CORRECTED Marketing Midterm Total

What is marketing?

Marketing is the process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return.

What is the marketing process?

Market Research → Marketing Strategy → Marketing Program → Relationship Management → Profit!

What is customer value?

Value = Benefits – Costs; perceived value is subjective; benefits and costs are not just about money.

What is customer satisfaction?

The extent to which perceived performance matches a buyer’s expectations.

Performance < expectations means what?

Dissatisfied.

Performance = expectations means what?

Satisfied.

Performance > expectations means what?

Delighted.

What is Customer Lifetime Value (CLV)?

The value of the entire stream of purchases that a single customer would make over a lifetime of patronage.

What is customer equity?

The total combined customer lifetime values of all the company’s current and potential customers.

What is strategic planning?

The process of developing and maintaining a strategic fit between the organization’s goals and objectives and its changing marketing opportunities.

What are the 4 steps of company-wide strategic planning?

1. Define the organization’s mission; 2. Set objectives; 3. Establish the business portfolio; 4. Develop growth strategies.

What is a mission statement?

A statement of the organization’s purpose—what it wants to accomplish in the larger environment.

What should a good mission statement be?

Market-oriented and based on satisfying customer needs; meaningful and specific, yet motivating; emphasize the company's strengths in the market; NOT stated in terms of sales or profits.

What is marketing myopia?

The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.

Why should companies avoid marketing myopia?

Defining the company’s mission too narrowly can cause managers to miss opportunities for growth.

What does S.M.A.R.T. stand for?

Specific; Measurable; Attainable; Relevant; Time-bound.

What are organizational objectives?

Objectives should be consistent with, and support the realization of, the company’s mission. Objectives are not always monetary.

What does the BCG Growth-Share Matrix evaluate?

Market growth rate and relative market share.

What are Stars?

High growth + high relative market share; build into cash cow via investment.

What are Cash Cows?

Low growth + high relative market share; maintain or harvest for cash to finance new stars.

What are Question Marks?

High growth + low relative market share; build into stars via investment OR reallocate funding and let become dogs.

What are Dogs?

Low growth + low relative market share; maintain or divest.

What is market penetration?

Increasing sales of current products to current market segments.

What is market development?

Selling current products to new customer segments.

What is product development?

Selling new products to current market segments.

What is diversification?

Starting up or buying business outside of the firm’s current products and consumer segments.

What is the G-STIC framework?

Goal; Situation Analysis; Strategy; Tactics; Implementation; Control.

What happens in Situation Analysis?

SWOT analysis.

What happens in Goal?

Set goals and objectives.

What happens in Strategy?

Define the target market and positioning.

What happens in Tactics?

Marketing mix (e.g., 4P’s).

What happens in Implementation?

Turn plans into actions.

What happens in Control?

Evaluate performance and monitor the environment.

What are Strengths in SWOT?

Internal capabilities, resources, and positive situational factors that may help a company serve its customers and achieve its objectives.

What are Weaknesses in SWOT?

Internal limitations and negative situational factors that may interfere with a company's performance.

What are Opportunities in SWOT?

Favorable factors or trends in the external environment that a company may be able to exploit to its advantage.

What are Threats in SWOT?

Unfavorable external factors or trends that may present challenges to performance.

Which SWOT factors are internal?

Strengths and Weaknesses.

Which SWOT factors are external?

Opportunities and Threats.

What is segmentation?

Group consumers by needs.

What is targeting?

Choose the segment you will serve.

What is positioning?

Arrange for the offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

What does positioning involve?

A value proposition and differentiation.

What are the 4 P's?

The marketing mix: Product, Price, Place, Promotion. The uploaded slides did not provide individual definitions.

What is ROMI?

Net return from a marketing investment divided by the costs of the marketing investment.

What is the profit formula for ROMI?

Profit = Total Contribution − Ad Spend.

What is the ROMI formula?

ROMI = Profit / Ad Spend.

What is total contribution?

Total contribution = new sales × contribution per sale.

How are new sales calculated in the MedNet example?

New sales = impressions × click-through rate × % who buy.

What are impressions?

people who actually saw an online advertisement.

