WEEK 1: MKT MAN

What is the primary purpose of business according to Peter Drucker?

To create a customer.

What does Theodore Levitt argue is the purpose of business?

To create and keep a customer.

What modern extension of customer creation is mentioned?

Create customers who become brand ambassadors.

What is the key to firm success according to Levitt?

Differentiation.

What are the six parts of the marketing process as outlined by Shapiro?

1. Marketing strategy formation 2. Marketing planning 3. Programming, allocating, and budgeting 4. Implementation 5. Monitoring and auditing 6. Analysis and research.

Why is analysis and research important in the marketing process?

It should occur continuously.

What does the marketing strategy formation determine?

Which customers to pursue, what value to offer, and how the firm will compete.

What shortcomings did Peloton identify in traditional home equipment?

It was convenient but not engaging.

What shortcomings did Peloton identify in studio fitness like SoulCycle?

It was engaging and social but time-consuming and geographically limited.

How did Peloton position itself in the market?

As a world-class cycling studio experience in your own home.

What is the initial price of a Peloton bike?

Approximately $2,000.

What is the monthly subscription cost for Peloton?

$39/month.

What is Peloton's annual renewal rate?

96%.

What is the most important element in the 5 Cs analysis?

Customer.

What are the six roles in the Decision-Making Unit (DMU) identified by Bonoma?

1. Initiator 2. Gatekeeper 3. Decider 4. Influencer 5. Purchaser 6. User.

What is a core competency according to Prahalad and Hamel?

A competency that contributes significantly to customer value and is difficult for competitors to imitate.

What is the significance of collaborator analysis?

It allows firms to focus on areas of competitive advantage without needing to own every capability.

What does competitive analysis emphasize?

Defining competitors broadly, including alternative solutions and nonconsumption.

What are the important contextual forces in marketing?

Technological, cultural, legal, political, and social.

What is the aspiration decision in marketing?

Segmenting the market, targeting specific customer groups, and determining product positioning.

What are the types of market segmentation?

Demographic, geographic, psychographic, benefit sought, and usage.

What does good targeting in marketing exclude?

Customers that do not fit the target profile.

What does positioning determine in marketing?

What customers should think about a company relative to alternatives.

What are the components of a positioning statement?

1. Target customer 2. Customer wants 3. Product category 4. Key benefit.

What does the marketing mix (4 Ps) operationalize?

Positioning.

How are products defined in marketing?

As bundles of benefits, not simply physical objects.

What is product breadth?

The variety and number of product lines offered.

What is product depth?

The number of offerings of a given type within a product line.

What is the purpose of a 'good, better, best' strategy in pricing?

To offer different pricing tiers that cater to various customer needs and preferences.

What does 'trade up' mean in product evolution?

Introducing a premium product that offers enhanced features or quality, such as Tanqueray No. Ten.

What is meant by 'trade down' in product offerings?

Reducing the functionality or performance of a product to lower its price, like Delta's Basic Economy fare.

What are Robert Cooper's success factors for product testing?

Differentiated product, unique benefits, compelling value proposition, voice of the customer, and spiral development.

What is spiral development in product testing?

A process involving concept development, prototyping, customer feedback, revision, and retesting.

What are the main objectives of promotion?

Awareness, knowledge, liking, preference, purchase, and reinforcement.

What is the 'zero moment of truth' in consumer behavior?

The stage when consumers begin their information search before making a purchase decision.

What is the difference between one-way and two-way communication?

One-way communication sends messages without expecting a response, while two-way communication allows for interaction and feedback.

What are examples of one-way communication?

Television advertising, print advertising, billboards, and packaging.

What are examples of two-way communication?

Personal selling, social media exchanges, online customer service, and in-store consultations.

What is mass communication?

Delivering the same general message to a large audience, like national television advertisements.

What is customized communication?

Tailoring messages to individual customers or smaller groups, such as personalized emails or targeted ads.

What are the major promotional tools in marketing?

Advertising, personal selling, customer promotions, and trade promotions.

What is the role of advertising in promotion?

To create awareness and shape brand perceptions among a large audience through paid media.

What is personal selling?

Direct interaction between a representative and a potential customer, useful for complex or expensive products.

What are customer promotions?

Temporary incentives like coupons or free samples designed to encourage purchase or trial.

What is the purpose of trade promotions?

Incentives directed toward channel partners to encourage product stocking and support.

What is a pull strategy in marketing?

Motivating customers to actively seek a brand through tactics like advertising and promotions.

What is a push strategy in marketing?

Working through salespeople or channel partners to promote products directly to customers.

What factors should be considered in media selection for marketing?

Target market, mission, message, media effectiveness, frequency, and budget.

How has digital technology changed marketing communication?

It allows for direct communication, narrow targeting, response observation, and quick campaign adjustments.

What is the 'first moment of truth' in marketing?

The moment a customer stands before a product display in a store.

What is the 'second moment of truth'?

The experience a customer has when using the product at home.

What is the significance of customer feedback in product development?

It helps refine products based on user experiences and preferences.

What is the importance of measuring communication results?

To assess the effectiveness of marketing strategies and make necessary adjustments.

What is the challenge of mass communication?

