MGT-6201 Marketing Week 13

In this course, marketing is defined as ___.

The creation and satisfaction of demand for a product or service.

Trap: advertising is only one component of marketing, not its definition.

Course definition: strategy vs. tactic

Strategy = a set of ideas that outline how a product line or brand will achieve its objectives.
Tactic = a specific action or method that contributes to achieving a goal.

Per Drucker (quoted in the lesson), a business enterprise has which two — and only two — basic functions?

Marketing and innovation. Everything else is a cost.
The aim of marketing is to know the customer so well that the product fits him and sells itself.

The goal of marketing is to create a product that ___, not to ___.

…create a product or service that sells — not merely to sell products and services.

List the 8 universal marketing functions.

1. Buying
   2. Selling
   3. Transporting
   4. Storing
   5. Standardization & grading
   6. Financing
   7. Risk taking
   8. Market information
   
   They exist to overcome separations and discrepancies between parties to an exchange.

Universal marketing function: standardization and grading means ___.

Sorting products by size and quality.

Universal marketing function: market information means ___.

The collection, analysis, and distribution of all the information the marketer needs to plan, implement, and control need-satisfying marketing activities.

Define customer value.

The difference between the benefits a customer sees from a marketing offering and the cost of obtaining those benefits.

Benefits and costs may be intangible (time, convenience, emotion). Value is judged by the customer, not the firm.

Define customer lifetime value (CLV) — exam wording.

The total stream of purchases that a customer can contribute to the firm over the length of the firm-customer relationship.

Distractors used on the real exam: customer whole value, customer estimated value, customer worth, customer satisfaction value.
Note: the course gives no formula for CLV — it is tested as a definition.

Name the 5 C's of business/marketing strategy.

Customers, Company, Competitors, Collaborators, Context.
Customers sit in the center — they are the focal point.

5 C's: what does the Company element cover, and which tools support it?

Looking internally to define positioning, messaging, differentiators, and core capabilities.
Tools: SWOT, perceptual and positioning maps, marketing mix differentiation.

5 C's: what are Collaborators, with examples?

External business entities that work with the company to create value for customers.
Examples: raw-material suppliers, distributors, marketing agencies, third-party retailers.
Course example: Louis Dreyfus supplies sugar to Nabisco / Dr Pepper; Samsung relies on Target and Home Depot to resell.

5 C's: what is Context, and what tool assesses it?

The environment in which the company operates — regulations/laws, economic conditions, cultural norms, technological factors.
Tool: PESTEL = Political, Economic, Social, Technological, Environmental, Legal.

Which competitive-analysis frameworks does the lesson name under Competitors?

The competitive matrix (features and benefits offered by competitors) and Porter's Five Forces.

Why it matters: if customers don't perceive a difference, the offering is a commodity and they decide on price alone.

A marketing strategy ___.

Specifies a target market and a related marketing mix.

It is not a whole-company plan, and it does not omit customers. It gives the big picture of what the firm will do.

Marketing strategy → marketing plan → marketing program. Distinguish them.

Strategy = target market + marketing mix.
Plan = strategy + time-related details (what mix, to whom, for how long, what resources at what rate, expected results, control procedures).
Program = the sum of more than one marketing plan.

The marketing management process consists of which three activities?

Planning, implementation, and control.
Implementation = putting plans into action. Control = assessing and evaluating marketing performance and taking corrective action.

Define target market (course wording).

A fairly homogeneous (similar) group of customers to whom a company wishes to appeal.

Define the marketing mix.

The controllable variables the company puts together to satisfy the target market — used to create and harvest demand.

Exam distractors: Value Proposition, the 4 C's, the 4 Differentiators, Competitive Offering.

Name the four Ps.

Product, Place, Promotion, Price.
Trap options on past exams: Production, Personnel, Profit, People, Personal Selling.

Which of these is NOT a controllable element of a firm's marketing strategy: target market selection, product features, price, advertising content, sales team design, customer behavior?

Customer behavior. It is an influence the marketer must respond to, not a variable the firm controls.

List the stages of the customer marketing model in order.

1. Awareness
   2. Interest & engagement
   3. Acquisition
   4. Customer segmentation
   5. Customer retention
   6. Support & advocacy

Customer marketing model: what is Awareness vs. Interest & engagement?

Awareness = creating an identification moment; they know you exist.
Interest & engagement = answering "now that I know you exist, why should I care / how do you deliver value to me?"

Customer marketing model: what is the marketer's "holy grail" stage?

Support and advocacy — customers so satisfied they do the marketing for you. Usually needs tactful encouragement rather than happening spontaneously.

What is a customer persona / profile, and what components does the lesson list?

A semi-fictional depiction of the target audience; most firms have more than one, each representing a distinct target segment.
Components: demographic, geographic, psychographic, behavioral, and RFM (recency, frequency, monetary).

Which variables count as psychographic profiling? (Exam question)

Lifestyle, values, attitudes, personality.

NOT psychographic: brand loyalty and usage rate (behavioral); marital status, age, income (demographic).

Which is NOT a component of customer profiles/personas?

Assumption attributes (speculation, company opinions, guesstimates). Personas are built on data — demographic, geographic, psychographic, behavioral.

