Enhanced Exam 1 Study Guide

7.9 billion

What is the population of the world?

335 million

What is population of the US?

satisfying customer needs

marketing in 3 words

marketing (23 words)

the process by which companies engage customers, build strong relationships, and create customer value in order to capture value from customers in return

marketing (5 boxes)

1. understand the marketplace and customer needs and wants

2. design a customer value-driven marketing strategy

3. construct an integrated marketing program that delivers superior value

4. engage customers, build profitable relationships, and create customer delight

5. capture value from customers to create profits and customer equity

—# 5 is the only one that captures value, the other 4 create value

needs

state of felt deprivation

—includes physical, social, and individual

wants

form taken by human needs when shaped by culture, individual personality, and marketing

demands

human wants that are backed by buying power

market offering

products, services, information, or experiences offered to satisfy a need or want

—more than just the tangible product

—steer clear of marketing myopia

expectation-satisfaction model

delighted

/

expectations → perceived performance → satisfaction

\

dissatisfied

exchange

the act of obtaining a desired object by offering something in return

value proposition

the set of benefits or values it promises to deliver to consumers to satisfy their needs

—the company must decide how it will differentiate and position itself in the marketplace

—have to provide value for customers in order to be successful

target marketing

refers to which segments to go after

marketing management orientations

1. production concept

2. product concept

3. selling concept

4. marketing concept

5. societal marketing concept

market segmentation

refers to dividing the markets into segments of customers

production concept

available/affordable

—inside out

product concept

quality/performance/features

—inside out

selling concept

large-scale selling/promo

—inside out

marketing concept

needs and wants of the customer

—outside in

societal marketing concept

needs/wants + society

—outside in

shared value

they are concerned not just with short-term economic gains but with the well-being of their customers, the depletion of natural resources needed by their businesses, the welfare of key suppliers, and the economic well-being of the communities in which they operate

product, place, price, promotion

4Ps

—marketing mix

customer relationship management (CRM)

the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

transactional marketing

discrete transaction

—just acquiring

relationship marketing

relational exchange

—looking to retain

utilitarian

in just because you need to

—ex: loyalty program

affective

because you want to

—ex: act of kindness

symbolic

atmospheres

—ex: pink for breast cancer awareness

obligatory

because you ought to

—ex: Saint Jude donations at checkout

customer-generated marketing

brand exchanges created by consumers

—invited: consumers invited by companies to share their experiences

—uninvited: consumer-to-consumer exchanges

customer lifetime value (CLV)

the value of the entire stream of purchases a customer makes over a lifetime of patronage

—CLV = (Price) * 365 (# of years)

—capture it by growing share of customer

share of customer

portion of the customer’s purchasing in their product categories

—ex: Special K - not only the cereal but also more K-branded products are in the buggy

customer equity

total combined customer lifetime values of all of the company’s customers

butterflies

high profitability, short-term loyalty

true friends

high profitability, long-term loyalty

strangers

low profitability, short-term loyalty

barnacles

low profitability, long-term loyalty

strategic planning

the process of developing and maintaining a strategic fit between the organization’s goals and capabilities (current) and its changing marketing opportunities (future)

1. defining the company mission

2. setting company objectives and goals

3. designing the business portfolio

4. planning marketing and other functional strategies

—role in marketing is to think about future opportunities

mission statement

statement of the organization’s purpose

—want a market-oriented statement rather than a product-oriented one

business portfolio

collection of businesses and products that make up the company

strategic business units (SBUs)

can be a business, a product category, a certain college, a certain department

BCG Matrix

one of the well-known tools for portfolio planning

—putting the individual SBUs on this matrix

—horizontal axis: market share

—vertical axis: growth rate

star

high growth rate, high market share

question mark

high growth rate, low market share

cash cow

low growth rate, high market share

dog

low growth rate, low market share

product/market expansion grid

deals with the combination of existing markets, existing products, new markets, and new products

—classifications:

