Comprehensive Marketing Fundamentals: Chapters 1-4 Key Concepts

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.

________ is determined by a customer's evaluation of the benefits and costs of a market offering relative to those of competing offers.

Customer-perceived value

When customers purchase products, they typically act on ________ as they judge values and costs.

perceived value

"Losing a customer once means losing the entire stream of possible purchases that the customer would make over an extended period of patronage." This statement specifically indicates loss in terms of ________.

customer lifetime value

A ________ is some combination of products, services, information, or experiences provided to consumers to satisfy a need or want.

market offering

Which of the following marketing strategies should marketing managers focus on to manage detailed information about individual customers and carefully manage customer touchpoints to maximize customer loyalty?

customer relationship management

Many managers think that "doing things right," or ________, is as important as, or even more important than, "doing the right things."

implementation

________ are current and emerging external factors that may challenge the company's performance.

threats

In the BCG matrix, ________ are low-growth, high-share businesses/products that need less investment to hold their market share.

cash cows

Micropolitan areas are ________.

likely to offer many of the same advantages as metropolitan areas

Which of the following generational groups is fluent and comfortable with digital technology and is highly mobile, social, and connected?

gen z

According to the lecture, which principle emphasizes global brand consistency with local adaptation?

glocal

The marketing research process does NOT include ________.

market segmentation

________ involve(s) sending observers to watch consumers–usually unobtrusively–in their "natural environments" as they go about their daily lives.

ethnographic research

Juanita Petino, a nutritionist, decided to test the effects of two breakfast cereals, Kinglo and Loopy, on different consumer groups. For the purpose of her study, she divided 20 volunteers into two groups and asked the members of one group to have Kinglo cereal and the members of the other group to have Loopy cereal for breakfast. She decided to compare the responses of the volunteers after a week to gain deeper insights into consumer attitude. In this instance, Juanita is using ________.

experimental research

research plan

define problem, develop plan, implent plan, interpret findings, test marketing

According to the Duolingo lecture, using streak anxiety to motivate upgrades is an example of:

Loss aversion

The marketing environment is a static concept that rarely changes.

false

Goal of Marketing

Attract new customers by promising superior value, keep and grow current customers by delivering promised value, and drive long-term company profitability by recapturing value from satisfied, loyal customers.

The Marketing Process

A five-step process that includes understanding the marketplace and customer needs, designing a customer value-driven marketing strategy, constructing an integrated marketing program, building profitable relationships, and capturing value from customers.

Importance of Understanding Marketplace

Deep understanding guides customer value creation, leads to competitive advantage, customer lifetime value, and greater share of customer.

Needs

States of felt deprivation (basic physical, social, individual). Marketers don't create needs.

Wants

Needs shaped by culture and individual personality.

Demands

Wants backed by buying power.

Example of Understanding Needs

Starbucks CEO Kevin Johnson spends time in stores to understand customer needs in the 'digital age'.

Market Offerings

Combinations offered to satisfy a need or want.

Marketing Myopia

Focusing too narrowly on specific products rather than on the benefits and experiences produced.

Example of Marketing Myopia

People want a quarter-inch hole, not just a drill.

Transformational Experience Example

Mahali Mzuri safari camp offers a 'transformational experience' rather than just a place to stay.

Customer Value and Satisfaction

Customers form expectations about value and satisfaction and buy accordingly. Setting the right level of expectations is crucial.

Exchange

Act of obtaining a desired object by offering something in return.

Building Relationships

Marketers build relationships by consistently delivering superior value.

Markets

The set of actual and potential buyers of a product or service.

Key Elements of a Customer Value-Driven Marketing Strategy

Includes selecting customers to serve through market segmentation.

Market Segmentation

Dividing the market into segments of customers.

Target Marketing

Selecting which segments to serve (companies should focus on segments they can serve well and profitably).

Value Proposition

The set of benefits or values a brand promises to deliver to satisfy needs. It differentiates one brand from another.

Example of Value Proposition

JetBlue ('award-winningly nice humans') vs. Spirit Airlines ('Bare Fare').

Production Concept

Consumers favor available and highly affordable products; focus on improving production and distribution efficiency. Risk of marketing myopia.

Product Concept

Consumers favor products with most quality, performance, and features; focus on continuous product improvements. Also risks marketing myopia.

Selling Concept

Consumers won't buy enough unless firm undertakes a large-scale selling and promotion effort (often for unsought goods like life insurance). Focuses on creating sales transactions rather than long-term relationships.

Marketing Concept

Achieving organizational goals depends on knowing target market needs/wants and delivering satisfaction better than competitors. Takes an outside-in perspective (customer-centered sense-and-respond philosophy).

Customer-Driving Marketing

Understanding customer needs even better than customers themselves do, creating products for both existing and latent needs.

Societal Marketing Concept

Questions if pure marketing concept overlooks conflicts between consumer short-run wants and long-run welfare. Marketing strategy should deliver value in a way that maintains or improves consumer and society's well-being.

Shared Value

Creating economic value that also creates value for society.

Example of Shared Value

Jeni's Splendid Ice Creams sources ingredients carefully and builds community.

Customer Relationship Management (CRM)

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Deals with acquiring, engaging, and growing customers.

Customer-Perceived Value

Customer's evaluation of benefits vs. costs of market offering, relative to competitors. Customers act on perceived value.

