Baylor University - MKT 3305 - Tom Pagel - Exam 2 Review

customer relationship market (CRM)

a systematic tracking of consumers' preferences and behaviors over time to tailor the value proposition as closely as possible to each individual's unique wants and needs

touchpoints

any point of direct interface between customers and company (online, by phone, or in person)

primary customer-related metrics

- share of customer

- customer lifetime value (CLV)

- customer prioritization

share of customer

the percentage of an individual customer's purchase of a product that is a single brand

what does customer lifetime value (CLV) represent

- how much profit a firm expects to make from a particular customer

how is customer lifetime value calculated (CLV)

CLV ($) = Margin ($)/[1 + Discount Rate (%) - Retention Rate (%)] - Acquisition Cost ($)^14

customer prioritization

- not all customers are equal

- enable marketers to identify priority customers and customize communications and special special offers accordingly

big data

a popular term to describe the exponential growth of data - both structured and unstructured - in massive amounts that are hard or impossible to process using traditional database techniques

5 primary sources of Big Data

- social media sources

- corporate I.T.

- government and nongovernmental organizations

- commercial entities

- partners

how is big data used by marketers

- identifying new opportunities through analytics that yield greater return on investment (ROI) on marketing efforts

- turning insights they gain into products and services that are better aligned with the desires consumers

- delivering communications on products and services to the marketplace more efficiently and effectively

internet of things

describes a system in which everyday objects are connected to the internet and in turn are able to communicate information throughout an interconnected system

sentiment analysis

the process of identifying a follower's attitude toward a product or brand by assessing the context or emotion of his or her comments

emotion analysis

a sophisticated process for identifying and categorizing the emotions a follower possesses in relation to a product of brand by assessing the content of that communication

web scraping

the process of using computer software to extract large amounts of data from websites

scanner data

data derived from items that are scanned at the cash register when you check out with your loyalty card

Brand Association Map

analyzes consumer conversations online and plots the words and phrases that most closely relate to a client's brand

- the closer a word appears to the map's center, the stronger the association

- the proximity of words to each other also indicates the strength of their relationship in online posts

data mining

sophisticated analysis techniques to take advantage of the massive amount of transaction information now available

primary types of data found through data mining

- structured data

- unstructured data

structured data

data that (1) are typically numeric or categorical; (2) can be organized and formatted in a way that is easy for computers to read, organize, and understand; and (3) can be inserted into a database in a seamless fashion

- date

- time

- census data

- Facebook "likes"

unstructured data

nonnumeric information that is typically formatted in a way that is is meant for human eyes and not easily understood by computers

- body of emails

- tweets

- Facebook status update messages

- video transcripts

4 key applications of data mining for marketers

- customer applications

- customer retention and loyalty

- customer abandonment

- market basket analysis

data scientist

an individual who searches through multiple disparate data sources to discover hidden insights that will provide a competitive advantage

omni-channel connectivity

most of us get our information about the world from multiple media user

5 digital marketing channels

- social media

- digital ad networks

- email

- search engines

- Short Message Service (SMS)

cost-per-click

an online ad purchase in which the cost of the advertisement is charged only each time an individual clicks on the advertisement and is directed the web page that the marketer placed within the advertisement

cost-per-impression

an online ad purchase in which the cost of the advertisement is charged each time the advertisement shows up on a page that the user views

cost-per-order

the cost of gaining an order in terms of the marketing investment made to turn a website visitor into a customer who has chosen to make a transaction

conversion rate

the cost of gaining an order in terms of the marketing investment made to turn a website visitor into a customer who has chosen the make a transaction

search engine optimization (SEO)

a systematic process to ensure that your firm comes up at or neat the top of lists of typical search phrases related to your business

landing page

a single page on a website that is built for a particular direct marketing opportunity

margin-on-sales

the difference between the price at which a product is sold and the cost of the product

Margin on Sales (#) = Selling Price per Unit ($) - Cost per Unit ($)

Margin on Sales (%) = (Unit Margin on Sales/Selling Price per Unit) * 100^54

churn rate (%)

= (Number of Customers Lost at the end of the Prior Period/Total Nuber of Customers at the Beginning of the Prior Period) * 100^56

consumer behavior

the process involved when individuals or groups select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires

consumer purchasing decisions

- habitual decision making

- limited problem solving

- extended problem solving

habitual decision making

little or no conscious effort

limited problem solving

we do some work to make a decision but not a great deal

extended problem solving

carefully go through the steps

perceived risk

the belief that choice of a product has potentially negative consequences, whether financial, physical, or social

5 levels in the consumer decision making process

- problem recognition

- information search

- evaluation of alternatives

- product choice

- postpurchase evaluation

problem recognition

the process that occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state; this recognition initiates the decision-making process

- can marketers help the consumer recognize that a problem exists

information search

the process whereby a consumer searches for appropriate information to make a reasonable decision