1. market penetration

2. market development

3. product development

4. diversification

also known as Ansoff’s matrix

market penetration

existing markets, existing products

—ex: adjusting product design, ads, price, distribution

—least risky

diversification

new markets, new products

—ex: start or buy business with different market

—most risky

market development

new markets, existing products

—ex: new target markets (demographic, geographic)

product development

existing markets, new products

—ex: unveiling new products

value chain

series of internal departments that carry out value-creating activities

value delivery network

composed of the company, its suppliers, its distributors, and its customers

—external

value-driven marketing strategy

how we are going to create value, achieve profitable relationships with customers, and further develop our integrated approach

segmentation

dividing a market into distinct groups with different needs/characteristics/behaviors

—gets you to the target market

targeting

evaluating each segment and selecting which to enter

—gets you to the target market

differentiation

differentiating the market offering to create superior customer value

—gets you to the value proposition

positioning

arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumers

—gets you to the value proposition

analysis, planning, implementation, organization, and control

5 functions of managing marketing

SWOT

(S)trengths - internal capabilities

(W)eaknesses - internal limitations

(O)pportunities - external positive factors

(T)hreats - external negative factors

marketing return on investment (ROI)

net return from a marketing investment divided by the costs of the marketing investment

—can be hard to measure

microenvironment

actors close to the company that affect its ability to serve its customers

—closer environment

macroenvironment

larger societal forces that affect the microenvironment

—larger environment

company, suppliers, intermediaries, competitors, publics, and customers

6 components in the microenvironment

company

interrelated groups in a company form the internal environment

—departments share the responsibility for understanding customer needs and creating customer value

suppliers

provide the resources needed by the company to produce its goods and services

intermediaries

help the company to promote, sell, and distribute its products to final buyers

competitors

marketers must gain strategic advantage by positioning products strongly against competitors

publics

any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives

customers

the most important actors in the company’s microenvironment

—the aim of the entire value delivery system is to serve target customers and create strong relationships with them

demographic, economic, natural, technological, political, and cultural

6 components of macroenvironment

demographic environment

the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics

—4 categories:

1. geographic population shifts

2. changing age and family structures

3. educational characteristics

4. population diversity

economic environment

economic factors affect consumer purchasing power and spending

—ex:

-inflation

-unemployment

-interest rates

-growth or recession

natural environment

physical environment and natural resources needed as inputs by marketers or affected by marketing activities

technological environment

new technologies create new markets and opportunities

political environment

forces that influence or limit various organizations and individuals in a society

legislation effecting marketing

intended to protect:

—companies from each other

—consumers from unfair business practices

—the interests of society against unrestrained business behavior

cultural environment

institutions and other forces that affect a society’s basic values, perceptions, and behaviors

—core and secondary beliefs

gain consumer insight

what somebody says is not necessarily what they do

—understanding consumer insights creates more value for customers

marketing information system (MIS)

assess, develop, use

—used to generate and validate actionable customer and market insights

assessing

what you need vs. what is feasible

developing

3 areas:

1. internal databases

2. competitive marketing intelligence

3. marketing research

internal database

collections of consumer and market information obtained from data sources within the company network

competitive marketing intelligence

systematic monitoring, collection, and analysis of information about consumers, competitors, and developments in the marketing environment

marketing research

systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

—4 steps:

1. define the problem and research objectives

2. develop the research plan

3. implement the research plan

4. interpret the findings

quantitative

more like taking surveys and filling out a scale from 1-10

qualitative

more like interviews and transcribing

Big T

real deal truth

—really understanding the phenomoen as best you can

exploratory research

used to gather preliminary information and helps to define problems and suggest hypotheses

—best to use observational approach

descriptive research

used to better describe the market potential for a product or the demographics and attitudes of consumers

—best to use survey approach

causal research

used to test hypotheses about cause-and-effect relationships

—best to use experimental approach

secondary data

information that already exists and was collected for another purpose

primary data

information collected for a specific purpose at hand

observational approach

gathering primary data by observing relevant people, actions, and situations

—includes ethnographic research (was used by P&G)

survey approach

asking people questions about their knowledge, attitudes, preferences, and buying behavior

experimental approach

selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses

sample

a segment of the population selected to represent the population as a whole

—unit: people to be studied

—size: number of people to be studied

—procedure: method of choosing the people to be studied

probability sample

the true random sample

non-probability sample

based on convenience

sustainable marketing concept

meeting present needs while preserving the ability of future generations to meet their needs

—future needs of consumers and businesses