BUSML 3250 - Marketing Exam 1

Marketing

the set of strategies and activities by which companies acquire and engage customers, build strong customer relationships, and create superior customer value in order to capture value from customers in return

Customer Needs

the status of felt deprivation, ex: food

Customer Wants

needs shaped by culture and personality, ex: Americans want pie

Customer Demands

wants backed by buying power

Market offerings

products, services, solutions, and experiences

Markets

the set of actual and potential buyers of a product or service

Marketing Myopia

focus on products, loss of sight of customer needs

Customer dissatisfaction

expectations > customer perceived value

Customer satisfaction

expectations = customer perceived value

Customer delight

expectations < customer perceived value

Customer equity

total combined lifetime values of current and potential customers / future value of customer base

Customer lifetime value

the total revenue or net profit a business expects to earn from a single customer account throughout the entirety of their relationship

What role does creating and capturing customer value play in marketing?

you create customer delight and built profitable relationships and lead to being able to capture customer lifetime value and increase market/share of customer

Customer Relationship: Butterflies

high potential profitability, short term projected loyalty

Customer Relationship: True Friends

high potential profitability, long term projected loyalty, continuous investment

Customer Relationship: Strangers

low potential profitability, short term projected loyalty, make money on every transaction

Customer Relationship Groups: Barnacles

low potential profitability, long term projected loyalty, if they can’t be profitable, “fire” them

Market orientations

product, selling, marketing, societal concepts

The product concept

favor quality, performance, and innovation (can lead to marketing myopia)

The selling concept

undertake a large-scale selling and promotion effort (typically with unsought goods like blood donations), focus on sales and transactions over relationships & profits through sales volume

The marketing concept

know the needs/wants to target and deliver better than competitors (outside in perspective, deliver value, customer centered sense-and-respond) & profits through customer satisfaction

Customer-driven marketing

fully understand the customers and market, then design a marketing strategy: who will we serve? (segmentation, target) How can we serve them best? (value prop)

Customer relationship management

overall process of building/maintaining profitable customer relationships through superior customer value and satisfaction

Customer generated marketing

customers play a more active role in shaping brand content and products

Features of the changing marketing landscape

the digital age, digital/social media marketing, mobile marketing, big data and AI, not-for-profit marketing, rapid globalization, sustainable marketing

Strategic planning

developing and maintaining a profitable strategic fit between goals, capabilities, and changing marketing opportunities of an organization

What is a firm’s mission?

a statement of the organization’s purpose, that focuses on the customer experience a company seeks to create, market oriented and defined in basic customer needs

How do an organization’s goals relate to its mission?

goals stem from the mission and needs of the company. They are measurable, specific, realistic, and time specific. (SMART)

What is the BCG Matrix? How/why would you use it?

It compares relative market share and market growth rate of different SBU’s. you’d use it to design the business portfolio, deciding on how much to invest into each strategic business unit (SBU). Either build, hold, harvest, or divest

Stars

high market growth rate, high relative market share. High growth needs heavy investment. Will slow down into cash cows. Build or hold

Cash cows

low market growth rate, high relative market share. Established, need less investment. Hold or harvest(milk)

Question marks

high market growth rate, low relative market share. Need lots of investment, either decide to invest promising question marks, or divest

Dogs

low market growth rate, low relative market share. Not a big source of cash, higher opportunity cost. Divest.

What is the product-market growth matrix? How/why would you use it?

Where do we want to go? Illustrates different growth strategies between markets and products.

Product-market growth matrix, market penetration

existing markets and existing products (go for a higher share)

Product-market growth matrix, product development

existing markets and new products

Product-market growth matrix, market development

new markets and existing products (new segments or groups)

Product-market growth matrix, diversification

new markets and new products

Segmenting (basic def)

divide market into distinct groups of customers that share characteristics

Targeting (basic def)

select the most attractive segments to serve/focus marketing on

Positioning (basic def)

determine how to position your product for each target segment

The 4 P’s of Marketing

Product (acceptability), price (affordability), place (accessibility), promotion (awareness)

Managing Marketing

analysis (SWOT - strengths, weaknesses, opportunities, threats) into planning, implementation and organization, control (measure and evaluate) 

Microenvironment

actors close to the company that affect its ability to engage and serve its customers: supplies -> company and competitors -> marketing intermediaries (help promote, sell, and distribute, resellers, marketing service agencies), publics (a group with an actual or potential interest/impact on organization’s ability to achieve objectives) -> final customers (consumer markets, business markets, resellers, government, international markets)

Demographic Environment

study of human populations in terms of size, density, location, age, gender, race, occupation. Population shifts (family structure, education), age structures (generations), geographic shifts (move to suburbs), diversity

Economic Environment

conditions affecting how consumers allocate money: consumer confidence (view on future health of economy), discretionary spending (money available over and above that required for comfortable living), purchasing power, consumer spending, income distribution, other economies

Natural Environment

physical environment and natural resources needed as ingredients or packaging (input) and affected by marketing activities (output). Environmental sustainability, sustainable energy, green consumers, sharing economy, secondary market, etc

Technological Environment

new products, communications, retail channels, efficient operations, investment, BOPIS (buy online pick up in store), creates new markets and opportunities: could render existing offerings obsolete, gov’t agencies investigate and ban potentially unsafe products

Political-Social and Legal Environment

government agencies, and laws that influence and limit organizations and individuals in a given society. Protect businesses from each other, protect consumers, and protect society: FTC (federal trade commission), socially responsible behavior and social scrutiny. Rise of cause related marketing and brand activism

