Untitled Flashcards Set

Unit 1 Introduction: Responsibility of Marketing and Marketing concept:

• Marketing is a much higher strategic concept involved in understanding and fulfilling customer needs - designing product or service, designing distribution channels, setting price, sales and advertising.

  • Responsible for driving revenue into org by identifying ideal customer segments, understanding their needs, and then effectively using organization's resources to satisfy the needs of those ideal customer segments.

• Good marketing practices aim to create more value for a customer when they choose to buy an organization's product or service.

  • Satisfied customer shares good experience with other people or other orgs in network and those people buy the product as well.

        Framework for Marketing Strategy Formation:        

• The purpose of business to create and keep a customer

• 6 parts of the marketing process:

  • Marketing strategy formation: set overall long term goals and basic approach to marketplace - involves making choices about specific customer groups to serve and how to create best value for customer

  • Marketing planning: could be more regular or long plans

  • Programming, allocating, and budgeting: set near term objectives and detailed plans

  • Implementation - executing plans

  • Monitoring and auditing - evaluate results against goals and develop corrective action plans as needed.

  • Analysis and research: gather necessary data from inside and outside the company to support four action steps (1-4)

• 2 sets of decisions every organization needs to make:

  • Aspiration decision (what company hopes to achieve in market)

  • Action plan decision (product, promotion, place, price)

• The aspiration decision is about what value to whom we should assign

  • Segmenting the market to identify possible groups to serve

    • Most widely used is demographic, geographic, and lifestyle.

  • Targeting a specific group or groups to address

    • Is meaningful when it excludes some customers from market served

  • Positioning in mind of selected customers

    • Effective statements include: the target customer, the wants of that customer, the product type and category, the key benefit to be provided to the target customer.

• Action plan is 4 p's

  • Product, promotion, and place are value creating and price is value capturing

  • What will satisfy needs? Products, services, or experiences

  • Promotion - 6 M's - market, mission, message, media, money, measurement

• Company needs to analyze market in order to make good aspiration and action plan decisions: requires analysis of 5 C's (customer, company, collaborators, competition, and context)

  • Customer is in center of analysis -> try to understand how potential customers make a purchase decision in a product category

    • Who is involved in decision (individual or group) aka the decision making unit

    • Decision making process is understanding the buying criteria of targeted segment.

  • Company naalysis is more about its strengths and weaknesses

    • Understand its finances, research and development capability, manufacturing capability, ITS CORE COMPETENCY

      • Make a significant contribution to creation of perceived customer value in products

      • Be difficult for competitors to imitate.

  • Collaborator analysis involves analyzing set of external assets that may be accessed to complement those of the company.

  • Competitive analysis looks at creating more value for customers than any other options known to them.

    • Identifying competitors and their offerings, how they address market, their strengths and weaknesses

  • Context analysis takes into account cultural trends, politics, regulation, law, and social norms.

• The actions of the firm create outcomes like franchise, the platform for future marketing efforts, including brand reputation and customer loyalty.

• 6 major roles across a buying situation:

  • Intiators: recognize value of solving a particular issue so they stimulate search for a product

  • Gatekeepers: act as problme or product experts and control information and access to other members of the DMU

  • Deciders: make purchasing choice

  • Influencers: do not make final decision, have input into it

  • Purchasers: consummate transaction

  • Users: consume product

        film orientations and the evolution of the marketing concept:        

• Production orientation started first from industrial revolution in late 1800s, companies striving to move product creation into a more efficient form of mass production

• Sales orientation started in the 1920s as more active and aggressive tactics were needed to convince customers to part with hard earned money to drive purchase transactions

  • Products more than what customers really needed

• Market orientation started in 1960s driven by companies competing for sales with same customer base. Companies became more interested in the hollistic needs of customers, creating more reliable streams of revenue from satisfied customers

  • Lowers costs and raises profitability over time

• Societal Marketing started in 1980s when customers became more interested in purchasing from organizations that wanted to make their community a better place.

