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MRKT 354 Midterm 1 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

Medium rate of change customer dynamic sources

A

discrete life events, product learning efforts, product lifecycle

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2
Q

Immediate rate of change customer dynamic sources

A

discrete life events
changes in economy, government, industry, or culture

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3
Q

lifestyle approach

A

use generic stages of growth and their position in the lifecycle to determine customer preferences and associated strategies

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4
Q

dynamic customer segmentation

A

segments a firm’s existing customers on the basis of their similar, expected migration patterns

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5
Q

customer lifetime value

A

contribution of each customer according to the expected migration path over the entire lifetime with the firm

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6
Q

Pros of Lifecycle

A

simplicity
ease of use

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7
Q

Cons of Lifecycle

A

assumes all customers follow one curve
averages all customers
ignores causes of customer dynamics
misses many unique trigger points/migration paths

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8
Q

pros of dynamic customer segmentation

A

combines lifestyle and segmentation
matches strategic marketing thinking
identifies temporally homogenous groups

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9
Q

cons of Dynamic Customer Segmentation

A

segments not perfectly homogenous
puts continuous change into discrete changes

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10
Q

Pros of Customer Lifetime Value Approach

A

provides insights for AER decisions
supports customer-centricity
captures dynamics + heterogeneity

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11
Q

cons of Customer Lifetime Value Approach

A

requires insight into future migration and detailed financial data

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12
Q

Stages of Product Lifestyle

A

introduction, growth, maturity, decline

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13
Q

What is another name for dynamic-based segmentation?

A

AER model (Acquisition-Expansion-Retention Model)

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14
Q

acquisition stage

A

begins with first contact, typically before the first purchase occurs, when prospects and early customers have similar needs

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15
Q

expansion stages

A

firms try to upsell/cross-sell to expand sales and engage with existing customers

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16
Q

retention stage

A

customer migrate in pursuit of greener pastures

17
Q

Hidden Markov Models (HMM)

A

form of dynamic segmentation that can uncover stages or “states” of customer behaviors, as well as how those states evolve

18
Q

When to use HMM analysis?

A

understand dynamics/stages of customer’s relationship with a business
dynamically segment customer base
predict changes in stages

19
Q

Fice Outputs of HMM Analysis

A
  1. Number of feasible/dynamic states in data
  2. Initial probability that a customer is in each state
  3. transition probabilities, or the probability that customers move from one state to another
  4. conditional probability of a behaviour given customers’ hidden state
  5. effect of marketing in moving customers across states
20
Q

Why do customer states get hidden?

A

unaware of biases and what they are based on; customers just show behaviours, so marketers do not see all constraints

21
Q

Variables for Customer Lifetime Value analysis

A

net cash flow
time horizon
discount rate

22
Q

Variables for Simplified Customer Lifetime Value analysis

A

margin for customer in sales
annual marketing cost for customer
retention rate for customer as %
discount rate as a %
acquisition cost for customer in $

23
Q

When to use Customer lifetime analysis

A

identify which customers are worth acquiring/retaining
determine where to target marketing programs to maximize firm’s return of marketing investments
understand true value of a customer to a firm

24
Q

What does it mean if a CLV is negative?

A

customer is not profitable

25
Q

Choice Models

A

Analysis approach that attempts to determine the impact of different factors (price, promotion) on consumer’s individual choices (joining, cross buying, leaving)

26
Q

What model is really good at determining best AER strategies?

A

choice models

27
Q

What does choice model provide?

A

elasticity
probabilities of customer’s choice

28
Q

latent class choice models

A

clusters and runs choice model at same time

29
Q

When to use Choice Model Analysis

A

determine the customer’s most likely choice when faced with many alternatives
determine most important factors that influence customer choice likelihood
segment/target customers according to choice drivers
simulate potential market share for various products on the basis of customer choice

30
Q

Steps to Manage customer dynamics

A
  1. Dynamic Segmentation
  2. Migration Paths/Triggers
  3. Customer Lifetime value of segments/migrations
  4. AER Positioning statements
  5. AER strategies
31
Q

Lost customer analysis

A

mathematical choice model that predicts likelihood of an observed customer choice/response

MRKT 354 Midterm 1 (4 decks)

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