Exam 1 Flashcards
Who determines the value of a product?
The consumer
If companies don’t determine value, then what do they do?
Companies offer value propositions
What is customers perceived value?
Perceived benefits versus perceived costs (what you get relative to what you give)
What is satisfaction?
A pleasurable fulfillment response to a consumption experience
How is satisfaction determined?
Satisfaction is determined by disconfirmation
ie… McDonalds example: we go in with low expectations and you may or may not be satisfied, because your notion was to expect little satisfaction
What is ACSI and why does it matter?
American Customer Satisfaction Index
Can be an indicator of economic standings in terms of consumer oriented companies/products
What is a market?
A collection of buyers and sellers who are both interested in making exchanges
A market can also refer to a group of people, a place, or a product.
What is the unique contribution of Marketing to a firm?
Marketing acquires resources from customers, while stimulating product demand & customer value
What is Marketing?
Marketing is the idea of managing exchanges with customers
What is Marketing not?
Marketing is not advertising and it is not common sense. Another common misconception is that marketing does not require the use of numbers/analytic processes.
Counter to the idea of “Marketing is advertising and unnecessary”
You can’t force people to buy something that they don’t need, which is why being in touch and understanding consumers is crucial to marketing and company success
What is the marketing concept?
Achieving the goals of an organization based on the knowledge of consumer wants along with targeting desired markets
What are the other concepts that compete with the marketing concept?
Production concept, sales concept, and social concept
What is required to implement the marketing concept?
1) Information has to be generated regarding the customer and target audience
2) Disseminate the information back to the organization
3) Incentivize the use of the information
What is the role of Marketing Research?
Measuring the outcomes of marketing activities versus the goals of the organization. Failure is bound to happen, and has potential to help refine the allocation of $$ and resources towards strategies that show positive results.
What is the shareholder concept?
The goal of a firm should be to maximize shareholder value
What are some problems with focus on the shareholder concept?
Often times firms who focus on the shareholder concept are overly concerned with short term goals in hopes of satisfying shareholders periodically, instead of focusing on long term investments for the benefit of the firm.
What are the consumer bill of rights?
The right to information, the right to be heard/acknowledged, and the right to not be harmed
Why do consumers need protected rights as opposed to the “buyer beware” mentality?
Consumers don’t know every little thing about a product. They deserve to be made knowledgeable of anything potentially harmful. The business knows all but the consumer does not.
What is the Milton Freidman view on businesses?
“The role of a business is to increase profits.” This is beneficial because it creates competition in the market and helps to drive prices down as companies try and gain advantages over one another.
What are some arguments for businesses to seek other goals besides maximizing profit?
The issues we face globally are massive, and some consumers feel that businesses should do their part to help, as for profit businesses have a large majority of resources. For businesses, there are also self oriented reasons for them to engage in other activities. (they can become more likeable if they do it right)
CSR
Corporate social responsibility
What determines whether firms are “rewarded” for engaging in CSR?
Quality, stakeholders opinion, advertising spending is higher than others
What is Cause Related Marketing (CRM)?
Charitable actions of a firm are directly tied to consumer revenue
What is the annual amount spent on CRM?
$2.24 billion
Is CRM related spending the same as marketing spending?
No, regular marketing spending is $250 billion, so CRM spending is small in comparison.
Why is CRM so hard to get right?
The purpose of the firm needs to align with the cause of the charitable actions, and the quality of product can’t be affected.
ie… big tobacco shouldn’t act charitably toward cancer research
What is a mission statement? How do you evaluate it?
A definition of the firms business focus that helps provide direction for the company
What is Marketing Myopia and why does it matter?
Defining a company to narrowly with not enough focus on the progression and evolution of consumer behavior. Companies that suffer from this often miss key trends in the market.
What happens when a firm defines itself to broadly?
The firm will struggle to perfect a product or division of the market. Resources and spending will not be allocated well.
What is a competitive advantage?
A firm has a competitive advantage when they offer greater customer value than a competitor.
What is differentiation?
A marketing strategy that helps a firm stand out from competitors and encourages consumers to choose their product.
What are the 5 P’s of marketing.
Product- diet soda
Place- live streaming service
Promotion- sale on beer
Participation- discord/reddit
Price- matinee at movie theatre
5 C’s
Customer benefit
cost
convenience
communication
connection
What does it mean to change the marketing mix?
Adjusting strategy to better influence customer decision making or to broaden/shrink the target audience for a product
Market share and relative market share
Market Share = brand sales / category sales
Relative Market Share = brand market share / key competitor %
What is the benefit of market share?
As market share increases, companies are likely to have higher profit margins, declining purchase to sales ratios, decline in marketing costs, and higher product quality
Link between market share and customer satisfaction
as market share increases, typically customer satisfaction decreases.
ie… McDonalds controls the most market share in fast food, but has the worst satisfaction rating
Does the drive for market share relate to the marketing concept?