Customer Satisfaction

Product's perceived performance matches buyer's expectations. Satisfied customers are more likely to be loyal.

Basic Relationships

For low-margin customers (e.g., P&G's Tide using advertising/social media).

Full Partnerships

For key customers (e.g., investment firms with high-net-worth clients).

Loyalty Programs

Enhance brand experience (e.g., American Airlines AAdvantage).

Customer-Engagement Marketing

Direct and continuous customer involvement in shaping brands, conversations, and experiences. Finding ways to enter customer conversations with relevant brand messages.

Example of Customer-Engagement Marketing

Bark (BarkBox) uses humor and relatable dog stories on social media to build relationships.

Customer-Generated Marketing

Brand exchanges created by customers themselves (invited or uninvited).

Example of Customer-Generated Marketing

Oreo's #MyOreoCreation contest, Heinz's 'Draw Ketchup' campaign.

Partner Relationship Management

Working closely with partners inside (other departments forming an internal value chain) and outside (suppliers, distributors forming a value delivery network) the company to create customer value.

Capturing Value from Customers

If customer value is created well, firms capture value in return.

Creating Customer Loyalty and Retention

Highly satisfied customers stay loyal, buy more, and advocate.

Customer Lifetime Value (CLV)

Value of the entire stream of purchases a customer makes over a lifetime of patronage. Essential for long-term profitability.

Example of CLV

Stew Leonard's 'Disneyland of Dairy Stores' focuses on customer service to retain loyal customers, understanding the CLV of a customer.

Growing Share of Customer

Portion of the customer's spending in its product categories that a company captures. Firms increase this through variety, cross-selling, and up-selling.

Example of Growing Share of Customer

Amazon uses personalized recommendations and Prime membership to increase 'share of wallet'.

Building Customer Equity

The total combined customer lifetime values of all current and potential customers. A measure of the future value of the customer base.

Customer Relationship Groups

Building the Right Relationships with the Right Customers.

Strangers

Low profitability, low loyalty. Don't invest.

Butterflies

Potentially profitable, low loyalty. Enjoy for the moment, capture short-term business.

True Friends

Profitable, loyal. Make continuous relationship investments to delight, nurture, and grow.

Barnacles

Highly loyal, low profitability. Limited fit. Try to improve profitability or 'fire' them.

The Digital Age

A period characterized by the rise of digital and social media marketing.

Digital and Social Media Marketing

Online, mobile, and social media tools for engaging customers anytime, anywhere.

Example of Digital Marketing

MoonPie's use of real-time marketing and AI-powered 'MoonMate' chatbot for engagement.

Mobile Marketing

Smartphones are ever-present, targeted, personal; ideal for engaging customers.

Big Data and Artificial Intelligence (AI)

Amassing data from transactions, social media, IoT devices to gain insights and personalize offers.

The Growth of Not-for-Profit Marketing

Marketing increasingly used by colleges, hospitals, museums, government agencies to attract support and membership.

Global Marketing

Marketers increasingly take a global view, sourcing and producing goods internationally.

Sustainable Marketing

Marketers reexamining social and environmental responsibilities.

Core Idea of Company-Wide Strategic Planning

Company-wide strategic planning provides the blueprint for marketing strategy.

Strategic Planning

Process of developing and maintaining a profitable strategic fit between the organization's goals/capabilities and its changing marketing opportunities.

Four Steps in Strategic Planning

Defining a Market-Oriented Mission, setting objectives, designing strategies, and implementing and controlling the plan.

Mission Statement

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

Market-oriented mission

Should be meaningful, specific, motivating, and focus on customer/societal benefits rather than just profits.

Starbucks mission example

Shifted from 'sell premium coffee beans' to 'create the Starbucks experience... a third place where people could belong'.

IKEA's mission example

'Create a better everyday life for the many people' by offering functional, affordable home furnishings.

Setting Company Objectives and Goals

Turning the broad mission into detailed supporting objectives for each level of management.

CVS Health's mission example

To be a 'pharmacy health care innovation company' leading to objectives like increasing access, lowering costs, and improving care quality.

Designing the Business Portfolio

Collection of businesses and products that make up the company, aiming for the best fit between environmental opportunities and company strengths/weaknesses.

Johnson & Johnson portfolio example

Manages a diverse portfolio from consumer health to pharmaceuticals and medical devices.

Developing Functional Plans

Each business unit and product team develops detailed marketing plans that support the company's strategic plan.

Portfolio Analysis

Management evaluates and plans for the future of its Strategic Business Units (SBUs).

BCG Growth-Share Matrix

Classifies SBUs based on market growth rate (attractiveness) and relative market share (company strength).

Stars

High-growth, high-share SBUs that need heavy investment and will become cash cows.

Cash Cows

Low-growth, high-share SBUs that generate cash to support other SBUs.

Question Marks

Low-share, high-growth SBUs that require lots of cash to grow into stars.

Dogs

Low-growth, low-share SBUs that may generate enough cash to maintain themselves but don't promise large cash sources.

Problems with Matrix Approaches

Can be difficult, time-consuming, costly, and may not apply well to rapidly changing or disrupted markets.

Developing Strategies for Growth and Downsizing

Finding businesses and products for the future, focusing on 'profitable growth'.

Product/Market Expansion Grid (Ansoff Matrix)

Tool for identifying growth opportunities.

Market Penetration

Increase sales of current products to current markets without changing the product.

Market Development

Identify and develop new markets for current products.