mktg 301 concept check 1

Marketing

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

Recurring themes

 strategic fit (with company's broader strategy), customer-centric value creation, market intelligence & adaptation, customer relationships & loyalty

Marketing Framework

market analysis: customer, company, competition

strategic decisions (STP flow): segmentation —> targeting —> positioning

tactical decisions: product, price, place, promotion

PESTEL Analysis

framework to evaluate external macro-economic factors

political, economic, social cultural, technological, environmental, legal and regulatory

Marketing strategy

big-picture plan to achieve marketing goals

marketing tactics

the specific actions that execute the marketing strategy

marketing process

• Understand marketplace and customer needs/wants 

• Design customer value-driven marketing strategy

• Construct an integrated marketing mix that delivers superior value

• Engage customers, build profitable relationships, and create customer delight

• Capture value from customers to create profits and customer equity

Marketing myopia

paying more attention to specific products than to benefits and experiences produced (assumes brand loyalty persists without innovation, ignores market shift and competitor advantages)

segmentation

divde markets into meaningful groups

Targeting

process of evaluating market segments and deciding which ones to serve - and how to win them

undifferentiated, differentiated, concentrated (niche), micromarketing (individual/localized)

Positioning

how is the product unique from competitors? How should it be perceived and remembered by customers?

positioning statement

communicates strategy and serves as a reminder that all of your tactics should be consistent with the segment you’re targeting, the needs you’re addressing, and the value proposition you’ve chosen

perceptual maps

measure the way products are positioned and show these perceptions on a graph whose axes are formed by product attributes

How marketers create a position

differentiation of product/services, channels, people, and image

SWOT Analysis

Strengths & weaknesses (internal) and opportunities & threats (external)

marketing mix

set of controllable, tactical marketing tools– 4Ps–that the firm blends to produce the response it wants in the target market

product, place, price, promotion

4 As of marketing

acceptability, affordability, accessibility, awareness

Customer Lifetime Value (CLV)

total net profit a business can expect to earn from a customer over the entire duration of their relationship

• Measures long-term customer value, not just one-time purchases

• Smarter budget allocation, identify best customers, forecast revenue accurately, improve product and experience

• Spans the entire customer relationship – from first contact to final purchase

Simple CLV formula

CLV = (p - c) * q * T

p: price; c: cost per unit; q: purchase frquency (PF) per year; T: total lifetime in years

Purchase Frequency (PF)

measures how often a customer makes a purchase in a given time period– typically per year

CLV formula with retention/churn

CLV = (p - c) * q * r / (1-r)

r: retention rate; (1-r): churn

retention rate

measures portion of customers today who still want to be customers in one year (as a %)

churn

inverse of retention; measures % of customers who leave

Acquisition Cost (AC)

cash flows from potential customer are partly offset by money spent on starting that relationship, or customer acquisition cost (CAC)

Customer acquisition cost (CAC)

total cost of sales/mktg efforts to acquire a single new customer

 total sales & mktg spending / # new customers acquired

CLV formula with AC

CLV = (p - c) * q * r / (1-r) - AC

CLV:CAC ratio

tells you the ROI for every dollar spent acquiring customers

<1:1 (losing money), 1:1–2:1 (breakeven), 3:1(healthy for sustainable growth), >5:1 (underinvesting)

CLV with time value of money

CLV = (p - c) * q * r / (1+i -r) - AC

i: discount rate

3 strategies to grow CLV

improve customer retention

launch loyalty programs

upsell (sell more expensive version) and cross-sell (sell more stuff with OG purchase)

what does CLV tell you?

tells you who to acquire, who to invest in, and who to let walk

helps guide segmentation and targeting

product

anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

service

intangible offering that involves an effort and performance that cannot be physically possessed

characteristics of a service

intangibility, inseparability (from provider), variability (depends on provider), and perishability (can’t be stored)

3 levels of a product

core customer value, actual product, augmented product

product and service decisions product managers make to create customer value

Product attributes → branding → packaging → labeling/logos →product support services

product line

group of closely related products from a single company

Similar functions, target consumers, channels, branding, usage occasions, resources

product quality

performance (ability to perform)

conformance (free from defects, consistency)

product mix (strategic) decisions

• Width - # of different product lines

• Length - total # of items across all lines

• Depth – # of versions per product

• Consistency - how closely related the product lines are

product line decisions

stretching: move outside current range (up, down, or both), enter new segments

filling: add products within current range; serve niches, block rivals (can cause cannibalization or choice overload)

product portfolio

a company’s full set of goods and services

BCG Matrix

Used to determine how much cash a product/unit should receive

stars (high market growth rate, high relative market share)

question marks (high growth rate, low market share)

cash cows ( low growth rate, high market share)

dogs (low growth rate, low market share)

Brand

name/term/sign/symbol that identifies a product and differentiates it from competitors

should be simple and suggest purpose

brand extensions

Should fit brand, leverage existing capabilities, strengthen ecosystem, solve a need, and avoid confusing or diluting the brand

classification of consumer products

convenience, shopping, specialty, unsought

2 ways to bring new product to market

acquisition and new product development

8-stage new product development process

(each stage acts as a filter)

1. idea generation

2. idea screening

3. concept development and testing

4. marketing strategy

5. business analysis

6. product development

7. test makreting

8. commercialization

RWW framework

during idea screening

real (need)? win (advantage)? worth it?

concept

detailed description of idea in meaningful customer terms (who uses, why, and how)

types of NPD

• Customer-centered NPD

• Team-based NPD

• Systematic innovation NPD

Product Life Cycle

• introduction → growth → maturity → decline

• Customers: innovators, early adopters, majority, laggards

the 3 gaps marketing research closes

knowledge, decision, and risk

goal of marketing research

customer insights

information is NOT an insight

3 sources of marketing information

internal databases, marketing intelligence, marketing research

objectives of marketing research

exploratory: gather preliminary info to help define problem (why?)

descriptive: describe mktg problems/situations/markets (Who, what, where, when)

causal: test hypotheses abt cause-and-effect relationships

4-step research process

define, design, implement, interpret (findings)

Secondary Data

info that already exists, collected for another purpose

cheaper and available quickly

May not exist for specific need, unusable, outdated

4 tests for trusting: relevance, accuracy, currency, impartiality

Primary Data

info collected fresh, for specific purpose at hand

3 approaches: observational, survey, experimental

loaded framing

question that assumes something negative/positive about subject pushes respondents toward that frame

double-barreled

2 questions hiding inside one

assumed behavior

question assumes respondent has already done something and offers no way to say they haven’t

5 mistakes to avoid in marketing research

leading questions, wrong sample, confirmation bias, over-interpreting, ignoring cost of delay

tools to act on massive data

big data and & analytics, CRM, AI

branding is marketing research

Awareness, associations, perceived quality, loyalty, brand equity

Net Promoter Score (NPS)

how likely are you to recommend this to friend/colleague?

measures overall customer satisfaction

4 forces that shape ever purchase

cultural (shifts are opportunities), social, personal, and psychological (motive/drive)

maslow’s hierarchy of needs (psychological)

self-actualization, esteem, social, safety, physiological

selective attention

eople screen out most info they are exposed, only notice info related to current need

selective distortion

people interpret info in way that will support what already believe

selective retention

tendency to remember good points made about brand they favor and forget about competing brand

Buyer decision process

Need recognition → information search → evaluation of alternatives → purchase decision → postpurchase behavior

Customer journey

sum of ongoing experiences customers have with a brand that affect their buying behavior, engagement, and brand advocacy over time