A person's distinguishing psychological characteristics leading to consistent, lasting responses to their environment is ___.

Personality.
Note: on one past exam the graded key accepted Psychographics for this stem after a regrade — know both, and read the stem carefully.

Name the three stages of the buyer's journey.

Discovery → Consideration → Decision.

Target marketing vs. mass marketing.

Target marketing: tailor the marketing mix to a specific, fairly homogeneous group.
Mass marketing: one marketing mix offered to everyone; assumes everyone is the same and everyone is a potential customer.

Target marketing is not necessarily a small market — only a similar one.

TRUE or FALSE: A production-oriented manager sees everyone as different and practices target marketing.

FALSE. Production-oriented managers see everyone as basically the same and practice mass (unsegmented) marketing. Marketing-oriented managers practice target marketing.

Define breakthrough opportunity and competitive advantage.

Breakthrough opportunity: helps innovators develop hard-to-copy strategies that stay profitable a long time.
Competitive advantage: the firm has a marketing mix the target market evaluates as better than a competitor's.

Key: competitive advantage is judged from the customer's perspective, not the firm's.

Define the four growth strategies: market penetration, market development, product development, diversification.

Market penetration: more of present products in present markets.
Market development: present products into new markets/uses.
Product development: new/improved products for present markets.
Diversification: new products and new markets.

Lipton runs ads encouraging current customers to drink Lipton tea instead of coffee at morning coffee breaks. This is ___.

Market penetration — increasing sales of a present product in a present market.

E-Z-Go promotes its golf carts as a quiet way for workers to get around malls, airports, and factories. This is ___.

Market development — an existing product taken to a new market.
Trap: this is not diversification (the product isn't new) and not product development.

Tylenol launches Extra Strength Rapid Release Gels for its existing market. This is ___.

Product development — an improved product for present markets.

Starbucks corporate gift-card program aimed at increasing purchase frequency among existing business customers is an example of ___.

Market penetration.

What are the four components of the external market environment?

1. Economic
   2. Technological
   3. Political & legal
   4. Cultural & social
   
   Trap: the competitive environment is NOT part of the external market environment in this course.

What is in the direct market environment?

Customers, the company's resources and objectives, and the firm's competitors.

X-Brand Bikes' South America strategy failed after interest rates and inflation rose sharply. Which environment?

Economic environment.
Cue words: interest rates, inflation, recession, consumer spending, exchange rates, buying power.

Which environment covers trade policies, labor laws, and political stability?

Political environment (part of political & legal).
Legal covers health & safety, advertising standards, product safety, product labeling, consumer rights.

Which environment covers population growth, age distribution, health consciousness, and career attitudes?

Cultural and social (sociocultural) environment — the shared beliefs and attitudes of a population.

Define the four market situations the course names.

Monopoly: one company serves the entire customer base.
Monopolistic competition: several firms offer mixes some customers see as different — the typical situation.
Oligopoly: a small number of firms control the market; barriers to entry very high.
Pure competition: many firms, essentially commodity products; price decides.

A market where a small number of firms control the market and barriers to entry are very high is ___.

Oligopoly.
Trap: this is the item most often missed by confusing it with monopolistic competition.

What limits the search for opportunities (company analysis)?

Financial strength, producing capability and flexibility, and marketing strengths (familiar brand, strong channel relationships, brand advertising, industry-leading sales force, people's knowledge).

How does the Aveeno example illustrate using a company resource for competitive advantage?

A familiar brand name that consumers already associate with quality in a related category (skin lotion, quality ingredients) makes them more likely to consider Aveeno body wash — a category Aveeno wasn't known for.

What insight drove the Old Spice body wash positioning?

Although the user was male, the majority of purchases were made by women shopping for the household — so early advertising and positioning were directed at women.
Takeaway: buyer ≠ user.

A strategic planning grid positions opportunities on which two axes, and how are the zones read?

Axes: industry attractiveness (market size, growth, competitive structure) × business strengths (skills, technology, share, profitability).
Blue = growth opportunities, pursue. Red = avoid. Yellow = borderline, analyze further.

What is the total profit approach?

Estimating potential sales and costs over the life of the plan for competing options.
Course exhibit: Product A (much-improved product) isn't profitable until after year 3 but earns more over 5 years; Product B (me-too) has lower start-up cost and profits sooner. A wins if the firm can afford the delay.

Define a market (course wording).

A group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services.

Generic market vs. product market.

Generic market: broadly similar needs, sellers offering diverse ways of satisfying them (e.g., entertainment: concerts, movies, cruises).
Product market: very similar needs, sellers offering close substitutes (e.g., compact, rugged, and super-zoom digital cameras).

Name a product-market with a four-part description. What are the four parts?

1. Customer needs
   2. Customer types
   3. Geographic area
   4. Product type
   
   Trap: a generic market has NO product type — only three parts.

Define market segmentation.

A two-step process: first disaggregate (break apart) all customer needs, then an aggregating process that clusters people with similar wants and needs into a market segment.
Step 1: name a broad product-market. Step 2: break it apart into submarkets and their mixes.

