BMGT350 Midterm Exam 1

Chapters 1-6 Exam October 16, 2023

Marketing

The process by which companies engage customers + manage profitable customer relations, and create customer value to capture value from customers in return

• Social & managerial process

• Promise to deliver superior value

2 Fundamental Goals

1. Acquisition (Attract new customers)

2. Retention (Keep + grow current customers w/ delivery of satisfaction)

Customer Engagement

• Two way nature of engagement

• Engaged customers provide a premium

  “ Ongoing interactions offered by comp & chosen by customer”

Market Offerings

Some combo of products, services, info or experiences offered to a market to satisfy a need or want

• Not limited to physical products

Marketing Myopia

Paying attention to specific products offered, rather than meeting customer needs or seeing societal implications

Needs, Wants, & Demands

Need: Deprivation

Wants: Shaped by culture & individual personality

Wants become demands w/ buying power

Exchange

Act of obtaining desired object from someone by offering something in return

Market

Set of actual & potential buyers of product/services which have a set of needs

Suppliers to Consumer Relation

Suppliers → Company OR Competitors → Marketing intermediaries → Final consumers → Company OR Competitors

• Relations must be developed + managed to create customer value, engagement, and profitable customer relations

Marketing Management

Art/Science of choosing target market & building profitable relations with them

1. Divide into Segments (Marketing Segmentation)

2. Select Segments (Target Marketing)

Value Proposition

Set of beliefs and values a company promises to deliver to customers to satisfy their needs. Must differentiate + position itself!

• Foundational support for a customer-value-driven strategy

Marketing Mangement Orientations

Production, Product, Selling, Marketing, & Societal Marketing

Production Concept

Consumers favor products that are available and affordable

• The focus is increasing production and distribution efficiency

Product Concept

Consumers favor products with the highest quality, performance, and features

• Too much = Marketing Myopia

• Importance of continuous improvement

Selling Concept (“Inside-Out”)

Consumers will not buy enough of the firm’s products unless it undertakes large-scale selling & promotion efforts

• Usually unsought goods like insurance, & blood donations

• Focus = sales transactions, not LT relations

Factory → Existing Products → Sell + Promote → Profits from Sales Volume

Marketing Concept (“Outside-In”)

Requires an organization to know the target’s needs and wants and better deliver than competitors

• Focus: customer satisfaction

Market → Customer Need → Integrated Marketing → Profits from Satisfied Customers

Societal Marketing Concept

Marketing should consider consumers’ wants, company requirements, consumers’ interest, and LT society interests.

Society (human welfare), Consumers (want satisfaction), Company (Profits)

Consumer-Driven Marketing

Understanding customer needs even better than customers themselves + creating products/services to meet existing + latent needs

Shared Value

Societal needs & economic needs define markets

Marketing Mix (4 P’s)

Product: variety, quality, design, features, services
Price: list price, discounts, pmt period
Place: channels, coverage, locations
Promotion: ads, public relations, sales promos

• Should be blended into a integrated marketing program

Personalized Marketing Data Collection

1. Zero (shared explicitly by consumer)

2. 1st-party (collected implicitly by the org)

Customer Relationship Management

Process of building & maintaining profitable customer relations

• Acquire, Engage, Grow

Customer Perceived Value

(subjective)
Customer evaluation of ALL benefits & costs of market offering relative to those of competitors

Customer Satisfaction

Products’ perceived performance relative to buyers’ expectations

• Short = dissatisfied

• Exceed = satisfied, which leads to customer loyalty and better company performance

Customer Engagement Marketing

Foster direct & continuous customer involvement in shaping brand conversations, experiences, and community

• Be a meaningful part of consumers’ convos & lives

Customer Brand Advocacy

Satisfied customers initiate favorable interactions about a brand

• Engage customers rather than interrupt them

Customer Generated Marketing

Customers themselves play a role in shaping brand experience & those of others

• Examples: social media, blogs, online-review-sites

Partner Relationship Management

Working with others inside & outside the company to jointly engage & bring more value to their customer

• Examples: suppliers, channel products, distributors, retailers

Customer Lifetime Value (CLV)

Prediction of total net profit that will be attributed to an organization’s ‘relationship’ with an individual consumer

• Entire stream of purchases

• Customer Equity = sum of all company current & potential customers

Loyalty Focus

1. Behavioral: Customer buys the brand regularly and does not respond to competitors offerings (habitual)

2. Attitudinal: degree to which a customer prefers or likes the brand (psychologically connected)

3 Triangles of Loyalty

1. True: Emotionally Connected, Relationship-based

2. Mercenary: Loyal because paid to be, transaction focused

3. Inertia: Here because too much trouble elsewhere, passive

Types of Customers

Butterflies: Profitable, NOT loyal
(here for ST, then gone)

