chapter 1 - marketing strategy first principle approach

Question 1

4 “first (marketing) principles” of marketing strategy

Answer 1

1. All customers differ.
2. All customers change.
3. All competitors react.
4. All resources are limited.

Question 2

marketing principle #1 - key marketing decisions

Answer 2

(MP1 = all customers differ)
–> managing customer heterogeneity= a variation among customers in terms of their needs, desires, and subsequent behaviours.
- To deal with customer heterogeneity; segmentation, targeting, and positioning (STP) approach.
- Customer-centric approach= the firm recognizes the long-term value of its core customer segment and puts it at the centre of all major internal business processes and decisions.

Question 3

marketing principle #2 - key marketing decisions

Answer 3

(MP2 = all customers change)
–> managing customer dynamics= the process by which customers’ desires and needs change over time. Due to seminal (major) events, life stages, knowledge/ expertise, product category maturity, and regular exposure to relevant information.
- Customer lifecycle= the average change or migration among customers as they age.
- Product or industry lifecycle= typical user experiences and industry developmental
effects as the product category matures.
- To handle customer dynamics; acquisition, expansion, retention (AER) approach.
- Customer lifetime value (CLV) approach= attempts to capture the financial
contribution of each customer by determining the discounted value of the sales and costs associated with them.

Question 4

marketing principle #3 - key marketing decisions

Answer 4

(MP3 = all competitors react)
–> managing sustainable competitive advantage (SCA)= competitors are always attacking the firm’s market position, therefore they should anticipate future competitors’ reactions and build barriers to withstand.
- Key 3 marketing-based sources of SCA; brands, offerings, and relationships, which are captured by the brand, offering, relationship (BOR) equity stack.

Question 5

marketing principle #4 - key marketing decisions

Answer 5

(MP4 = all resources are limited)
–> managing resource trade-offs=
- Five critical factors that impact the resource trade-offs; resource slack, changes in
customers’ needs, lifecycle stage of a firm’s product portfolio, product market
landscape, and effectiveness of marketing activities.
- Approaches to resource allocation:
1) Heuristic-based processes= using simple rules of thumb, driven by intuition and
judgement. When they lack hard data about the attractiveness of each option.
2) Attribution-based processes= historical data is reviewed to measure the impact of
various marketing resource allocation outcomes on sales and profits.

Question 6

chain ratio equation

Answer 6

= market demand (units) * market share (%) * average selling price ($), shows the firm’s sales revenue

Question 7

key elements of any marketing strategy

Answer 7

1. Decisions and actions
2. Differential advantages over competitors
3. Sustainability
4. Ability to enhance firm performance
5. Customer perspective

Question 8

marketing strategy

Answer 8

= consists of decisions and actions focused on building a sustainable differential advantage, relative to competitors, in the minds of customers, to create value for stakeholders

Question 9

corporate strategy

Answer 9

= the direction and scope of an organization over the long term, which achieves advantage for the organization through the configuration of resources within a changing environment, to meet the needs of markets and fulfil stakeholder expectations