- how can comparison-shopping agents assist the consumer in the information search

evoked set

all of the alternative brands a consumer is aware of when making a decision

consideration set

the alternative brands a consumer seriously considers in making a decision

comparison shopping agents or shopbots

web applications that help online shoppers find what they are looking for at the lowest price and provide customer reviews and ratings of products and sellers

evaluation of alternatives

determinate attributes

the features most important to differentiate and compare among the product choices

evaluative criteria

the dimensions consumers use to compare competing product alternatives

product choice

compensatory decision rules

the methods for making decisions that allow information about attributes of competing products to be averaged in some way

heuristics

a mental rule of thumb that leads to a speedy decision by simplifying the process

post purchase evaluation

the consumer evaluates just how good a choice he or she made

consumer satisfaction/dissatisfaction

the overall feelings or attitude a person has about a product after purchasing it

cognitive dissonance

the anxiety or regret a consumer may feel after choosing from among several similar attractive choices

7 internal influences on the decision process

- perception

- motivation

- learning

- attitudes

- personality and the self

- age

- lifestyle

perception

the process by which people select, organize, and interpret information from the outside world

exposure

the extent to which a stimulus is capable of being registered by a person's sensory receptors

attention

the extent to which a person devotes mental processing to a particular stimulus

interpretation

the process of assigning meaning to a stimulus based on prior associations a person has with it and assumptions he or she makes about it

motivation

an internal state that drives us to satisfy needs by activating goal-oriented behavior

hierarchy of needs

an approach that categorizes motives according to five levels of importance, the more basic needs being on the bottom of the hierarchy and the higher needs at the top

learning

a relatively permanent change in behavior caused by acquired information or experience

behavioral learning

theories of learning that focus on how consumer behavior is changed by external events or stimuli

cognitive learning

theory of learning that stresses the importance of internal mental processes and that views people as problem solvers who actively use information from the world around them to master their environment

attitudes

a learned predisposition to respond favorably or unfavorably to stimuli on the basis of relatively enduring evaluations of people, objects, and issues

affect

the feeling component of attitudes; refers to the overall emotional response a person has to a product

cognition

the knowing component of attitudes; refers to the beliefs or knowledge a person has about a product and its important characteristics

behavior

the doing component of attitudes; involves a consumer's intention to do something such as the intention the purchase or use a certain product

personality

the set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment

self-conduct

an individual's self-image that is composed of a mixture of beliefs, observations, and feelings about personal attributes

external influences on the decision making process

- situational

- cultural

situational and cultural influences

when, where, and how consumers shop

- physical environment

- time poverty

- culture

- subculture

- microculture

- social class

- status symbols

- reference group

- opinion leaders

- gender roles

3 types of business-to-business (B2B) customers

- producers

- resellers

- organizations

producers

the individuals or organizations that purchase products for use in the production of other goods and services

resellers

the individuals or organizations that buy finished goods for the purpose of reselling, renting, or leasing to others to make a profit and to maintain their business operations

organizations

government markets - the federal, state, county, and local governments that buy goods and services to carry out public objectives and to support their operations

key differences in business markets

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

demand in B2B market

- derived demand

- inelastic demand

- fluctuating demand

- joint demand

derived demand

demand for business or organizational products caused by demand for consumer goods or services

inelastic demand

demand in which changes in price have little or no effect on the amount demanded

fluctuating demand

joint demand

demand for two or more goods that are used together to create a product

B2B buyclass framework

- straight rebuy

- modified rebuy

- new-task buy

straight rebuy

a buying situation classification used by business buyers to categorized a previously made purchase that involves some change and that requires limited decision making

modified rebuy

a buying situation classification used by business buyers to categorize a previously made purchase that involves some change and that requires limited decision making

new-task buy

a new business-to business purchase that is complex or risky and that requires extensive decision making

5 steps in B2B buying decision process

1. recognize the problem

2. search for information

3. evaluate the alternatives

4. select the product and supplier

5. evaluate postpurchase

single sourcing

the business practice of buying a particular product from only one supplier

multiple sourcing

the business practice of buying a particular product from several different suppliers

outsourcing

the business buying process of obtaining outside vendors to provide goods or services that otherwise might be supplied in house

product specifications

a written description of the quality, size, weight, and other details required of a product purchase

market by fragmentation

the creation of many consumer groups due to a diversity of distinct needs and wants in modern society

what are the 3 components of target marketing

- segmentation

- targeting

- positioning

segmentation variables

dimensions that divide the total market into fairly homogeneous groups, each with different needs and preferences

3 segmentation categories for segmenting consumer markets

- demographics

- psychographics

- behavior

demographics

statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, occupation, and family structure

psychographics

demographic segmentation variables

- age

- gender

- family life cycle

- income/social class

- ethnicity

- geography

common methods for segmenting by behavior

- usage rate

- long tail

- usage occasions

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

- are members of the segment similar to each other in their product needs and wants and, at the same time, different from consumers in other segments?

- can marketers measure the segment?

- is the segment large enough to be profitable now and in the future?

- can marketing communications reach the segment?

- can the marketer adequately serve the needs of the segment?