Chapter 1 Flashcards
Marketing
The process by which companies engage customers, build strong customer relationships, and create value in order to capture value from customers in return
Goals of marketing:
Attract new customers (promising better value)
To keep and grow current customers (delivering value and satisfaction)
Needs
States of felt deprivation
Human needs are inherent and not created by marketers
Wants
The form human needs take as they are shaped by culture and individual personality
Demands
Human wants backed by buying power
Market offerings
Some combination of products, services, information offered to a market satisfy a need or a want
Marketing myopia
The mistake of paying more attention to the specific products offered by a company rather than the benefits and experiences produced by these products
A market
Brand experience
Smart marketers combine several services and products to create a ‘brand experience’, such as Disneyland, it offers not only rides but characters and a ‘magical environment’
Marketers need to set the right level of expectations:
Too low: Will satisfy but not attract enough customers
Too high: Risk disappointing and losing current/potential customers
Exchange
The act of obtaining a desired object from someone by
offering something in return
Market
The set of actual and potential buyers of a product or service.
These buyers share a particular need or want that can be satisfied
through exchange relationships
Marketing management
The art and science of choosing target markets and building profitable relationships with them
Aim of marketing management
To engage, keep, and grow target customers
Market segmentation
Dividing a market into segments of customers
Target marketing
Selecting a market segment to market to
It is not realistic to try and attract the entire market, so companies
target specific segments and focus on them
Value proposition
The set of benefits and values a brand promises
to deliver to customers to satisfy their needs
Value propositions differentiates different brands
Five concepts of marketing strategy:
Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concept
Production Concept
Consumers prefer products that are available and highly affordable
Management ought to focus on improving production and distribution
efficiency
May lead to marketing myopia
Issue with production concept
May lead to marketing myopia
Product concept
Consumers prefer products that offer the most in quality, performance, and innovative features
Management ought to focus on making continuous product improvements
Issue of product concept
May lead to marketing myopia
Selling concept
The idea that consumers will not buy enough of the firm’s products
unless it undertakes a large-scale selling and promotion effort
Usually practised by companies selling unsought goods (life insurance,
blood donations)
These companies must be extremely efficient at tracking down
prospoects and selling them on a product’s benefits
Issue with selling concept
Focuses on creating sales rather than building long-term relationships with consumers
Focuses on selling rather than satisfying consumer needs
Marketing concept
The idea that achieving organisational goals depends on knowing the needs and wants of the target markets and satisfying them better than competitors do
“Find the right products for your customers, not finding the right
customers for your products”
Marketing driven companies usually learn DEEPLY about the needs and wants of their target consumers to provide a better product
Customer-driving marketing
Knowing the needs and wants better
than the consumers themselves do.
Consumers often don’t know what they desire or what is possible to produce, Henry Ford: “If I had asked what consumers wanted they would’ve said faster horses”
The Societal Marketing Concept
The idea that marketing strategy should deliver value to customers in a
way that maintains or improves both the customer’s and society’s well-
being
Criticises the pure marketing concept for being too short-term focused,
only satisfying customer’s immediate needs
Calls for sustainable marketing, socially and environmentally responsible marketing
Shared value
Recognising that societal needs, not just economic
needs, define markets
The FOUR P’s of marketing:
Product
Price
Place
Promotion
Customer relationship management
The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
Customer-perceived value
The customer’s evaluation of the difference between all the benefits and all the costs of a market
offering relative to those of competing offers
Customers buy from the firm that offers the highest customer-
perceived value
Customer satisfaction
The extent to which a product’s perceived
performance matches a buyer’s expectations
Customer Relationship Levels and Tools
Customer relationships are minimal for low-margin companies (commodities)
Customer relationships are extensive and developed in high-margin, small market companies
Loyalty programmes are an inexpensive way to develop relationships
with customers and increase loyalty
Customer-engagement marketing
Making a brand a meaningful part of consumers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community
Customer brand advocacy
Actions by which satisfied customers initiate favourable interactions with others about a brand
Consumer-generated marketing
Brand exchanges created by
consumers themselves – both invited and uninvited – by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers
- Companies can invite consumers to provide ideas through contests or general conversation
Issue with consumer generated marketing
Can be costly and time consuming
Many times, the ideas are just not helpful or innovative
Partner relationship management
Working closely with other
departments and outside the company to jointly bring greater value to customers
All departments and partners can interact with consumers, so they
need to be coordinated and work together to maximise value
Creating Customer Loyalty and Retention
Research suggests that it is 5x cheaper to retain an existing customer than to attract a new one
Losing a single customer means losing all potential future lifetime sales/revenue, and also risks them sharing their disappointment with other potential shopper
Share of customer
The portion of the customer’s purchasing that a company gets in its product categories
How can companies increase share of customers?
Offering a greater variety to current customers, cross-sell and up-sell to existing customers
Customer equity
The total combined customer lifetime values of all of the company’s current and potential customers
Companies need to manage their customers based on their
Loyalty
Potential profitability
Strangers
Low loyalty & low profitability
What should you do with strangers?
Don’t invest any money in them
Make money on every transaction
Butterflies
Low loyalty and high profitability
What should you do with butterflies?
Efforts to convert them to loyal customers are rarely successful
Focus on making as much profit in the short-term but stop investing after that
True friends
High loyalty & high profitability
What should you do with true friends?
Continuous relationship investments to delight and engage customers
Barnacles
High loyalty & low profitability
What should you do with barnacles?
If they cannot be made profitable, they should be fired
Digital and social media marketing
Using digital platforms to engage customers anywhere, anytime via their digital devices
Social Media Marketing
Online social media provide digital hubs where information can be shared and accessed in real time
Mobile Marketing
More than 40% of online purchases are now made from mobile devices
Customers are constantly on their mobile devices
Big Data and Artificial Intelligence (AI)
Brands can use big data to personalise marketing offers based on individual consumer habits
AI can be used to analyse big data instantly and develop marketing
plans
