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Principles of Marketing > 1. Creating & Capturing Customer Value > Flashcards

1. Creating & Capturing Customer Value Flashcards

1
Q

What is the definition of Marketing?

A

Marketing is creating value for the customer and building relationships with the customers and receiving customer loyalty through the exchange of a product.

Example:
An example of marketing would be In-and-Out burger gaining customer loyalty and relationships through their customer service and their food.

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2
Q

What is the definition of Marketing Process?

A

Marketing process is a five-step model that allows a company to excel in marketing

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3
Q

What are the steps within the marketing process?

A
  • Understand consumers
  • Design customer-driven strategy
  • Create customer value
  • Building strong customer relationships
  • Capture customer value and profits
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4
Q

What is the definition of needs?

A

Needs are things that someone can’t live without

Example: Food, clothing, water, shelter

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5
Q

What is the definition of wants?

A

Wants are needs that are influenced by someone’s personality and culture

Example:
Someone needs food but they want a cheeseburger

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6
Q

What is a demand?

A

A demand is want that is backed with power. The power could be money or hierarchy

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7
Q

What is the definition of market offerings?

A

A product, service or experience or combination that satisfies customer needs or wants

Example: An example would be hotels, in which they provide customer service, facilities and experiences for the customers by using the physical product of the hotel

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8
Q

What is marketing myopia?

A

Marketing myopia is when the company is focused on creating their product rather than researching whether the product satisfies customer wants or needs

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9
Q

What is the definition of customer value?

A

Customer value is what the customer brings that benefits the company providing the product such as profit or customer loyalty

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10
Q

What are the benefits of customer satisfaction

A
  • Increased customer loyalty
  • Positive word of mouth
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11
Q

What are cons of customer dissatisfaction

A
  • Switch to competitors
  • Negative word of mouth about the company and product
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12
Q

What is the definition of exchange?

A

Exchange is the process of getting a product in return for something valuable such as money, service or product

Example: A politician wants votes in exchange for holding to their promise to make the country a better place

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13
Q

What is the definition of marketing in the context of exchange?

A

Marketing consists of actions that build relationships with customers in exchange for products, services, idea or other object.

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14
Q

What is the definition of market?

A

Market is the group of customers and potential customers that are interested in purchasing the product or service made by the company.

Markets are the final consumer target that the company and its competitors are fighting to satisfy

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15
Q

What consists within a market?

A

Demographic, economic, natural, technological, political and social/cultural sectors

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16
Q

What consists in a customer-driven strategy

A
  • Selecting customers to serve
  • Choosing a value proposition
  • Marketing management orientations
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17
Q

What is the definition of marketing management?

A

The act of selecting target markets and building relationships with them to make a profit

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18
Q

How does a company select their customers

A
  • They use market segmentation which will categorise and segregate the market. This allows the company to see which target market aligns with their product and company
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19
Q

What is a value proposition?

A

A value proposition is an aspect of the product or company that differentiates itself with their competitors

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20
Q

What is the definition of marketing management orientations?

A

Marketing Management Orientations are the concepts that help organizations design and carry out their marketing strategies

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21
Q

What are the marketing concepts?

A
  • The Production Concept
  • The Product Concept
  • The Selling Concept
  • The Marketing Concept
  • The Societal Marketing Concept
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22
Q

What is the definition of production concept?

A

The concept that consumers favour products that are available and affordable

Example: Lenovo dominates the PC market in China through low labour costs, high production efficiency and mass distribution

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23
Q

What does the production concept focus on?

A

The production concept focuses on improving production and distribution efficiency to keep the costs low and readily available for consumers

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24
Q

What is the definition of product concept?

A

The concept that consumers favour products that offer the best quality, performance and innovative features

Example: Customers may want a better solution for a rat problem but not necessarily a better mousetrap

Another example would be the smartphone being a new way to connect with people rather than regular phones

25
Q

What is the purpose of the product concept?

A

Provides a better solution to an existing problem rather than enhance the previous solution

26
Q

What is the definition of selling concept?

A

The concept that consumers will likely purchase the product only when the products have large discounts or promotions

Example: An example would be insurance where customers wouldn’t normally think of purchasing unless it was promoted to them

27
Q

What are the cons of selling concept?

A

It is risky due to it focusing on creating sales transaction rather than building customer relationships for the long term so it may not be sustainable or the best way long term

28
Q

What is the definition of marketing concept?

A

The concept of knowing the needs and wants of the target market better than competitors allows achieving organizational goals better

29
Q

What is the marketing concept based on

A

It is based on sensing what the customers want and need and providing a solution for them rather than finding the right customers after the product has been made.

30
Q

What are the cons of marketing concept

A

Customers don’t really know what they want, so it’s the company’s job to guide them to what they want

31
Q

What is the definition of societal marketing concept?

A

The concept that questions whether the marketing plan is looking at consumer’s short term wants or the long term welfare of consumers.