What is click-through rate (CTR)?

clicks divided by # ad impressions delivered.

What is click-to-buy rate (CTB)?

people who made a purchase divided by # people who clicked on the advertisement.

What is the 5 C's framework?

Company; Customers; Collaborators; Competitors; Context.

What is Company in the 5 C's?

Company or SBU responsible for the market offering.

What are Customers in the 5 C's?

Customers for whom the company aims to deliver superior value.

What are the customer types listed in the slides?

Consumer; Business; Reseller; Government; International.

What are Collaborators in the 5 C's?

Collaborators that work with the company to create and deliver customer value.

What are Competitors in the 5 C's?

Competitors that want to satisfy the same customer need.

What is Context in the 5 C's?

Context in which the other factors operate.

What is the microenvironment?

Actors close to the company that affect its ability to serve its customers.

What is the macroenvironment?

Larger societal forces that affect the microenvironment.

What are the six macroenvironment forces?

Demographic; Economic; Natural; Technological; Political; Cultural.

What are customer insights?

Fresh marketing information-based understandings of consumers and the marketplace that are basis for creating customer value, engagement, & relationships.

What is the Management Decision Problem (MDP)?

Focuses on symptoms; action oriented; asks what the decision maker needs to do.

What is the Marketing Research Problem (MRP)?

Focuses on causes; information oriented; asks what information is needed.

MDP vs. MRP: easiest way to remember?

MDP = What should we DO? MRP = What do we need to KNOW?

What are commercial reports?

Usually paid-for reports. Research firms collect large amounts of data about consumer opinions, trends, demographics, industries, etc.

What is competitive marketing intelligence?

The systematic monitoring, collection, and analysis of publicly available information about consumers, competitors, and developments in the marketing environment.

What is internal data?

Examples include transaction data; website/app data; customer/CRM data; marketing data; customer service data; operational data.

What is exploratory research?

Used to discover ideas or insights and to form hypotheses.

What kind of data does exploratory research generally provide?

Qualitative data (small scale studies).

What are methods of exploratory research?

Ethnography; consumer interviews; projective techniques; focus groups; case studies.

What is descriptive research?

Descriptive research describes market characteristics and/or functions.

What are characteristics of descriptive research?

Large samples; quantitative data; well structured; can be cross-sectional or longitudinal.

What is cross-sectional research?

Analyze data from different groups in a population at one point in time.

What is longitudinal research?

Analyze data from one group in a population over time.

What is causal research?

Determine cause and effect relationships.

What is causation?

A change in one variable (X) causes a predictable change in another variable (Y).

What is an experiment?

A research approach in which one (or more) variables is manipulated (X) and the effect on another variable (Y) is observed.

In an experiment, what is X?

Independent variable.

In an experiment, what is Y?

Dependent variable.

What is a sample?

A segment of the population for marketing research that we select for study because we think they represent the whole population.

What is a population?

The entire set of people who we are interested in learning about.

What should samples ideally be?

Large and representative of the population being studied.

What is correlation?

An association or dependency between two variables.

What is positive correlation?

When values on one variable are high, values on another variable are also high (or low and low).

What is negative correlation?

When values on one variable are high, values on another variable are low (or low and high).

What is the key rule about correlation and causation?

Correlation ≠ causation.

What is need recognition?

Occurs whenever a consumer recognizes a difference between the current state and the ideal or desired state.

What is motivation?

An internal state that drives us to satisfy needs.

What happens during information search?

Once a need is activated, consumers search for information on how to satisfy it.

What is internal search?

Retrieving relevant knowledge stored in memory.

What are the types of external information sources?

Personal sources; Commercial sources; Public sources; Experiential sources.

What happens during evaluation of alternatives?

Consumers identify the consideration set and narrow the list and compare pros and cons.

What are heuristics?

Rules of thumb.

What are examples of heuristics from the slides?

Price = quality; Brand name; Country of origin.

What happens during post-purchase evaluation?

Consumers ask: How good a choice was it? Customer satisfaction depends on whether performance meets expectations, exceeds expectations, or falls short.

What can post-purchase evaluation affect?

Future purchase decisions for that particular consumer and for others through word-of-mouth.