Chapter 2 and 3: Market Analysis and Marketing Strategy Flashcards
What should be the management’s objective in all cases?
- To generate a sufficient demand (enough customers) or incidents of use or purchasing.
- To generate a sufficient appeal that generates a willingness to pay (based on alignment with the needs of the respective market) and
- To generate appropriate delivery and handling costs
… in the relevant markets
What is the definition of a market?
Places where supply and demand meet
In which forms can markets occur?
These places can be
- real in the form of a specific geographical space (traditional market place, fair or mall)
- institutional in the form of a stock market that can be accessed electronically or from a distance
- or virtual in the form of a data system (e.g. electronic buying places like eBay)
What are the three characteristics of a market?
- Information, products and services are exchanged
- prices are set
- and contracts are negotiated
…in markets.
When is a transaction achieved on a market?
A transaction is achieved if one partner (buyer) places a higher value on a piece of information, product or a service than the other partner (seller).
Which are the individual steps of a market transaction? What can be identified based on them?
Using a market is never free of cost; sometimes substantial transaction costs arise.
==> These can be identified based on the individual steps of a market transaction.
- Initiation:
Costs for information and selection of transaction partners - Negotiation:
Costs for negotiating, writing contract and completing contracts - Settlement:
Costs for coordinating, controlling and customizing the contract.
What does a customer system consist of?
Consists of a customer and the social elements influencing him that can be depicted in a stratigraphic model.
What is created on every level of a customer system?
A customer benefit is created on every level.
Which levels does the customer system consist of?
In what forms do the customer benefits come on every level of the customer system?
Buyers’ community:
Structures and infrastructure like distribution systems or markets, which create efficiency on the level of the buyers’ community.
Co-customers:
Atmosphere on the level of the co-customers
Co-decision makers:
Security on the level of the co-decision makers.
Which phases does the repeat-purchase cycle comprise?
Customers are subject to processes in their purchasing behavior:
The repeat-purchase cycle comprises the phases of
- initial purchase,
- usage,
- repeat purchase,
- complementary
- and replacement purchase
==> If customers are satisfied and trust a provider, they tend to buy more and different products from him.
What is the share of wallet?
The share of total expenditure a customer spends with a particular company
What is “word of mouth”?
Satisfied customers lead to the acquisition of new customers via “word of mouth”
What is cross selling?
If one succeeds in selling not only more but also different goods and services by cross selling (the sale of new kinds of products to existing customers, for example when a post office sells stationary or books), the customer return increases even more.
Why did the focus in marketing shift from individual transactions to integrated and long-term customer relations?
After initial high investments in acquisition and in the first transaction, costs decrease gradually thorugh standardization. (One knows the customer, knows what he wants and can build on a relationship of trust)
During this process, the customer’s critical attitude often diminishes as well. Subsequently, servicing and warranty costs decrease.
Why do intermediaries become necessary?
In more complex markets, intermediaries (Vermittler) are necessary to overcome distances, to provide support services that address problems or challenges or to handle payment and information flow.
Which are the main categories of intermediaries?
- Brokers
- Architects
- Classic retailers and wholesalers
What do brokers do, what are examples for brokers?
Brokers mediate between demanders and suppliers by among other things exchanging information and pooling demanders and goods and services.
Example: Insurance Brokers who create risk-management packages for insurance clients, real estate brokers or financial market brokers
What do Architects do as intermediaries?
Advise individual customers and negotiate with suppliers, in doing so they represent the customer
What do classic retailers and wholesalers do as intermediaries?
connect suppliers and buyers and take on logistic, collection, consulting and range-of-goods functions for their own accounts
What is an intermediary’s contribution?
An intermediary’s contribtution is the reduction of transaction costs.
Which distinctions between markets are there and why is the distinction important?
Due to the market players’ different ways of reacting, the distinction between I-markets (instituional markets) and C-markets (end-customer or consumer markets) is important
What is an I-market?
In I-markets (also called B-markets) it is mostly committees making decisions, or at least individuals who have to answer for their decision to committees.
A factual situation is essential; definite arguments like benefits and costs are critical.
However, a political dynamic often arises from the involvement of committees with their formal and informal power structures for example when a purchasing has to be convinced.
What are C-Markets?
In C-Markets (also community markets), purely mateiral cost-benefit considerations are not the only decisive factors.
Rather, purchasing decisions are based on psychological benefits like affiliation with a group or community or a contribution to identity establishment.
What are G-Markets?
There are also G-Markets (government/state markets)
What does a benefit result from?
A benefit is the result of the satisfaction of a need.
What is the definition of a need?
Needs can be understood as perceived shortages that the buyer craves to satisfy.
They occur against the background of external influences (information or peer group and internal influences (attituted, motives, learning processes etc.)
What is the definition of a motive?
Underlying driving forces that can be explained by internal factors (e.g. psychological values such as personal goals) and contribute to identity.
Motives change due to external influences such as social change and internal influences such as customer experience and changed values.
Motives such as status, act as goals or underlying driving forces from which specific needs line one for a big house can be deduced.
Between which needs does Maslow make a distinction in the pyrimadi model?
- Psychological needs
- Safety needs
- Love and belonging
- Esteem and
- Self-actualization
What is a transformation society?
The predominant motive (a person’s dominant internal driving force) is to do whatever it takes to come closer to one’s self concept.
People try to reduce the distance between their current perception of self and the desired self-concept for example by consuming status goods in the form of specific cars or by learning new skills and sports.
What is the homo economicus? According to this concept, through what does a customer make their decisions?