True Friends: Profitable & loyal
Barnacles: Loyal, not profitable
(limited fit with needs & company offers)
Strangers: Not Profitable, not loyal

Strategic Planning

The process of developing & maintaining a strategic fit between organization’s capabilities and its changing market opportunities

Steps: Define Mission → Set Objectives & Goals → Design Business Portfolio → Planning Marketing & other functional strategies

Mission Statement

Statement of the organization’s purpose and what it wishes to accomplish in the larger environment

• Should be market-oriented (focus on customer + customer experience) not product-oriented

Business Portfolio

Sum of all the businesses & products that make up the company

1. Analyze current portfolio (which businesses deserve more $$?)

2. Shape future portfolio

Portfolio Analysis

Management evaluates products & businesses that make up a company

Strategic Business Unit (SBU)

Key businesses (hard to define)

• Examples: company division, product line, single product or brand

Growth-Share Matrix

1. Dog: (low-share, low growth) Generate enough for themselves but not a-lot)

2. Question Mark: (low-share, high-growth) Require more $ but think about which to make stars

3. Star: (high share, high growth) Heavy investments. Eventually slow down

4. Cash Cows: (high share, low growth) Require less investment, produce $ to pay bills & support other SBUs

Value Chain

Each department carries out value-creating activities to design, produce, market, & deliver a firm’s products

Value Delivery Network

Composed of the company, suppliers, distributors, & customers who partner with each other to improve the performance of the system to deliver value

Market Segmentation

Dividing the market into groups of buyers with different needs, characteristics, and behaviors

Market Segment

Consumers who respond in similar ways given set of marketing efforts

• Examples: Tylenol (diff in low vs high income, there is none)

Market Targetting

Evaluate each segment’s attractiveness and select one to enter

• Start with one, then add more if successful

Product/Market Expansion Grid

1. Market Penetration (Increase ‘share of customer) existing product + market

2. Market Development: Find new markets for current products (existing product, new market)

3. Product Development: Develop new product (existing market, new product)

4. Diversification: Start/Buy business beyond current (new product, new market)

Positioning

Arranging for a product to occupy clear & distinctive place relative to competing products

4 A’s of Marketing

Acceptability, Affordability, Accessibility, & Awareness

SWOT Analysis

Strengths: Internal capabilities that help the company reach objectives

Weaknesses: Internal limitations that interfere
Opportunities: External factors that the company can exploit to its advantages

Threats: Current + Emerging external factors that challenge company’s performance

GOST Approach

Goals → Objectives (what must be done to reach goal) → Strategies (methods & Capabilities) → Tactics (activities to implement strategies)

• Constraints should also be considered (budget, training, tech)

Marketing Dashboard

Meaningful sets of marketing performance measures in a single display used to monitor strategic performance

Marketing Control

Evaluate results & corrective action to ensure objectives are attended

Microenvironment

Actors close to the company affects its ability to engage & serve its customers

• Examples: suppliers, marketing intermediaries, competitors, publics, and customers

Macroenvironment

Larger societal forces that affect the microenvironment

• Examples: Demographic, Economic, Natural, Technological, Political, Cultural

Marketing Intermediaries

Help the company promote, sell, and distribute its products to final buyers
Examples: resellers, physical distribution, marketing service agencies & financial intermediaries

Publics

Any group that has an actual or potential interest in an organization to achieve its objectives

• Examples: financial (banks, stockholders), media (tv stations), gov, citizen, internal, general, local

Demography

Study of human population in terms of size, density, location, age, gender, rare, occupation, etc

Different Generations

1. Baby-Boomers(post ww2):

   wealthiest, most loyal

2. Generation X(1965-1980)

   less materialistic, family first

3. Millennial/Generation Y: (1996)

   also value more authenticity

4. Generation Z (1997-2012)

5. Generation Alpha (2012+)

Economic Environment

Economic factors that affect customer buying power and spending patterns

• Examples: COVID-pandemic, Recession

Natural Environment

Involves the physical environment and natural resources needed as inputs by marketers or needed by marketing activities

Proactive vs Passive

Proactive: Don’t assume strategic operations bounded by the environment, develop strategies to respond to changes

Passive: View the marketing environment as uncontrollable. Don’t try to change it

Marketing Information System

Consists of people & procedures dedicated to:
Assesses Info Needs → Develops needed information → Helps decision makers interpret insights

Big Data

Huge & complex data sets generated by today’s sophisticated generation, collection, storage, & analysis

• If you tap into it, can be rich and give consumer insights!