Cultural Environment

institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviors. Cultural characteristics affect marketing decision making: shared meanings, health/wellness concerns, eating patterns, consuming habits

Big data

huge and complex data sets generated by sophisticated data collection, storage, and analysis technologies, but we don't need more data, we need better data

Customer insights

the real value of marketing data

Marketing Information Systems (MIE)

consists of people, processes, and assets dedicated to assessing information need, developing information, and generating/validating actionable insights Developing marketing information

Marketing Research

systematic design and execution of initiatives to collect, analyze, and report data/insights to a specific marketing situation

Defining problem and research objectives

exploratory, descriptive, or causal

Exploratory Research

gather information to further define the problem / ambiguous problem

Descriptive Research

describe market/consumer characteristics / aware of the problem

Causal Research

test hypotheses about cause/effect relationships / problem is clearly defined  

Advantages and disadvantages of secondary data

quicker and cheaper, but we need to evaluate relevancy, accuracy, currentness, impartiality

Observational Research (primary)

qualitative, collecting deep insights by carefully observing consumers' relevant actions and activities. Natural or artificial settings

Ethnographic Research (primary)

qualitative, send observers to watch consumers in the wild

Focus Groups (primary)

qualitative, inviting small, carefully selected groups of people to meet with a trained moderator for focused discussions about an offering to gain insights. Immersion groups, need a good moderator, avoid sensitive topics, risk of sampling issues or dominant participants

Survey Research (primary)

quantitative, gather info about consumer knowledge, attitudes, preferences, and buying behavior by asking a targeted set of respondents pre-selected questions. Consumers sometimes lie because of social desirability, need to formulate good questions, low cost and quick collection 

Experiments and Quasi-Experiments (e.g., test markets) (primary)

quantitative, subjecting two or more groups of randomly chosen customers to different marketing stimuli and compare the results. Gathers causal information, need to have independent variable and dependent variable (control for others). Test markets are quasi experiments, can’t control for everything 

Basic idea behind A/B testing (primary)

split test, show different consumers different versions to gather insights and compare  

Marketing analytics

analysis, tools, technologies, and processes by which marketers dig out meaningful patterns in big data

Consumer Buyer Behavior

the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption

Buyer’s decision procession black box

includes buyer’s characteristics and decision processes

Extended problem solving

high involvement, lots of time, high cost, internal and external information, many alternatives

Limited problem solving

low to moderate, moderate time, low to mod cost, mostly internal information, few alternatives

Routine problem solving

low involvement, minimal time, low cost, internal information search, one alternative

The five steps in the five-step consumer behavior decision making process

problem recognition (satisfy needs, not to buy products), information search, evaluation of alternatives (consideration, choice sets, final choice), purchase decision, postpurchase behaviors

Complex buying behavior

high involvement, significant differences between brands

Variety seeking buying behavior

low involvement, significant differences between brands

Dissonance-reducing buying behavior

high involvement, few differences between brands

Habitual buying behavior

low involvement, few differences between brands

Customer loyalty

frequency and refusal of alternatives

Culture and consumer behavior

set of learned meanings, norms, and traditions shared among an organization or society (socialized), beliefs, attitudes, goals, values, behaviors, customers, etc influences all aspects of behavior (expectations, perception of benefits, morality and ethics). Subcultures are smaller groups based on common life experiences and situations

Social class and consumer behavior

society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors, occupation/income/education/wealth, prestige, income isn’t the greatest indicator

Reference groups and consumer behavior

points of comparison and reference, actual or imaginary, in the formation of values, attitudes, and behavior

What role do families play in consumer behavior

most important member group

Household member roles

gatekeeper (collect and controls info), influencer (express opinions), decider, buyer, user

Lifestyles and consumer behavior

a pattern of living that determines how people choose to spend their time, money, and energy that reflects their values, tastes, and preferences. AIO dimensions (activities, interests, opinions)

Psychological factors and consumer behavior

motivation, subconscious motives, perception (process by which we select and interpret meaning), learning, beliefs and attitudes (overall evaluative judgement), Maslow’s Hierarchy of Needs  

Business buyer behavior

buying goods and services for use in production of other goods and services that are sold/rented/supplied to others, a series of B2B transactions occurs before a single B2C transaction.

Customer vs business buying behavior

both have people in buying roles and satisfy needs, differences in the nature of the buying unit, types of decisions and decision process, and market structure/demand

Business market structure and demand

fewer but larger buyers, inelastic and more fluctuating demand, derived demand

Business nature of the buying unit

more decision participants, more professional

Business types of decisions and decision process

buyer/seller are more dependent, more complex decisions, longer process, formalized

B2B marketing differs from B2C marketing

domain knowledge (B2B buyer has more expertise), multiple levels within a B2B customer, number of customers

Supplier development

systematically developing networks of supplier-partners

The buying center

all individuals and units participating in the business decision making process

Roles in buying center

users, influencers, buyers, deciders, gatekeepers

Why does the buying center represent a challenge to marketers?

it’s not fixed or a formally identified unit. Informal participants, unclear individual evaluation criteria, relative authority

Straight rebuy class

reorder, no modifications

Modified rebuy class

reorder, modify some details

New task class

buy something for the first time

Market segmentation

dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs: search for a homogenous cluster in a heterogenous market.

Market targeting

picking a group to serve, a group of consumers that respond similarly to a given set of marketing efforts

Geographic segmentation

live similarly: nations, states, regions, counties, cities, neighborhoods, zip codes, population density (urban, suburban, rural), climate. May operate in all areas but adjust for the local environment. Hyperlocal social marketing