Yes, as companies seek to grow their market share, they must implement the marketing mix to better understand and cater to the needs of their customer base.
Are monopolies concerned with customer satisfaction?
Yes, because studies show a direct tie between customer satisfaction and operating costs.
As customers become satisfied, operating costs go down.
ROI
Return on investment = net profit / total investment
CLV
Customer lifetime value is the expected value a company can expect to receive from a customer over the course of their relationship
CLV = Customer value x average customer lifespan
Customer equity
the total value of a company’s customer relationships over their lifetime.
Customer equity = # of customers x average value of each customer
*typically calculated for a specific period
Value appropriation & Value creation
Value appropriation is the value that a company receives for providing consumer value
Value creation is the actions that innovate, produce, and deliver products to market.
Who are the main appropriators
1) firm
2) competitors
3) Society/public
Is marketing more related to value creation or appropriation?
Marketing is tied more closely with value creation, as it strives to understand customer needs and deliver products and services
What do fidget spinners, Beanie Babies, Nike, and Legos tell us about
marketing’s role in value creation and appropriation?
Beanie babies were produced conservatively, resulting in a fad that went on for a long time. Fidget spinners were overly produced which led to a short period of popularity.
Nike, could profit off the secondary market, but they choose to appropriate value elsewhere
Micro-environmental forces
things in the environment that are affected by marketing decisions.
company, consumers, suppliers, resellers, primary/secondary and unexpected competitors
Macro-environmental forces
general trends that companies do not influence
social, political, economic, natural, technological
What is a SWOT analysis?
a strategic planning tool that helps businesses identify their strengths, weaknesses, opportunities, and threats
What is critical thinking?
evaluation of evidence regarding a claim, so a sound conclusion can be drawn.
5 cognitive biases
gamblers fallacy: if the slot machine hasn’t paid out yet it’s bound to soon
anchoring bias: i heard that company was bad 10 years ago so that’s what i believe
sunk-cost fallacy: if we’ve invested in something, we keep going no matter what the cost benefit ratio is
confirmation bias: tendency to search, interpret, and favor information that supports what we already think
survivorship bias: if i can do it than anyone can (0.1% success and 99.9% failure)
How does critical thinking and biases relate to marketing?
Marketers have to assume people will be biased. They have to use critical thinking and the marketing mix to target and appeal to all types of consumers
General model of customer experience
1) need recognition
2) information search
3) evaluation of alternatives
4) purchase/choice
5) post purchase
what is an attitude
a consumer’s opinion, feelings, and intentions about a product or service. Typically hard to change, as people become loyal to brands. To change an attitude, peoples opinions must be disconfirmed over time, whether good or bad.
Contextual influences on buyer behavior
Contextual- motivation & problem solving
Social Influences- reference groups
Individual Influences- personality & perception
Maslow’s hierarchy in order
self actualization
esteem
love/belonging
safety
physiological
What are the two ideas related to MH?
unknown
Can Maslow’s be used for any product?
Yes, any product can serve any need
Examples of ads at each level of Maslow’s
unknown
Routine, limited, & extensive problem solving
routine: little thinking, little judgement, and insulated from arguments (brushing your teeth)
limited: short cuts in thinking and can accept weak arguments (buying toothpaste)
extensive: elaborate thinking, and evidence serves as judgement, rejects weak arguments (buying a car)
What % of our behavior is habitual
40-50%
How do the thinking types relate to celeb endorsers
Influencers have no impact on extensive problem solving, but they do with limited
you might buy chips with katy perry on them
What are the forms of selective perception? How do these relate to marketing
phenomenon?
Selective attention: Humans don’t direct a lot of attention to things that we don’t support or care about.
Selective interpretation: we often interpret things to confirm what we already think
Selective retention: We choose to remember what supports our preconceived notions.
What is the self-concept?
Self-concept is a consumer’s perception of themselves.
How they think, feel, and value themselves
How does the self-concept relate to self-image?
How a person sees themselves, especially physically and mentally. Self-image can be based on how a person wants to appear to the world, and it doesn’t always align with reality.
Self-concept is a broader concept than self-image, but self-image is a component of self-concept
Traits vs Roles
Traits are what makes someone unique… caring, generous, attentive
Roles are what connects you to the rest of society. I am a consumer, I’m a brother, I’m a friend
Actual & Ideal self concept
The actual self is who someone is, and the ideal is who someone strives to be.
Planet fitness is an “actual” marketing style while LA fitness is an “ideal” marketing style.
Which to choose is based on the product and the target audience
Ideal could be used when a product is highly visible and consumers seek cognition
Is consumer purchasing typically rational or irrational?
consumer purchasing is typically not entirely rational and often incorporates irrational elements
behavioral economics highlights how psychological factors and cognitive biases can lead to seemingly irrational choices
How is organizational buying different from consumer buying?
organizational buying involves a more complex decision-making process with multiple individuals within a company, focused on rational economic needs and specific product specifications.
consumer buying is typically driven by personal wants and needs, often influenced by emotions and brand loyalty
When does consumer buying start to look like business buying?