  • Developing longer term customer relationships.

        Customer Centricity - Understanding the Customer        

• Consumers attempt to maximize customer-perceived value - want greatest benefit from lowest possible cost

  • Value = benefit - cost

  • Can increase this by raising benefit offerings, lowering costs, or both.

• A resonance focus model involves demonstrating a deep understanding of customer needs and differentiating or highlighting offerings on the few elements that matter most ot target customers

• Creating the demand landscape involves tracking consumer behaviors through observation, diaries, journals, and interviews, and grouping them into distinct categories of goals, activities, and priorities.

• Each intersection of customer interaction with the product/service/brand is called a touch point

• Customer relationship management is the process of collecting and using the detailed information about individual customers at all of the touch points

• Selective relationship managemnet is when companies examine their customer bases in great detail, perform profitability analyses to target fewer but more lucrative customers

• Net promoter score categorizes customers into 1 of 3 groups: promoters, passives, and detractors

  • Helps us see whether the customer experience was a success or failure and why.

• Building a customer centric culture requires:

  • Coordination - entails establishing structural mechanisms and processes that allow employees to improve their focus on the customer by harmonizing information and activities across units

  • Cooperation - encouraging people in all parts of company to work together in interest of customer needs

  • Capability: ensuring enough people in org have skills to deliver customer focused solutions as well as defining a clear career path for employees with those skills

  • Connection: involves developing relationships with external partners to make increasing value of solutions more cost effective.

• False loyalty is the result of loyalty promotions, high switching costs, and proprietary technology.

• Customer lifetime value is what each customer means for their entire relationship with a company. This CLV calculation is built on:

  • Margin that a customer generates from purchases with us

  • Time period durign which customer makes regular purchases.

  • Total periods of time they are customers with us

• Total customer lifetime value is customer equity.

• Brand equity is the value of a brand

• 7 directives about brand management practice:

  • Make brand decisions subservient to decisiosn about customer relationships

  • Build brands around customer segments

  • Make brands as narrow as possible

  • Plan brand extensions based on customer needs, not component similarities

  • Develop capability and mindset ot hand off customers to other brands in company

  • Take no heroic measures

  • Change how you measure brand equity.

        Creating a Marketing Plan: An Overview        

• The product or service is centerpiece of marketing mix

• Place refers to point of sale and distribution of product or service

• Price is what a buyer must give up in exchange for your product or service

  • Too low increases unit sales at expense of profits

  • Too high leads to customers going to competitors.

  • A function of uniqueness of your product -> can price mor eaggressively when product is unique.

• Promotion is most difficult, includes advertising, catalogs, contests, public relations, and personal selling.

  

Unit 2: Marketing Environment and Analysis:

        Marketing Analysis Toolkit: Situation Analysis        

• 5 C's analysis includes customers, context, competition, collaborators, and company.

  • Customer analysis involves outlining potential customers who have a need for the product and understanding their needs (both rational and irrational) and preferences.

    • An understanding of how consumers come to realize they have a need and the process by which they seek to fulfill that need.

• 5 stages of consumer decision making process:

  • Recognition: where, when, and how consumers' needs arise and the situational, social, or marketing triggers that cause consumers to realize they have a problem that needs to be solved.

  • Information search: understanding sources of information consumers use to learn more about available options

  • Evaluation of alternatives: understanding which attributes or features of the product are most important to consumers when choosing among brands or products.

  • Purchase decision: where do consumers go to purchase product and what situational and social influences do they encounter during the purchase.

  • Post purchase evaluation: how consumers assess whether they have purchased the right product and how it is used in everyday life.

• Analyzing environments and context:

  • Demographic environment: understanding current state and future direction of population in market, interpreting census and other demographic data to discern trends that may affect business.

