit card after

the ride. The amount of fare at the end of the ride is visible to both the driver and the rider on

Uber’s mobile application.

Moreover, the app also provides an estimate of the fare if the pick-up and drop-off destinations are

correctly specified. Uber has completely reinvented the cab business by leveraging technology in

a way that’s innovative and refreshing; this newer business model that they invented has now

resulted in a multi-billion-dollar valuation for the company. Lower overhead costs because of the

sophisticated use of technology have allowed them to offer cheaper transportation compared to the

traditional taxi cab.

There are six different types of utilities that companies can use to add value to their products and

services. These utilities are form, time, place, possession, information, and service. Let us examine

Uber’s services and in relation to these utilities to see how it leverages these utilities to add

customer value.

Form utility is adding or changing the shape or form of the product or service. In Uber’s case, the

form of their service has been modified very radically in relation to the traditional taxi cab service

by incorporating the use of technology. Uber has successfully added to the form utility of taxi cab

by making them more accessible and by changing the way customers interface with the product

and service; from the point of requesting the cab to the point of completing the trip; the customer

interaction is different and vastly improved when compared to a traditional taxi cab service.
Uber makes much use of the place and time utility. Uber’s drivers are routed to where the

customers are; its technology can monitor demand in real-time and routes its drivers accordingly

so that they can maximize their time and place utility by being where the customers are or where

they are going to be. This ensures Uber’s drivers are the right place at the right time when they are

needed creating time and place utility. Service utility is created by satisfying the transportation

needs of customers with as little friction as possible. Uber satisfies the needs of the riders who

want to move from one place to another and to do with comfort, ease, and most important of all:

predictability. There is comfort in knowing whether a cab is available or not before venturing out.

This has service utility in of itself separate from the cab itself. I think Uber also maximizes the

possession utility by requiring drivers to use their own personal vehicles. This allows Uber to

commandeer the personal cars of drivers for its purpose, in effect owning them during the period

one of their drivers is driving an Uber customer around. They can save substantial amounts of

capital by employing this business model. This provides a utility for drivers as well by allowing

them to deploy their capital, i.e. their car towards generating income. Finally, information or

knowledge utility is created because Uber makes it a point to deliver information in real-time to

customers. The real-time knowledge of where the driver is and when he or she will arrive has real

information utility for the customer.

Moreover, Uber’s creative use of the technology to solve a problem also has information or

knowledge utility in of itself. As customers experience Uber’s technology, they learn about the

technology’s potential and the art of the possible in the digital age. Uber affords the customer the

chance to interact with a modern service in the digital arena, and customers feel empowered

because of this, thereby creating information and knowledge utility.

through various mechanisms. Nike is continuously diversifying and refreshing its product lineup

of athletic shoes. Newer products are made to satisfy the ever-changing needs of both existing as

well as new customers. For instance, their new Vaporfly line of running shoes have a spoon-like

plate that helps the runner run fast while using lesser amounts of energy. Continued innovation,

such as the one in the preceding example allows Nike to continue to expand the form utility of

their products. Nike ensures that it is employing the latest technology and research to keep

providing the best quality athletic footwear for its customers. Continuous improvement in their

product life cycle keeps expanding the form utility for their customers.

Moreover, Nike also works with various athletes so that their feedback can in be incorporated into

the product to improve and enhance it. As a result, customers feel that they are getting the best

product possible to satisfy their needs. Nike is also expanding into new geographical locations so

that the customers can reach and buy its products quickly. Nike has also made significant

investments to make its products more accessible in digital marketplaces to enhance and expedite

sales for customers. This is an example of Nike creating time and place utility for its customers.

Response to Essay Question

Marketing and advertising are two different terms that are often confused and considered to be the

same term. Both terms refer to similar concepts share some overlap in objectives, i.e. to alert or

inform the consumer about the goods and services being sold. Marketing is the process that

involves research, design, creating, and mining data to determine how to best align a product with

the target audience. Marketing strategies even help define the product in some cases. In contrast,

advertising is the process of making a product known to an audience. It is the act of interacting
with a potential or existing customer to present the product. Advertising is typically the outcome

of successful marketing strategies. Advertising is one of the activities amongst many that a

marketing department will engage in.

Marketing involves systematic planning, controlling, and implementing a mix of different

activities aimed to bring the buyer and sellers together for a mutually beneficial transfer or

exchange of products or services. Marketing involves research and analysis, studying the

audience’s response and designing and creating a language that will influence the target audience

towards buying a particular product or service. The message of a marketing campaign

communicates the type of people that can use a product, the kind of environment that is best suited

for the product, and other similar information. Advertising will then spread and get the word out

about a product. Advertising involves designing campaigns that align with the marketing strategy

and then engaging with various medium to get the message out, e.g. print, digital, radio, television,

etc.

Marketing is an umbrella term that entails various activities and components, and advertising is

one of these many components. Marketing is about preparing a product for the market, while

advertising is about making the product known to the prospective audience or market. Advertising

is one step of marketing; it makes use of the research and data collected by the marketing strategies.

Advertising is only specific to brand communication, but marketing encompasses a broader set of

activities. Marketing involves research and understanding customer behavior, whereas advertising

involves creative endeavors such as multimedia production and design. So, marketing is a pie, and

advertising is just one slice of it.