While it reaches a broad audience, the message may be less relevant to individual customers.

What is the advantage of customized communication?

It improves message relevance but can be more complex and costly to implement.

What factors should spending depend on?

Communication objectives, target-market size, competitive activity, media costs, expected response, and the economics of acquiring and retaining customers.

What is the final measurement in communication strategy?

It assesses whether the communication accomplished its mission, using measures such as awareness, recall, attitudes, website activity, inquiries, trial, sales, repeat purchase, and customer acquisition cost.

What are the four major tasks of a distribution channel?

Generate demand, fulfill demand, provide after-sales service, and gather and transmit customer feedback.

How does Gap operate as a retailer?

Gap operates as an omnichannel retailer through company-owned stores, franchise stores, and online sales.

What is Avon's primary method of distribution?

Avon relies on independent sales representatives who contact customers, sell products, deliver orders, and collect payment.

How did Warby Parker evolve its distribution strategy?

Warby Parker began with a direct-to-consumer e-commerce model and later added physical stores.

How does BMW distribute its vehicles?

BMW distributes through independently operated dealers who handle local advertising, display vehicles, and provide services.

What was the outcome of Starbucks' partnership with Kraft?

Starbucks ended the partnership to better integrate its at-home and away-from-home markets, resulting in a costly arbitration award for Kraft.

Why do many firms use multichannel distribution?

To cater to different customer preferences for shopping, such as online convenience, physical inspection, immediate access, and expert assistance.

What are the key decisions in channel design?

Whether to sell directly, whether to use intermediaries, which partners to use, and which tasks each participant will perform.

What is channel power?

Channel power refers to which participant has enough influence to capture a larger share of the profits in a distribution channel.

What is a common issue in channel conflict?

Channel members may agree on growing total profit but disagree on how that profit should be divided.

What is the significance of pricing in marketing?

Pricing captures part of the value created by product, promotion, and place, and small improvements in price can lead to large increases in profit.

What was Siemens' example of pricing realization?

A 1% improvement in price realization could have added approximately €0.83 billion to Siemens' net income, a 14% increase.

What are the two main types of pricing mechanisms?

Auctions and posted prices.

What does a posted price represent?

A stated price that may be fixed, a starting point for negotiation, stable over time, or dynamic.

What are the three core pricing considerations?

Value to the customer, opportunities to vary prices across customers, and customer price sensitivity.

What is value-based pricing?

Pricing determined primarily by the product's value to the customer rather than the firm's production cost.

What is perceived value?

The customer's assessment of the offering, which creates the upper bound on willingness to pay.

What is true economic value?

The value calculated relative to the customer's next-best alternative, including performance differences.

What does price customization involve?

Charging different prices to different customers based on various factors.

What is the primary purpose of marketing?

Facilitating an exchange between the business and consumers.

What are the three main objectives of marketing?

Acquire customers, retain customers, and encourage customers to become brand ambassadors.

What is price sensitivity?

The degree to which purchasing behavior changes in response to price changes.

What factors increase customer price sensitivity?

When the end user bears the cost, the purchase is a large portion of spending, and customers can easily compare alternatives.

What is buyer stickiness?

Resistance to switching from one supplier to another, often due to switching costs.

How can companies customize pricing?

By varying prices based on customer segment, product version, purchase timing, quantity, location, and transaction characteristics.

What is an example of price customization in the video game industry?

Charging new buyers $95 and upgraders $40, resulting in a total contribution of $405.

What does the term 'competitive reactions to pricing' refer to?

How a firm's pricing affects customer willingness to purchase and competitors' pricing strategies.

What are the four Ps of marketing?

Product, Price, Promotion, and Place.

What does the 'Product' decision in marketing involve?

Determining the types of products in the product line and their features.

What does the 'Price' decision in marketing involve?

Establishing pricing structures based on units, rental models, or different pricing for different products.

What is the significance of 'Promotion' in marketing?

It involves how to communicate the value offered to consumers.

What does 'Place' refer to in the context of marketing?

The distribution of products and how timing and location can add value.

What influences marketing decisions?

Company goals, customer preferences, competition, context, and collaborators.

What is the role of brand strategy in marketing?

To guide and influence marketing decisions and create customer value.

How does Disney exemplify price customization?

By using variations in admission terms and customer categories to charge different prices.

What is the importance of understanding customer value in marketing?

It helps create value that aligns with what customers are willing to pay.

What is the relationship between customer acquisition and retention?

Actions that acquire a customer may differ from those that retain them.

What is the concept of 'entropy' in customer relationships?

The natural deterioration of attention and sensitivity in customer relationships unless actively maintained.

What does the Net Promoter Score measure?

The percentage of customers who rate the company highly and are likely to promote the brand.

What is the impact of low switching costs on buyer stickiness?

It reduces buyer stickiness, making it easier for customers to switch suppliers.

What is the significance of timing in the 'Place' aspect of marketing?

It can create temporal value by determining when and where products are offered.

How can a company identify customer segments for pricing?

By understanding different values placed on the product by distinct customer groups.

What is the effect of a price cut in a competitive market?

It may trigger competitors to match the price, reducing profits without a lasting advantage.