Marketing 3305 Exam 2

What is customer relationship management?

the systematic tracking of consumers preferences and behaviors over time in order to tailor individualized value propositions

How is customer relationship management used?

allows firms to get up close and personal, a process by which firms enact their customer orientation, capture information at each customer touchpoint

What are touchpoints?

any point of interaction or contact between a person and a brand

Share of customer (primary customer-related metrics)

the percentage of a given customer’s purchases in a category over time

How is Customer Lifetime Value calculated (primary customer-related metrics)

Average purchase value x Purchase frequency x Customer lifespan

What does CLV represent? (primary customer-related metrics)

how much profit a firm will make on a customer

What is meant by customer prioritization? (primary customer-related metrics)

focusing the most time and resources on customers who are most valuable to the company

How is customer prioritization applied? (primary customer-related metrics)

a firm may emphasize personal selling for contacting high-volume customers, while using direct mail or telemarketing to communicate to low-volume customers

What is big data?

describes the exponential growth of structured and unstructured data

What are the 5 primary sources for big data?

social media, corporate IT, commercial entities, government and nongovernmental organizations, partners

What is the internet of things? (ways big data is used by marketers)

network of physical objects embedded with sensors, software, and internet connectivity that allows them to collect and exchange data

Sentiment analysis and emotion analysis (ways big data is used by marketers)

SA: measures the broad polarity of text to determine if its positive, negative, or neutral

EA: goes deeper to identify specific psychological feelings like joy, anger, sadness, or fear

Scanner data (ways big data is used by marketers)

electronic transaction records captured at the point of sale via barcode scanning

What is the purpose of a brand association map?

provides a visual, consumer driven illustration of thoughts, emotions, attributes, and perceptions connected to a brand

How do structured and unstructured data differ?

SD: highly organized in fixed formats like rows and columns

UD: no predefined format and requires advanced AI or machine learning to analyze

The 5 digital marketing channels?

social media, digital ad networks, email, search engines, short message services (SMS)

Cost-per-click

advertiser is charged only when user clicks on an ad (more expensive and requires greater interaction)

Cost-per-impression

advertiser is charged each time an ad shows up on user page (less expensive but not as easy to measure)

Cost-per-order

advertising costs/orders

Conversion rate

#of goal achievements/# of website visitors

Search engine optimization? How does it help marketers?

the process of improving a website to increase its visibility when people search for products or services. helps marketers by driving organic traffic to their website and boosting awareness

Churn rate?

#of customers lost at end of prior period/# of customers at beginning of prior period) *100

Consumer behavior

the process individuals or groups go through to select, purchase, use, and dispose of products in order to satisfy their wants and needs

Habitual decision-making (consumer purchasing decisions)

automatic, routine choices made out of habit with almost zero conscious thought or brand comparison

Limited decision-making (consumer purchasing decisions)

moderate effort where a consumer pends a small amount of time researching or comparing a few familiar brands

Extended decision-making (consumer purchasing decisions)

requires deep research, significant time, and careful evaluation because the purchase is expensive, infrequent, or high risk

Problem recognition (decision making process 1)

occurs when a consumer sees a difference between current state and desired/ideal state

Information search (decision making process 2)

consumers need adequate information to make good decisions

Evaluation of alternatives (decision making process 3)

identifying a small number of products for closer consideration

Product choice (decision making process 4)

consumers often rely on mental shortcuts, or heuristics, in making decisions

Post purchase Evaluation (decision making process 5)

consumer satisfaction/dissatisfaction following purchase of product is critical

Cognitive dissonance

psychological discomfort experienced by consumers following a purchase decision

Heuristics

rules of thumb used by individuals to arrive at good decision with less mental effort

• price equals quality

• brand loyalty

• country of origin

Evaluative criteria

represents the specific dimensions, features, or potential benefits a consumer reviews and compares when evaluating alternative solutions to a problem

Internal influences on consumers’ decisions

• perception

• motivation

• learning

• attitudes

• personalty

• age groups

• lifestyle

External influences on consumers’ decisions

• situational influences

  • physical environment

  • time

• social influences

  • culture

  • subculture

  • social class

  • group memberships

  • opinion leaders

  • gender roles

Types of B2B customers

manufacturers and other product producers, resellers (retailers and wholesalers), government and not-for-profit institutions

Key differences in business versus consumer markets

multiple buyers, number of customers, geographic concentration, size of purchases

Demand in B2B market

• derived

• inelastic - changes in price have little or no effect on quantity sought

• fluctuating - small changes in consumer demand create large changes in business demand

• joint - two or more goods are used together to create a product

B2B buyclass framework

• straight rebuy - routined orders

• modified rebuy - minor adjustments

• new-task rebuy - first time acquisitions

Market fragmentation

occurs when diverse interests and backgrounds of individuals create greater diversity in needs and wants 

• Technological and cultural advances have fueled growing fragmentation of markets 

• Consider the choice you made as a consumer of higher education

3 components of target marketing

segmentation, targeting, and positioning

Segmentation

Identify and describe market segments 

Targeting

Evaluate segments and decide to go after

Positioning

Develop a marketing mix that will create a competitive advantage in the minds of the selected target market

What is a segmentation variable?

a dimension or characteristic that divides a total market into homogeneous groups, each with different needs and preferences

Segmentation demographics

• Demographics 

  • Age 

  • Gender

  • Family life cycle 

  • Income and social class

  • Ethnicity 

  • Place of residence (geography)

Segmentation psychographics

• Lifestyles

• Personality traits

• Interests, values, and attitudes

Segmentation behavior

• Usage rate

• Brand loyalty status

• Benefits sought

What is meant by psychographics?

the use of psychological, sociological, and anthropological factors to segment a market, construct consumer personas, and understand the motivations behind consumer choices

What are common methods for segmenting by behavior?

usage rate: dividing the market into categories based on the volume or frequency of purchasing

usage occasions: looks at when consumers use a product most (holidays, events, etc.)

Once segmenting is accomplished, what are the 3 phases in targeting?

evaluate market segments, develop segment profiles, choose a targeting strategy

What factors should the marketer consider when evaluating segments

1. Are members of the segment similar to each other?

2. Can the marketer measure the segment?

3. Is the segment long enough to be profitable?

4. Can marketing communications reach the segment?

5. Can the marketer adequately serve the needs of the segment?

What are the different types of targeting strategies and what do they mean?

• Undifferentiated Targeting Strategy: am approach that appeals to a broad spectrum of people with a single product and marketing mix (treating the market as one large group).

• Differentiated Targeting Strategy: developing distinct products and tailored marketing mixes for several different customer groups, keeping those offerings separate in the marketplace.

• Concentrated Targeting Strategy: Focusing a firm’s resources and efforts on offering one or more highly tailored products to a single, specific sub-segment (often referred to as niche marketing).

• Custom Marketing Strategy / Micromarketing: An extreme strategy that tailors specific products and marketing messages to individual customers (common in B2B environments or service industries).

• Mass Customization: A modern technological approach that modifies a basic consumer good or service to meet the specific needs of an individual user on a mass scale.

What are the 4 steps in positioning?

1. analyze competitors’ positions

2. define your competitive advantage

3. finalize the marketing mix

4. evaluate responses and modify

What is re-positioning?

the deliberate strategic overhaul of a company’s marketing mix to change the image and position of an existing product in the minds of consumers

What is a perceptual map and what does it represent?

a visual matrix or diagram that represents where various brands, products, or services sit in the minds of consumers relative to competing products

What variables are used to segment business customers (B2B)?

organizational demographics, operating variables, purchasing approaches, and situational factors