Example: the bottled water industry where it satisfies a customer need by providing water but also harms the society and the planet in the long-run due to the production and waste of using bottled water

32
Q

What is the aim/goal of societal marketing concept?

A

The aim is to balance out and look after the three stakeholders’ interest:
- Company - profits
- Consumers - wants and satisfaction
- Society - The welfare of people

33
Q

What is an integrated marketing plan?

A

The company’s marketing strategy that outlines their target segment and how they will create value for these customers

34
Q

What should be included in a integrated marketing plan?

A

The Marketing mix (4 Ps)
- Product - a need-satisfying market offering
- Price - how much the product will be charged for
- Place - The availability to customers
- Promotion - a way of communicating with target customers and tell them about the product

35
Q

What is customer relationship management (CRM)

A

The whole process of building and maintaining profitable customer relationships by providing customer satisfaction through the company’s market offering

Example: The Ritz-Carlton is providing high level customer satisfaction through their amazing customer service.

36
Q

What is customer perceived value?

A

The worth of a product after weighing the costs and benefits of the it compared to others by the customer

37
Q

What is customer satisfaction?

A

How well the product’s performance does compared to the customer’s expectation of it

38
Q

What is the downside to maximising customer satisfaction?

A

To maximise customer satisfaction, it would mean lowering prices of products and services so the purpose of marketing is to optimize customer satisfaction in return generates profits to make it a win-win scenario

39
Q

What are profitable customers?

A

They are customers which provide profits and promotion to the company

40
Q

What are non-profitable customers

A

Customers that cost more to satisfy them compared to losing them

41
Q

What are some reasons to cut non-profitable customers?

A
  • To provide better service to the profitable customers
  • To save cost of retaining customers that has more cons outweighing their benefit to the company
42
Q

What is customer-managed relationships?

A
  • Marketing relationships which involves customers in the shaping the brand of the company
    Example: Allowing customers to have input in creating market offerings such as Lego Ideas giving customers a way to pitch new Lego sets
43
Q

What is consumer-generated marketing?

A

A marketing strategy which allows consumers to play a bigger role in creating their brand experiences

44
Q

Why is it important to capture value from customers?

A

It creates more satisfied customer which lead to more loyal customers that will buy more products from the company. This leads greater long-term returns for the company.

45
Q

What are the benefits of creating customer loyalty?

A

Loyal customers will have positive word of mouth about the company and the product

46
Q

Why should companies focus on customer loyalty?

A
  • It is cheaper to retain a customer rather than find new customers
  • Losing a customer means losing more than one sale as they had potential to value at more than one sale

Example: An example is Stew Leonard, who owned a supermarket and an average customer life time value was at 50000 which meant 50k was walking out the door dissatisfied

47
Q

What is customer lifetime value?

A

It is the customer’s value of their entire stream of purchases from that company in their home lifetime

48
Q

What is share of customer?

A

The portion of the overall customer purchases that a company gets in its product categories compared to their competitors

Example: Amazon, which once only sold books but now sell a variety of different products to increase their customer share in the market

49
Q

How to increase customer shares?

A

Offer greater variety to current customers

50
Q

What is the definition of customer equity?

A

The total combined customer lifetime values of the company’s current and potential customers

Example: A bad example is Cadillac just focusing on their current customers and weren’t marketing for the long-term which cost them customers shares to its competitors

51
Q

What type of customers are there?

A

Strangers, Butterflies, true friends and barnacles

52
Q

What are the traits of strangers?

What should the company do about strangers?

A
  • Show low profitability
  • Little projected loyalty
  • There is little fit between products and their needs

Companies shouldn’t invest anything in them as they provide no benefit to the company

53
Q

What are the traits of Butterflies?

What should the company do about butterflies

A
  • Potentially profitable
  • Not loyal
  • Enjoy them for a short while
  • Capture as much business and sales for the short amount of time they are there
54
Q

What are the traits of true friends?

What should the company do about true friends?

A
  • Profitable
  • Loyal
  • Strong fit between product and needs
  • Make investments towards true friends
  • Retain and grow them
55
Q

What are the traits of barnacles?

What should the company do about barnacles?

A
  • Not profitable
  • Highly loyal
  • Limited fit between their needs and the product
  • Might improve their profitability by selling them more, raising their fees, or reducing service to them
  • If they cannot be made profitable they should be “fired” or removed
56
Q

What does it mean by changing marketing landscape?

A

When the economic structure affects the markets such as recessions and booms

Example: 40% of consumers say they are eating out less due to the recession hence fast food chains have the opportunities to grow during this time

57
Q

What is the digital age?

A

The massive growth of technology such as computers, communications and many more that impact the way the company markets

58
Q

What are the benefits of the digital age?

A
  • Marketers found a new way to learn and track customer behaviours which led to the creation of products that adhere to customer needs
  • Provided a new medium to market such as online advertising, video-sharing tools and social networks

Principles of Marketing (12 decks)

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