Chapter 2: Marketing Strategy Flashcards
a plan of action used to achieve a goal.
strategy
What is the first step under plan?
goals
a plan of action used to achieve a marketing goal.
marketing strategy
What is the goal of marketing strategy?
specifies a target market and a marketing mix.
Which do these describe, “segmentation and targeting”, or “differentiation and positioning”:
1. How will we offer value to them
2. Which customers will we serve
- differentiation and positioning
- segmentation and targeting
a definition of the firm’s business focus that provides direction for the company.
mission statement
T or F: Firms that only focus on what they can do now rather than what they might need to do in the future miss opportunities and can become obsolete quickly.
True
How do you evaluate a mission statement (what makes a mission statement good) (2 things)?
- clearly indicate what the company is about by taking into consideration what present and future customers might want in an exchange
- It should account for potential market trends and changes due to environmental forces
(failure to account for both the customer side of business as well as the potential market forces in the future can be disastrous)
Defining a company too narrowly and focusing on the company instead of the customer and missing key environmental trends;
the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.
marketing myopia
Why does marketing myopia matter? (2 things)
- Can cause you to miss macro-level trends (movements of society, technology things, etc.)
- Can cause you to fail (ex: amtrak railroad system, blockbuster)
Marketing myopia is when companies are more ______-oriented than _______-oriented.
product; customer
What is the issue of being too narrow? What is the issue of being too broad?
- You can fail
- You can waste money
T or F: If you find the sweet spot between being too narrow and too broad, your company will be successful.
False; the right focus doesn’t guarantee success
What happens if a firm goes too far and defines itself too broadly?
Profits can sink when developing a lot of products that aren’t selling (ex: Amazon); wasting money
T or F: All industries are growth industries at some point.
True
an advantage gained over competitors by offering greater customer value.
competitive advantage
For a company to truly have a competitive advantage, what are the 2 conditions?
- Needs to be valuable to customers
- Hard to imitate
T or F: Technology is often a competitive advantage.
False; Technology is often NOT a competitive advantage.
T or F: Being low cost is not really a competitive advantage, unless you have an inherent cost structure that other people can’t copy.
True (ex: Walmart)
T or F: Having happy and engaged employees is not a competitive advantage.
False; it IS a competitive advantage (hard to imitate)
______ image is a competitive advantage.
Brand
T or F: The marketing mix idea is relatively new.
False; it’s very old
A marketing strategy that differentiates a product from its competitors; produces more value to the target customers
product differentiation
the unique combination of marketing activities used to encourage and facilitate exchanges by delivering value to the customer.
marketing mix
What are the 5 P’s of the marketing mix?
- Product (what the company offers to the customer in the exchange.)
- Place (where and when the product will be made available to the customers)
- Price (physical cost of the product)
- Promotion (how the company communicates value to the customer)
- Participation
The idea behind the marketing mix was that if you get the 5 P’s right, then you ______ the market.
Win
What are the 5 C’s of the marketing mix (these represent a company’s focus; the C’s are ways that customers use the P’s)?
- Customer benefits (product decisions affect customer benefits)
- Convenience (place)
- Cost (price)
- Communication (promotion)
- Connection (participation)
Which P and C of the marketing mix takes into account our modern era and that brands now attach with customers online in communities; things are no longer diagonal?
Participation and connection
For each of the following activities, match them to the corresponding P of the marketing mix they fall into:
1. Where do we want to make our product available for sale? How will we deliver the product to customers? Should we use more than one way to get the product to the customers? (includes returns as well)
2. Will the customer receive emails, tv ads, phone call, or billboards on the highway? What will be the message to customers? When and where will we communicate with customers?
3. connecting with customers online in communities.
4. What are we selling/offering to customers? What form will it take? How will it be packaged? How much will we offer? How many different versions of the product will we provide?
5. How will the customer pay for the product? Will we offer discounts, combination prices for multiple items, etc?
- Place
- Promotion
- Participation
- Product
- Price
Which P of the marketing mix sets the minimum value for the company for the exchange?
Price
Which P of the marketing mix has to do with returns of product?
Place
If you make changes in the marketing mix it means you’re appealing to one of the 5 P’s or C’s (changing something about those) either to build a better ________ with your customer or to ________ your competitors. This is what it means to change/vary the marketing mix.
foundation; overcome
T or F: Coke offering Diet Coke, Coke Zero, and Regular Coke is an example of customizing the marketing mix.