Customer Insights

Fresh Marketing info based on the understanding of customers & marketplace becomes the basis for creating customer value, engagement, & relations

Internal Databases

Collection of customer & market info obtained from data sources within the company network

• Comes from: customers, accounting, operations, etc

• Quick & cheaper, ages quickly, need sophisticated tech

Marketing Research

Systematic design, collection, analysis, & repeating of data relevant to specific marketing situation facing an organization

• Examples: get insights on motivation, purchase behavior, satisfaction

Just in Time Research

Fast & agile marketing info & research

• Speed matters more

Marketing Research Process

1. Define Problem & Research Objectives

2. Develop research plan for collecting info

3. Implement research plan — collect & analyze data

4. Interpret & reporting the findings

Research Hypotheses

Statements about measurable variables can be tested with empirical data, and should contain clear implications for testing stated relationships

Research Approach

Exploratory, Descriptive, & Casual

Exploratory Research

Clarifies or helps define problems and suggest hypotheses

Descriptive Research

Used to describe product’s performance and/or potential. Also used to describe consumers’ demographics and/or attitudes.

• Who? What? Where? When?

Casual Research

Used to test hypotheses about cause-and-effect relationships

Primary Data

Generated for specific problem!

• Examples: focus groups, interviews, observations, experiments

• Relatively costly

Secondary Data

Previously collected for a different purpose internal/external database, inexpensive

• Is it available, relevant, sufficient?

Observational Research

(primary data approach)

Gathers primary data by observing relevant people, actions, & situations

• Captures behavior (what) but not motivations (why)

Survey Research (Good for Descriptive info)

(primary data approach)

Asks target consumers specific questions about their knowledge, attitude, differences, and buying behavior

• many ways to complete (online, mail)

Experimental Research

(primary data approach)
Selects matched (ideally random) groups of groups (test vs. control) of subjects, gives different treatments, controls extraneous factors & measures group differences to determine causality

• explain cause-effect relationship

Ethnographic Research

Involves sendings observers to watch & interact with consumers in the ‘natural’ environment

• gets fresh insights

Focus Group Interviewing

Inviting small groups to gather with a trained interviewer to talk about product, service, or organization

Secondary Data Types

Internal - CRM (Zero & First Party), often used for data mining & analyzing large dataset to discover unseen trends, patterns, & interests
External - Business & Non-Government, non-profits, commercial publishers, government & syndicated Sources

Syndicated Sources

Companies that collect & sell data of known commercial value

Behavioral Targetting

Using online customer tracking data and analytics to target ads & marketing offers to specific customers

• Examples: want new shoes, get a lot of ads for Converse

Social Targeting

Mining individual online social networking activity for the purpose of targeting ads& marketing efforts

• Example: seeing the Converse a friend bought a week ago

Sample

Segment of the population selected for marketing research to represent population as a whole

CRM (Customer Relationship Management)

Managing detailed info about individual customers, and carefully managing customers touch points to maximize loyalty

• Examples: Salesforce, Oracle

Consumer Buyer Behavior

Refers to the buying of final consumers:

• Individuals & households buying for personal consumption

• Sum = Consumer Market!

Model of Buyer Behavior

Environment:
Marketing stimuli: Product, Price, Place, Promotion
Other: Economic, Technological, Social, Cultural
Buyer’s Black Box: Buyer characteristics & decision process

Buyer Response:
Buying attitudes & preferences, purchase behavior (what the buyer buys, when, where, how much), brand engagements & relations

Factors Influencing Consumer Behavior

Cultural: culture, subculture, social class
Social: groups & social networks, family, roles & status
Personal: age, life-style stage, economic sit, personality
Psychological: motivation, perception, learning, beliefs & attitutes

Culture

Set of basic values, perceptions wants, & behavior learned by family or other individuals

• examples: equality, individualism, directness, achievement

Subculture

Group of people with shared value systems based on common life experiences & situations

• examples: nationalism, religions, race, age

Social Class

Relative permanent ordered divisions in a society whose members share similar values, interests, & behaviors

• examples: income, occupation, etc

Membership Groups

Have a direct influence to which a person belongs

• family = most important

Reference Groups

Direct (face-to-face) or indirect parts of comparison or reference in forming a person’s attitudes

• Expose people to new behaviors & lifestyles

Opinion Leader

Person within a reference group who (because of skills, knowledge, or personality) exert social influence over others

Word of Mouth Influence

Impact of personal words & recommendations of trusted family, friends, associates and other consumers on buying behavior

• Natural & credible

Influencer Marketing

Enlist established influencers or creating new influencers to spread word about company’s brands

Online Social Networking

Communities, blogs, online, and social media where people socialize to exchange information & opinions

• examples: Amazon, Etsy, Instagram

Lifestyle

Person’s pattern of living, expressed by his/her psychographics

• examples: activities, interests, opinions

Personality

Unique psychological characteristics that distinguish a person or group

• self confidence. dominance, sociability

• want brand to have “personality” with human traits

Motive/Drive

Need that is sufficiently pressing to direct the person to seek satisfaction

Maslow’s Hierarchy of Needs : Motivation

Physiological → Safety → Social → Esteem (recognition, status) → Self Actualization