    • Break down total population by age, cohort, family structure, race, ethnicity, social class, gender, educational levels, geographic location

  • Economic environment: understand microeconomic and macroeconomic conditions facing consumers in market

  • Socio-cultural environment: understanding prevailing worldviews, political and social ideologies, value systems, traditions and rituals, fashion and taste system.

  • Political/Legal Environment: make sure company is operating within law and common business practice, understand how political practices can enable growth or hinder company's potential in various markets.

  • Technological environment: understand how tech is affecting consumers and their purchasing needs and habits.

  • Natural environment: understanding consumers' connection to and concern for natural world and how your operations and product are reliant on that.

• Competitive advantage is something that the company does or can do that is of value to cusomters and that competitors cannot match.

  • Sustainable ones are predicted to persist over time.

• Collaborators or companies or people who help the firm in marketing the product to customers

  • Include suppliers who provide materials to make the products, distributors, and retailers who sell the prodcuts to consumers.

• Competitive analysis involves identifying and analzying companies who compete with the firm by delivering a similar product to consumers or an alternate solution to consumers' needs.

  • Focuses on analyzing the business models, competitive strategies, competitive advantages, and marketing strategies  of each firm in comparison to your firm.

• Five forces that determine the intrinsic long run attractiveness of an industry:

  • Industry competitors

    • Less competition better for firms

  • Potential entrants

    • Less entrants more appealing

  • Availability of substitutes

    • Less substitutes more appealing

  • Buyer power

    • Less buyer power more appealing

  • Supplier power

    • Less supplier power more appealing

• SWOT analysis: summary of external opportunities and threats facing the firm

  • Opportunities: art of finding, developing, and profiting from opportunities that arise in the external environment.

    • Creating new customer needs, opening access to new customer markets, or offering new technologies that can save costs and enhance profits

    • Favorable trends or developments in external environment which may lead to higher sales or profits or which may open doors to new business opportunities for the firm.

  • Threats: unfavorable trends or developments that threaten current sales or profits or preclude the firm from pursuing new business opportunities.

    • Closing access to markets, increasing competition in an industry, decreasing customer desire for and value of a product

  • Strengths: focuses on strengths that are customer relevant, serve as a distinctive competence for the firm compared to its competition

    • Unique resources or circumstances that can be used to take advantage of opportunities

    • Core competencies and company capabilities that are superior to the competition and relevant to consumers.

  • Weaknesses: core competencies and company capabilities that are inferior to the competition -> where firm is deficient

    • Should improve their capabilities in areas important to customers and need to understand all that customers require of firms in competition.

        The importance of Environmental Forces        

• Several major categories of environmental forces:

  • Social/cultural/demographic

  • Technological

  • Environmental

  • Economic

  • Political/regulatory

    • US is captalist leaning economy, role of gov in economy is more limited and should focus on having a free market

    • Federal Trade Comission was established in 1914 to help prevent or restrict unfair trade practices, restricts use of advertising that might be deceptive to consumers.

  • Often overlap and bleed into each other - environmental issue may become political issue

• Don’t define competition too narrowly when analyzing it.

  • Confusing internal weaknesses with external threats

        Core Reading: Marketing Intelligence        

• The customer "value proposition" is what the company hopes to bring to market, the special quality that will differentiate the company from competitors.

• The market research process:

  1. Formulate the problem or question

  2. Determine the sources of information and design a research process

  3. Choose the most appropriate data collection method

  4. Collect the data

  5. Analyze and interpret the data

• Internal secondary data will be readily available to a company through employees and records.

• External secondary data is publically available and can provide important background in marketing decision making

  • Assess accuracy and relevance of such data, particularly if it is expensive.

• Primary data is data that a company collects at that time from customers first-hand.

  • Experimental: researcher manipulates environment, exposing some people to condition A and some people to condition B.

    • Can take place in real life and online

    • Laboratory settting has advantages of lower cost, quicker results, confidentiality, and internal validity - trade off is external validity.

