Principles of Marketing - Chapter 1: Creating Customer Value and Engagement

Flashcards covering Chapter 1 (Creating Customer Value and Engagement) of Principles of Marketing, including key concepts, figures, quotes, and mathematical exercises.

What is the difference between human needs, wants, and demands?

Needs are states of felt deprivation. Wants are the form human needs take as they are shaped by culture and individual personality. Demands are human wants that are backed by buying power.

What is marketing myopia?

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs.

What are market offerings?

Market offerings are combinations of products, services, information, or experiences offered to a market to satisfy a need or want.

How are an exchange and a market defined in marketing?

An exchange is the act of obtaining a desired object from someone by offering something in return. A market is the set of actual and potential buyers of a product or service.

What main elements make up a modern marketing system, as illustrated in Figure 1.2?

A modern marketing system involves suppliers, the company, competitors, marketing intermediaries, and final consumers, all operating within major environmental forces (demographic, economic, natural, technological, political, and social/cultural).

What is marketing management and how is a brand's value proposition defined?

Marketing management is the art and science of choosing target markets and building profitable relationships with them. A brand's value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs.

What is the official definition of marketing approved by the American Marketing Association in 2017?

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

What are the five alternative concepts under which organizations design and carry out their marketing strategies?

1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
5. Societal Marketing concept

According to management guru Peter Drucker, what is the aim of marketing, and how does Figure 1.3 contrast the selling and marketing concepts?

Peter Drucker stated that 'The aim of Marketing is to make selling unnecessary.' Figure 1.3 shows that the selling concept takes an inside-out view starting from the factory to generate profits through sales volume, whereas the marketing concept takes an outside-in view starting from market customer needs to generate profits through customer satisfaction.

What three considerations underlying the societal marketing concept are highlighted in Figure 1.4?

The societal marketing concept balances three considerations: Society (Human welfare), Consumers (Want satisfaction), and the Company (Profits).

What are the four Ps of the marketing mix and what constitutes an integrated marketing program?

The four Ps are Product, Price, Place, and Promotion. An integrated marketing program is a comprehensive plan that communicates and delivers intended value to chosen customers.

What is customer relationship management (CRM) and its two primary building blocks?

CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Its main building blocks are:

1. Customer-perceived value: the difference between total customer perceived benefits and customer cost.
2. Customer satisfaction: the extent to which perceived performance matches a buyer's expectations.

What was founder Leon Leonwood Bean's philosophy regarding customer satisfaction at L.L.Bean?

Leon Leonwood Bean stated: 'I do not consider a sale complete until [the] goods are worn out and the customer [is] still satisfied.'

How do customer-engagement marketing and consumer-generated marketing differ?

Customer-engagement marketing fosters direct and continuous customer involvement in shaping brand conversations, experiences, and community. Consumer-generated marketing consists of brand exchanges created by consumers themselves, where consumers play an increasing role in shaping brand experiences.

What is the difference between 'share of customer' and 'customer equity'?

'Share of customer' is the portion of the customer's purchasing that a company gets in its product categories. 'Customer equity' is the total combined customer lifetime values of all of the company's customers.

According to Figure 1.5, what are the four customer relationship groups based on potential profitability and projected loyalty?

1. Butterflies: High potential profitability, Short-term projected loyalty
2. True friends: High potential profitability, Long-term projected loyalty
3. Strangers: Low potential profitability, Short-term projected loyalty
4. Barnacles: Low potential profitability, Long-term projected loyalty

What key facts about PAGA illustrate financial inclusion and non-profit/social impacts in the changing marketing landscape?

PAGA was launched in Nigeria in 2009 to serve part of the $2.6\text{ billion}$ people in the developing world excluded from formal financial services. It currently serves $13\text{ million}$ Nigerians and has processed over $1\text{ billion}$ dollars in various payments since launch.

What are the five steps in the expanded model of the marketing process shown in Figure 1.6?

1. Understand the marketplace and customer needs and wants
2. Design a customer value-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Engage customers, build profitable relationships, and create customer delight
5. Capture value from customers to create profits and customer equity

In a PPC campaign where a key word bid is $1.25\,\text{€}$ for $14{,}000$ clicks and $300$ resulting customers buy shoes averaging $70\,\text{€}$, what are the total cost, estimated revenue, and net campaign difference?

The search engine charge (cost) is $14{,}000 \times 1.25\,\text{€} = 17{,}500\,\text{€}$. The estimated revenue is $300 \times 70\,\text{€} = 21{,}000\,\text{€}$. The difference (net campaign revenue) is $21{,}000\,\text{€} - 17{,}500\,\text{€} = 3{,}500\,\text{€}$.