Biases have to be ignored, and rational decisions based on economic principles have to be made.
What is the buying center?
The group that makes purchase decisions for a business
Parts of the buying center.
deciders, influencers, buyers, initiators, gatekeepers, and users
Is organizational buying purely rational?
No, not purely rational… Emotions are present throughout the organizational decision-making process. Marketers can use this to their advantage by managing emotions and fostering positive ones like trust, excitement, and interest.
How does the General Model of Customer Experience look for businesses as compared to
consumers?
for businesses, the model centers on the experience of their entire company interacting with a brand, encompassing multiple decision-makers.
consumers focus on individual perception and emotional/personalized experiences
how does marketing differ between business to consumer and business to business?
B2C: Focuses on individual consumers, with the goal of capturing their attention and driving sales. B2C marketing often uses emotional ads and straightforward language to speak to the customer
B2B: Focuses on individuals or teams that make purchasing decisions for a larger organization, such as suppliers, distributors, and wholesalers. B2B marketing focuses on building long-term relationships and delivering value to business clients.
What is market segmentation?
the process of categorizing groups of customers to divide a market into pieces based on customer differences.
What does market segmentation stress? (2 things)
And what should result? (2 things)
meaningful groups & customized marketing mix
better value propositions and increased likelihood of customer response should result
What are micromarketing, differentiated marketing, and niche marketing?
Micro: A targeted marketing approach that focuses on a small group of consumers with personalized messages and offers. Micromarketing campaigns are based on specific traits, such as age, gender, job title, or geographic location.
Differentiated: A strategy that involves creating campaigns for two or more customer groups or market segments. The goal of differentiated marketing is to increase brand awareness, reach a wider audience, and increase sales.
Niche: A technique that focuses on a smaller segment of the market with specific needs, preferences, or traits
What does mass marketing attempt to do? Is there anyone who truly mass markets?
aims to reach as many potential customers as possible by using a single message to appeal to a broad audience
nowadays every company is segmenting in one way or another
What are two ideas of the long tail?
the long tail theory shows that the popular products control most of the market share, while the products with less market share extend further to reach a subset (niche market)
as people learn about the long tail they tend to gravitate toward it
What helps asses a market segmentation?
demographics (gender, age, marital status)
geographics (region and size)
behavioral patterns (usage rates, visits, spending patterns)
psychographic (personality, wants vs needs, & value)
What can help resolve a non-profitable segment
adjust strategy, stop certain products, retain high value customers, and convert occasional buyers to high value customers
What segment variables are the easiest & hardest to collect?
Demographics… they’re often readily accessible on the internet or third party surveys/data
Psychographics… they are subjective and and lack observable data sometimes
What’s the issue with demographic variables? Does it remain true for geographic variables?
they are overly simplistic and might not capture behavioral needs within a group
yes because relying solely on location can overlook individual variations within a region
What is variability and how does this effect segmentation?
high variability indicates that a group of customers or data points within a segment exhibit diverse characteristics, making it difficult to effectively target them with a single marketing strategy
What is a problem with psychographic variables?
they’re subjective and hard to measure effectively
f there is a problem with psychographic variables, can they be used? How?
by combining them with other data sources like demographics or behavioral data to provide a more comprehensive understanding of your target audience
best predictor of future behavior
past behavior
What is user status, usage rate, Pareto principle, and share of wallet? What kind of variables are these?
user status: current relationship with a product (active or inactive user)
usage rate: how frequently customers interact with a product
Pareto principle (80/20): small % of factors contribute to large % of results
share of wallet: proportion of spending dedicated to a brand within a category (spending with brand/spending in category)x100
If you want to create segments that will be inclined to purchase more, what must you segment on (i.e. what did the Miller Lite case study tell us?
Match marketing actions to target markets (make stronger arguments than Miller Lite did)
How similar and/or different are the variables for business customers as compared to
consumers
buying behavior might be more important with consumers, while demographics could be more important with B2B
Steps of segmentation process
1) define market
2) pick relevant variables
3) create and profile the segments
What is targeting and a target market?
Targeting: The process of prioritizing advertising relevance by defining a target market and segmenting it based on common traits.
Target Market: A group of consumers that a business aims to reach with its products or services. Target markets are defined by commonalities such as age, income, interests, or geographic location
Why is choosing a target market a high risk activity?
if you select the wrong market segment, it can lead to significant financial repercussions
Why should companies initially focus on one segment?
few products have universal appeal, and financial resources can be easily wasted while expanding into new segments that may not be immediately successful
What is positioning?
creating perception in the customers mind relative to other options
key ideas of positioning
1) you can only own one position
2) a position can only be owned by one brand
What are perceptual maps?
a visual tool that shows how consumers perceive different brands or products relative to each other