The decision models underlying the neo-classical economic concepts assume a homo economicus
According to this concept a customer decides through:
- Known and measurable goals and
- Known and regarding goal-related decisions, assessable alternatives
Why is the Homo Economicus under criticism?
However these assumptions apply only in rare cases.
- Often the goals are unclear, or additional hidden goals which the person does not recognize or blocks out, play a role.
- Also, in most cases, some alternatives are unknown and/or cannot be fully assessed
With this in mind, purchase decistions are not purely rational decisions but decisions, with a bounded rationality.
Which two main research tools regarding purchasing decisions are there?
- Decision process research
focuses on the sequence of secondary decisions.
“about the tracking of decision processes”- Behavioral-scientific decision research
Examines the mechanisms operating during the formation of a decision.
The focus is on secondary perception, learning and behavioral processes.
- Behavioral-scientific decision research
What does SOR stand for in the standard model? What does this model say?
Internal and external stimuli (S) lead to organism (O) preferences and basis attitudes via object variables such as perception, learning and categorization processes.
These can be external stimuli in the form of marketing tools such as discounts and advertising messages or internal stimuli such as changes in values.
The customer’s behavioral response (R ) is derived from this process.
What are Feedback reactions?
They often play an important role in behavioral-science models; it includes actual cycles (for example in the form of learning processes)
Input variables lead to information needs and to information behavior.
==> This information is organized, assessed and saved.
What is the attribution mechanism?
The attribution mechnism through which causes are attributed selectively play a special role.
Causes are attributed in one’s perception in such a way, that preferably, no dissonance with internal convictions occurs.
(if someone has a positive image of a tour operator or a hotel, he will link his bad experiences with the weather or the local population (explanatory attribution)
If the same person experiences something positive, he will link it with the hotel for example (due to their internal conviction).
What is the theory of reasoned action?
Concerns itself with the predictability of those deliberate behaviors and supposes that individuals incorporate all the relevant available information for their behavioral decisions and act according to their intentions.
The individual’s attitude and positive and negative associations influence his behavioral intention (attitude toward the behavior) and also the subjective norm (e.g. peer-group pressure)
What is the approach of “perceived behavioral control as an influence factor”?
In this enhanced approach, they assume that the more positive the attitude toward the behavior and the subjective norm and the higher the perceived behavioral control is, the more intense the behavioral intention of a person will be. (If you believe you can study well and that there are no obstacles hindering you, then you will be more likely to study regularly)
There are different barriers between behavioral intention and actual behavior, for example disposable income (money left after taxes).
It is important to note that traditional market research methods usually just inquire into the behavioral intention.
Only observarion and customer tracking can identify the actual customer behavior.
What are the three main questions one should ask themselves when launching a new product?
- Quantitive demand volume
- Needs of individual customers or market segments
- Decision behavior, meaning the customer’s reaction to the applicatio of marketing tools
What are the two different market research methods
Qualitative and Quantitive
Qualitative = develop “theory”
Quantitve = verify “theory”
What are examples for qualitative market research methods?
- Observation
- In-depth/group interview
- Analysin texts and documents
What are the two different types of quantitive market research methods and what are examples for them?
Primary (generating new data)
==> surverys (perception - “stated”) and big data analysis (real behavior - “revealed”)
Secondary (utilization of already existing data)
==> Data analysis e.g. trend analysis
Which four different market sizes are there?
- Market Capacity
- Market Potential
- Market volume
- Market share
What is the market Capacity?
A theoretical maximum size: it indicates the theoretical capacity of a market without regard to prices and purchasing power.
Market capacity is a quantity that can change depending on the size of the market base (number of users).
(How many people could realistically be potential users but also how big the amount is, the company can produce or serve)
Non-financial!! (everyone that does sport)
What is the market potential?
the equivalent of demand for a good or service at a specific price (people who want to buy it (feel the need for it) but also those who have already bought it ==> everyone that feels the need for the product)
What is the market volume?
Comprises the sum of all the actually realized turnovers of all the suppliers on the market.
In cases in which market supply is adequate, market potential and market volume correspond with each other.
If the production capacities of all suppliers are insufficient (e.g. with innovations), the market volume is smaller than the market potential.
What all the other competitors are profiting.
What is the market share?
A KPI that puts a company’s own production or sales volume in proportion to the total market.
As a key indicator it is of major strategic importance because in many markets, the competitor with the biggest market share has advantages for example regarding brand awareness, production costs and network effects.
=> Therefore market share has an important function in most marketing objectives and correspondingly in marketing-controlling cockpits.
Which research services for which size is offered by industry organizations or market research institutions?
Usually industry organizations or market research institutions offer research services for the market volume.
How is the market capacity determined?
Market capacity is usually estimated based on projections in reference to other markets.
Example:
Market capacity for flat-screen TVs can be extrapolated by multiplying a theoretical maximum number of TV sets in households by the number of households today or in the future.
How is the market potential determined?
For market potential, complex interviewing techniques are often applied for estimating it.
The objective is to not just ask about a theoretical need for something customers do not yet know abou, but to simulate a buying situation that is as up-to-date as possible.
What is a conjoint measurement?
Methods like conjoint measurement can even determine customers’ willingsness to pay for particular product features.
For that, researchers present respondents with theoretical selection sets of alternative products that have different features and prices.
From their selection of different products one can extraolate customers’ assessment of individual features via an analytical procedure.
What is the difference between states preferences and revealed preferences?
Surveys only gather the stated preferences (the perceived behavioral intention, what people declare) and not the revealred preferences (the actual impact of needs or marketing tools)
==> Influences like socially desired behavior or unidentified internal motives can sometimes lead to significant differences between behavioral intention and actual behavior.
