Building Customer Relationships Through Effective Marketing

Vocabulary practice flashcards covering fundamental marketing principles, customer value, utility types, competitive strategies, the consumer purchase decision process, involvement levels, and market segmentation based on BUS 100 lecture notes.

Marketing

The process of creating, distributing, promoting, and pricing goods, services, and ideas that deliver value and satisfy the needs and wants of a target market.

Customer Value

The unique combination of benefits received by targeted buyers, represented by the equation: $\text{Customer Value} = \text{Total Benefits} - \text{Total Costs}$.

Total Benefits

The successful outcomes (real or perceived) a customer experiences from an offering—answering 'what do I get'—including making them safer, saving them money in the future, making lives easier, or providing status.

Total Costs

Everything required to obtain a product—answering 'what do I have to give up'—which includes retail price, taxes, transaction costs, additional fees, time, and effort.

Market

People who have both the desire and the ability to purchase a specific product offering.

Customers

Purchasers of an organization's product offering.

Target Market

A specific group of customers on whom an organization focuses its marketing efforts.

Marketing Mix

Everything that a firm can do to influence demand for its good, service, or idea, consisting of four controllable elements: Product, Price, Place, and Promotion.

Utility

The benefits or customer value received by users of a product, created directly through marketing efforts.

Form Utility

The value provided by the production or customization of a good or service, such as converting raw materials into a finished product or altering the size of packaging.

Place Utility

The value provided by having a product offering available where the consumer wants or needs it (e.g., Starbucks locations on every corner or vending machines in a lobby).

Time Utility

The value provided by having a product offering available when the consumer wants or needs it (e.g., Walmart open 24/7 or Dick's Sporting Goods stocking golf equipment in Illinois in January).

Possession Utility

The value provided by making an item easy to purchase, such as accepting multiple payment methods (cash, check, credit card) or Enterprise Rent-A-Car picking up customers.

Marketing Strategy

An organization's long-term course of marketing actions designed to deliver a unique customer experience while accomplishing objectives, necessitated by limited resources and the inability to be everything to everybody.

Low-Cost Leader Strategy

A marketing strategy that targets a broad market scope by competing primarily on having the lowest costs (e.g., Walmart).

Differentiation Strategy

A marketing strategy that targets a broad market scope by offering unique, high-value, or premium features (e.g., Nordstrom).

Niche Strategy

A strategy focused on serving a narrow market scope based on either a cost advantage (e.g., Claire's) or product differentiation (e.g., Whole Foods).

Consumer Purchase Decision Process

The five stages a buyer passes through when making decisions: Problem Recognition, Information Search, Alternative Evaluation, Purchase Decision, and Postpurchase Behavior.

Problem Recognition

The initial step of the purchase decision process, characterized by perceiving a difference between a person's ideal and actual situation big enough to trigger a decision.

Internal Search

A scan of personal memory to recall previous experiences with brands or products during the information search stage.

External Search

Gathering information from personal sources, public sources (such as Consumer Reports), or marketer-dominated sources when past experience is insufficient, risk of a wrong decision is high, and the cost of gathering information is low.

Evaluative Criteria

The objective and subjective product characteristics important to a buyer that serve as a benchmark upon which alternative choices are compared.

Consideration Set

A group of brands within a product category that a buyer views as alternatives for possible purchase.

Purchase Decision

The fourth step in the consumer decision process, where the buyer chooses a brand/product combination, selects the seller, decides when to buy, and negotiates terms of the sale (price, delivery, warranty, maintenance, credit).

Cognitive Dissonance

The postpurchase psychological tension or anxiety experienced by a consumer after making a purchase decision (e.g., after buying an expensive $350 purse).

High-Involvement Purchases

Purchase decisions for products that are expensive, carry serious personal consequences, and reflect the buyer's social image, typically requiring comparative advertising, personal selling, and efforts to reduce cognitive dissonance.

Low-Involvement Purchases

Purchase decisions for products that are inexpensive and carry limited consequences, typically requiring marketers to maintain product quality, avoid stockouts, and use repetitive advertising.

Market Segmentation

Aggregating prospective buyers into groups, or segments, that (1) have common needs/wants and (2) will respond similarly to a marketing action.

Market Segments

Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs or wants.

Psychographic Segmentation

Segmenting consumer markets based on lifestyle variables, including activities, interests, and opinions.

Behavioral Segmentation

Segmenting consumer markets based on product features, usage rate, frequency marketing, or purchasing behavior.

80/20 Rule

A behavioral marketing concept suggesting that approximately $80\%$ of a firm's sales are generated by $20\%$ of its customers.