    • Field tests and test markets are expensive to set up, field experiments are useful because they assess what people do and allow causal inferences to be made.

  • Nonexperimental research seeks data only by observing or interacting with market participants.

    • Qualitative data research is more oriented to fundamental open ended questions (interviews, focus groups, direct observation)

      • Interviews engage in convos with customers

      • Focus groups rely on group interaction for discussion (less interviewer effect for these) -> are more expensive

    • Quantitative data research collects numeric data suitable for statistical analysis.

      • Usually surveys administered online, in person, over the phone, or by mail.

      • Most reliable way is a census of the entire population.

      • Possible sources of error: insufficient sample size, nonresponse from participants, poorly constructed survey tool, influence of interviewer biases, lack of truthfulness from respondents.

• Social media "conversations" can be an important source of market intelligence because the consumers who visit these sites are not normally in research mode, are interacting freely with community members.

• Empathetic design is direct observation of people using a product or in the act of routine activities at home or at work.

  • Look for pain points or user frustrations that could be eliminated through improved product or service design.

  • Observe and discover what people really care about

  • Learning from extremes, think beyond assumptions

  • Interview to get more honest responses

  • Immersive empathy - walk in someone elses shoes

  • Sharing insights - craft compelling insights that will inspire innovation.

• Conjoint analysis is a marketing research technique designed to determine how consumers value the different attributes or features that make up a product and trade-offs they are willing to make among those different attributes or features.

  • Defining a product

  • Study design

  • Used to determine overall importance and consumers' willingness to pay for a proposed new product attribute or feature

  • Trade-off analysis: quantify trade-offs that potential customers are willing to make among the various product features under consideration in product design

  • Market share forecasting: predict market share of proposed new product given current offerings of competitors

  • Cost-benefit analysis: weight customer preference of product design features against their incremental costs.

• Perceptual mapping aims to develop an informative picture of how consumers perceive a brand and its competitors

        Possible Roles of Marketing Research        

• Descriptive role of marketing research is to simply describe what is happening with customers and/or within a market environment.

• Diagnostic role of marketing research is to go further than just describe what is happening, also tries to explain prediction of what is happening.

• Predictive role of marketing research is attempt to provide a best estimate for what might happen when we create a launch a marketing program in to the marketplace.

  • Often leveraging data we have previously gathered from descriptive and diagnostic forms of research to then look forward and anticipate what might happen next.

Unit 3: Understanding the Customer: Consumer Behavior and B2B Marketing:

        Consumer Behavior and the Buying Process        

• Cognitive vs. Emotional Decision Making:

  • Many purchases are cognitive in nature but some are emotional

  • Cognitive decision making is slower and more systematic

  • Emotional decision making is faster

• Consider Product type, context, and individual differences when trying to determine a person's buying process (whether it is largely cognitive, emotional, or both)

  • Appeal to product placement, advertising for age and beauty

• High involvement purchases allow buyer to be fully engaged, decision making is effortful, and time frame is relatively long.

  • Consequences of making a good vs. bad choice are significant

• Low involvement purchases tend to require far less effort, happen quickly, and have far lower risk.

• Optimizing decision making is when consumers want the best alternative purchase for a product

• Satisficing decision making is more common, when customers choose to sacrifice for an alternative that is not good enough, that passes some acceptable threshold.

• Compensatory decision making is when a product's shortcomings on a particular attribute can be compensated for by its strengths on another attribute.

  • Often done when there are a limited number of choices

• Noncompensatory decision making is when a product's failure to reach an acceptable threshold on one attribute cannot be compensated for by high performance on another attribute.

• The decision making process includes 3 processes:

  • Pre-purchase

    • Recognition of need, search for viable alternatives to satisfy that need, collection of information about those alternatives

    • Companies can try to influence how consumers narrow down their set of options by explaining or magnifying the importance of attributes on which a product does well.

  • Purchase

    • Making choices about which brand to buy, from whom to buy it, how many items of offering to buy, when to buy, and how to pay.