List the criteria for determining segments.

1. Customers within a segment are as similar as possible (homogeneous on some important dimension)
   2. Customers in different segments are as different as possible
   3. The segment is large enough to be profitable (substantial)
   4. Segmenting dimensions are useful for identifying customers and designing the mix (operational)
   5. The company has the resources/means to pursue it

Which is NOT a criterion for determining market segments? (recurring exam item)

"Members of the segment should be in the same socio-economic class."
Also wrong: "people in the segment are similar to people in other segments" — segments must be different from each other.

Which of these is NOT a factor affecting the choice of segmenting vs. combining?

"Combining implies more marketing costs." — Combining implies fewer costs; that's its point.

Real factors: the firm's resources; competition in various segments; segmentation can lead to increased sales; too much combining can be risky.

Torpedo Brands divides its market into professional athletes, amateur players, and non-athlete casual users, each with its own needs and marketing goals. This is market ___.

Segmentation. (Targeting = choosing which of them to serve. Positioning = shaping perception in their minds.)

Distinguish the single, multiple, and combined target market approaches.

Single: segment the market, pick one segment, one mix.
Multiple: pick two or more segments and give each its own marketing mix.
Combined: merge two or more submarkets into one larger target market served by one strategy.

A target marketer uses a single marketing mix to appeal to both office tablet users and home tablet users. This is the ___ approach.

Combined target market approach.

Trap: "single marketing mix" ≠ "single target market approach." Two segments merged into one = combined. One mix for one chosen segment = single.

Jazzy Tile Co. aims at two different segments, offering each a different marketing mix. This is the ___ approach.

Multiple target market approach.

Why would a firm use the combined approach rather than multiple?

Limited company resources — seeking economies from having one effort serve more than one market. Ideally a marketer would prefer single or multiple approaches with mixes tuned to each target market.

Name the main consumer segmenting dimension categories with examples.

Demographic: income, sex, age, family size & life-cycle stage, occupation, education, social class, ethnicity.
Geographic: region of world/country, region within a country, city size.
Behavioral: needs, benefits sought, thoughts/attitudes, rate of use, purchase relationship, brand familiarity, kind of shopping, problem-solving approach, information needs.

Tom and Sally's family life-cycle stage is a ___ dimension; the reliability benefit Sally seeks is a ___ dimension.

Family life-cycle stage = demographic.
Benefit sought (reliability) = behavioral.

Sarah belongs to an active, outdoor-loving segment into sports, music, and fashion — segmentation on activities, interests, and opinions. This is ___.

Psychographics (AIO / lifestyle analysis). Not demographics.

Name the business/organizational segmenting dimensions.

1. Kind of relationship (weak → strong loyalty)
   2. Type of customer (manufacturer, service producer, government)
   3. Demographics (geographic location, company size, industry)
   4. How the product will be used (installation, component, raw material)
   5. Type of buying situation (number of people involved; centralized vs. decentralized)
   6. Purchasing methods (bids, vendor analysis, e-commerce)

Qualifying vs. determining dimensions.

Qualifying: relevant to including a customer type in a product-market — the core features that must be offered to everyone in that product-market.
Determining: those that actually affect the customer's purchase of a specific product or brand and allow further segmentation.

What computer-aided methods help with segmentation?

Clustering techniques (find similar patterns in data) and customer relationship management modeling (predict what an individual customer will want from stored data), plus anticipation of emerging needs.

List the seven-step best practice for segmenting product markets.

1. Decide what broad product-market the firm wants to be in
   2. Write down as many relevant needs as you can for all potential customers
   3. Form submarkets around like need sets
   4. Identify the determining dimensions for each possible segment
   5. Name/nickname each segment based on the relative importance of its determining dimensions
   6. Consider what else you know about each segment — how and why it behaves as it does
   7. Tie the product-markets to demographic or other customer data to estimate segment size

Conference call: what does the Kate Spade Saturday / Jack Spade failure illustrate?

A failure of psychographic and behavioral segmentation — not understanding how male and value-oriented customers perceive, shop for, and engage with designer brands.

Conference call: why did Shoes for Crews ultimately fail despite a seemingly viable niche?

The segment was too small and not profitable once competition intensified and external shocks (COVID) reduced demand — it failed the "large enough to be profitable" criterion.
Segments must be distinct, reachable, and profitable.

Conference call: which example best illustrates Drucker's modern view of marketing (vs. a "sales era" view)?

A bicycle manufacturer identifying distinct segments — commuters, athletes, recreational users — and designing products and services tailored to each.
Not: aggressive advertising/discounting, scale-driven cost cutting, or mass distribution of one standardized product.

A bike maker sees demand shifting to e-bikes amid urban bike lanes, health trends, and tech advances. How should it read these conditions?

As indirect external environmental forces that influence customer needs and reshape market opportunities — not as controllable 4P variables and not as internal factors.

Jane and Henry debate who needs their concierge service, who is willing and able to buy, and where those people are. They are debating ___.

Who their target market is.

Which of these is NOT marketing: advertising a store opening, researching popular designs, testing price points, building a factory, selling in a showroom?

Building a facility to make furniture — that's production, not marketing.