True; changing product to satisfy different market segments
T or F: The point of any marketing activity we do is to make some kind of return. It doesn’t always have to be dollars.
True
Where does marketing run into trouble?
when trying to figure out if what you’re doing is worthwhile
T or F: Any time a marketing manager invests company resources, he/she should have in mind what to expect in return from those investments.
True
Analytical techniques such as market share, ROI, and CLV are used by marketing managers to measure marketing ________.
effectiveness
A comparative metric of a firm’s marketing success; it is the percentage of a brand’s sales relative to the total sales of all brands in a product category. Can be calculated in dollars or in units.
market share
How do you calculate market share?
Market share (%): Brand sales / category sales
compares a firm’s marketing success to that of the key competitors in a product category. Measured in percent. The metric can include several leading competitors in the category. Simply add together their market shares and use the sum in the denominator.
relative market share
How do you calculate relative market share?
Relative market share (%): Brands market share (%) / Category key competitor(s) (%)
Gives the percentage net profit return on some investment, usually simply expressed as total costs. However, managers can more narrowly consider it as returns on specific investments.
Return on Investment (ROI)
How do you calculate ROI?
ROI (%) = Net Profit ($) / Total investment ($)
total stream of purchases a customer contributes over their “lifetime” (i.e., length of relationship)
Customer Lifetime Value
What are the two ways to calculate CLV?
- Margin x lifetime
- (Order value x product margin) x lifetime
the total combined CLVs of a company’s customers; allows you to come up with a dollar figure that represents the value of your customers.
customer equity
What is the point of customer equity?
It allows you to look beyond single transactions
A metric that measures how happy customers are with a company’s products, services, and overall customer experience.
customer satisfaction
What 4 metrics allow you to look at customers as resources to invest in; long-term focus; helps measure a company’s overall performance and what direction they are headed for in the future.
- ROI
- Customer Equity
- Customer Lifetime Value
- Customer Satisfaction
What is the benefit of market share?
- Market share increases the amount of profit you get (linked to an increase in ROI)
What are the 3 ways market share links to profitability (increases your ROI)?
- Economies of Scale (the bigger you get, the more you are doing, the more efficient you are at doing it)
- Market Power (meaning the channels in your supply chain. If you’re the big one in the chain, you get to influence. You get to demand certain things (what they have to sell it to you at, what they have to do, etc.)
- Quality of Management (large companies with lots of money get sought after recruits from the labor market; high performers) (better employees increases your ROI)
A higher market share leads to (more/less) customer satisfaction.
less
Does the drive for market share relate to the marketing concept?
No because you’re not focused on customers; it relates to the shareholder concept
Does customer satisfaction matter for monopolies? If so, why?
Yes, because higher satisfaction reduces a company’s cost which allows it to be more profitable.
T or F: High market share companies can naturally charge higher prices, which is why market share links to profitability.
False
Companies pursue market share to maximize return for the _______ and _______.
owners; investors
What are the 3 benefits of customer satisfaction?
- Generates efficiency-enhancing benefits for utility firms by lowering the direct and employee engagement costs of dealing with dissatisfied customers
- Fosters greater trust and cooperation from customers
- Gives you some insurance/protection against market disruption
the value you get back to yourself as a company; extracting profits from their product; influences the amount of the advantage the firm is able to capture and the length of time the advantage persists
value appropriation
What are 4 value appropriation activities?
- Patents
- Trademarks
- Copyrights
- Pricing
the activities that you do to create value; influences the potential magnitude of the advantage
Value creation
What are 6 value creation activities?
- Innovating
- Producing
- Delivering products to market
- R&D
- Supply Chain Coordination
- Co-Creation
T or F: If you naturally do value creation and appropriation well, you will build a sustainable competitive advantage.
True
Who are the 3 main appropriators?
- Firm
- Competitors
- Society/Public
(So, when we have a product that has tremendous value, one of these 3 is the main appropriators)
Is marketing more related to value creation or appropriation? Why?
Value appropriation because marketers typically advertise and brand products
What are the 3 things that fall under BOTH value creation and appropriation?
- Promotion (advertising)
- Participation
- Branding