  • Post-purchase

    • People who are happy about their purchase are more likely to buy again and spread positive word-of-mouth to others.

• Consumer use of social media is exerting an enormous impact on the decision making process of consumers and the decision making unit

• Increasing number of companies are involving customers in the co-creation of products, services, and even marketing materials.

  • Customers increasingly likely to consider in their purchasing decisions factors such as a company's carbon footprint, its raw-materials sourcing practices, its treatment of employees, factory and working conditions, and its contributions to communities in which it has operations.

        Business-to-Business Marketing        

• When a business markets its goods or services to another business and/or to governments or nonprofits -> this is a B2B transaction.

  • Business markets have fewer customers, want customized products, and purchase volumes can differ between different business customers.

• B2B marketing involves:

  • Market selection

  • Pricing

  • Distribution

    • Distributers are resellers who deal in goods from many producers.

  • Communication: advertising and trade shows (online advertising growing daily) and content marketing

• B2B strategy involves:

  • Objectives: goals or ends strategy hopes to achieve

  • Scope: where firm plans to operate

  • Advantage: what firm does differently or better

• In B2B markets, buying can involve any number of individuals who come together in an Organizational buying center (OBC)

• Individual OBCs structure includes size (number of people involved in purchase), formalization (how much OBC emphasizes formal rules and procedures) and degree of centralization (how much a few key participants influence purchase decision).

  • OBC's involvement in particular buying process can vary

    • Lateral involvement refers to number of departments or other work related groups involved in purchase decision

    • Vertical involvement indicates number of management levels involved in decision

    • Relative influence refers to which participants take a lead role in this decision.

• Types of purchases:

  • Straight rebuys are routine reorders from current vendors of low or no risk items like office supplies - made with almost no consultation to other OBC members

  • Modified rebuys occur when org decides to alter purchasing terms for a product - may include negotiation with vendor

  • New task is when org wants to buy something new and this can have some risk.

• Stages in buying process for B2B:

  • Recognizing a need and identifying the benefits the organizations seeks

  • Establishing specifications and potential sources of supply

  • Request for proposals to vendors on qualified list, require highly detailed information about vendor's product, terms, and conditions

  • Post purchase evaluation

• Economic tangible benefits can be readily measured, verified, and quantified in terms of price performance

• Noneconomic tangible benefits include vendor reputation, scale of operation, or specialized capabilities that can command premium prices and brand preference.

• Economic intangible benefits are those that the vendor claims to be quantifiable, but nonetheless seem unverifiable by the customer, at least in the short term.

• Noneconomic intangible benefits include qualities such as trustworthiness or conscientousness

• 3 general rules can help organizations prioritize buyer-benefit types across various business marketing opportunities:

  • Focus on economic tangible benefits when pursuing orders. Noneconoimc intangible benefits like brand equity

  • To acquire customers, first establish competitive parity on economic, tangible benefits. Use noneconomic, tangible benefits to differentiate offerings

  • Build and strengthen customer relationships over time by migrating customer focus from economic and noneconomic, tangible benefits towards noneconomic, intangible benefits.

• Value proposition is key to communicating benefits to buyers, because it uses the customer's own language to do so.

  • Total package of benefits expressed in terms of buyer ends

• Product managers are responsible for managing tasks required to take an offering to market - makign plans and monitoring budgets and programs, spend more time on product design and development and less on advertising and promotion.

• Sales representatives represent buying organization to groups in seller's organization, represent their company and capabilities to customer.

  • Negotatie boundary between vendor and potential customer accounts.

• Customer service personnel are responsible for providieng pre and post sale support activities like product demonstration or application support

• Structural linkeages between functions occur when orgs create special units to facilitate and legitimize collaboration, specify required information flows, and capture learning about joint activities.

• Resonating focus model focuses on small number of benefits that motivate customer and that are superior compared with next best alternative provided by competitor