General concepts Flashcards
What are the four P’s?
Product
Place
Promotion
Price
What is customer analysis analogous to?
Marketing research
What are the basic assumptions of a market with demand-side focus?
Firms have a set of resources available for providing offers that can satisfy customer demand
The better it satisfies customer demand, the more sales it will generate
What is the consequence of a demand-side focused market?
For a firm to excel, it needs to know who the customers are and what they want
What is the ‘marketing concept’?
That the customer who determines what a business is. What the customer thinks s/he is buying, and what s/he considers value is decisive.
What are the five questions that guide (customer) market analysis?
What does the market buy? Why does it buy? Who buys? How do they buy? Where? When? How much does the market buy?
What are the three stages of a good?
Production
Exchange
Use/Consumption
What is benefit in use?
The actual value derived from a product or service in the context in which it is being used
Who can be seen as involved in the purchasing process?
An organization Initiator Influencer Decider Buyer User
What are the five steps in the decision-making process?
Need/problem recognition Information search Evaluation of alternatives Purchase decision Post-purchase evaluation
How can you define market potential?
The total market reachable by tour product/service
What are the five sources of untapped demand?
Awareness Availability Ability to use Benefit deficiency Affordability
What is industry analysis?
Identifying and analyzing networks and other factors influencing the dynamic of a company’s position in the market
Name Porter’s five forces
Threat of new entry Supplier bargaining power Customer bargaining power Substitutes Competition (Industry rivalry)
Which factors contribute to competition and rivalry within an industry?
Low concentration/equal players Slow growth High fixed costs Lack of differentiation Capacity growth in large increments Homogeneous competitors High strategic stakes Barriers to exit
Which factors defer new entry?
All barriers to entry Economies of scale Product differentiation Capital requirements Switching costs Access to distribution channels Cost disadvantages independent of scale Government policy
How can one deal with potential substitutes?
Put a ceiling on prices
Price-performance tradeoffs
Focus on production function
What are some danger signals to watch out for when looking at potential substitutes?
Substitutes with improving price/performance ratio
Substitutes in high-profit industries
When do suppliers possess power?
If their industry is more concentrated than yours
The products are unique, differentiated, or involve switching costs
There are no real substitutes
There is threat of forward integration
You are an unimportant customer
When does the buyer possess power?
The industry is concentrated or purchases large volumes
The products are standardized or undifferentiated
The products represent a significant share of costs
Risk of backward integration
Your product is unimportant
Your product does not save money for the buyer
What is an exchange relationship?
A pattern of interactions and the mutual shaping of behavior over time between a seller and a buyer
What are the main reasons that firms have relationships?
Increased productivity Reduced uncertainty Resource access Information Innovation
How can one easily define efficiency for a company?
Producing things the right way
By asking: how much product X can one produce from a given amount of inputs?
How can one easily define effectiveness of a company?
Producing the right things
By asking: how can we produce value for our customers?
Define positive connectedness
When exchange in one relation leads to exchange in others
Define negative connectedness
When exchange in one relation reduces exchange in others
What is the ARA model?
A network model consisting of
Actors control and depend on resources
Resources are linked together by activities
Activities are performed through the knowledge and skills of actors
What is the difference between informal and formal bonds?
Informal bonds are characterized by intangible exchanges. Trust Commitment Knowledge Experience Personal relations Formal bonds are characterized by their tangible nature, often in the form of written documents Contracts Warranties Ownership Certifications Joint ventures
What characterizes resources?
Includes objects, artifacts, money, people
Controlled by actors
Needed to perform and used in activities
Heterogeneous. Value and properties depend on the context in which they are used
Availability and control over a resource can vary
What characterizes activities?
They are performed by actors They transform resources They conduct exchanges (transfer resources) Linked in chains or cycles Can be routinized
Define resource ties
What brings resources together to activate them and create value
What are some examples of resource ties?
Product interfaces Synergies Interferences Standards Adaptations
Name the three types of network connections
Actor bonds
Resource ties
Activity links
What do actors typically do?
Interact
Establish exchange relationships
Control resources
Perform activities
What is the role of resources?
Used and transformed to something of use through activities
What do activities accomplish?
Transform or transfer resources
Name the three ways of analyzing markets
Industry analysis (Porter's five) Customer analysis (five marketing research q's) Network analysis
Define market segment
A market segment consists of a group of customers who share similar sets of needs and wants
What is STP?
Segmentation -> Targeting -> Positioning
Name four common segmentation bases
Geographic
Demographic
Psychographic
Behavioral
Name the five criteria for successful segmentation
Measurable Substantial Accessible Differentiable Actionable
What differs business segmenting from consumer segmenting?
A business consists of a group of people with a goal.
Within the group there is a designated group to make decisions on purchases for the group as a whole.
Targeting the purchasing unit is probably more effective than the organization as a whole
What is important to consider when segmenting businesses?
Firm demographics Business culture Usage behavior Characteristics of the purchasing unit Characteristics of the individual decision maker
What are the underlying assumptions of the STP model?
That a market exists
That identifying a market is possible
That the market is reachable
…
What is a possible outcome of releasing a new product?
Uses of the product differ greatly from the intended use
Define market construction
Defining a new market based on a new product or the new use of an existing product that creates a previously non-existent segment of specific users
Complete the sentence:
Stable markets allow for …
segmentation using descriptive methods
Complete the sentence:
Changing or forming markets require …
more of constructive practices
Name three possible constructive efforts
Market structure
Market behavior
Market meanings
Define market structure
The number and construction of market participants
Define market behavior
Modes of exchange and/or use
Define market meaning
Understanding of products and their uses
What is effectual logic?
The entrepreneurial mindset of shaping the world rather than predicting it. ‘What effect will this have?’
Describe effectual logic
Open ended view of the future
Means oriented in terms of taking action
Affordable loss is considered when starting a venture, not expected return
Outsiders are useful partners
The unexpected is a resource to be leveraged
Define predictive logic
Future is a continuation of the past
Goal oriented in terms of taking action
Expected return considered when evaluating risk
Outsiders are competitors
The unexpected is something to be avoided
What are the four entrepreneurial principles
The patchwork quilt principle
The affordable loss principle
The bird-in-hand principle
The lemonade principle
Explain the patchwork quilt principle
Create something new with existing means
Describe the affordable loss principle
Committing in advance to what one is willing to lose
Describe the bird-in-hand principle
Negotiate with those who commit, adjust goals to accommodate them
Describe the lemonade principle
Appropriate contingency and leverage surprise
What is the effect of effectual logic?
Uncertainty is reduced through controlling the future
Which elements affect the value of an offering?
Features
Price
What defines the relative value of an offering?
Other available offerings
Your resources (and skills)
Preferences
Situation at hand
Complete the sentence:
Value has no …
objective existence, it can only be estimated
What is economic value?
The monetary worth of a product or service in nominal terms
What is the difference between exchange value and value in use?
Exchange relationships are convenient for estimating economic value, since they involve assigning monetary values of offerings. However, the relation may only vaguely reflect the value a customer derives from the offering. Its value in use depends on whom, how, and in what context the product/service is being utilized
Define the two basic value equations
Customer value = customer benefits - cost of purchase
Customer perceived value = customer perceived benefits - perceived sacrifice
Name the six aspects of the lifecycle costs of a purchase
Price paid Acquisition costs Usage costs Maintenance costs Ownership costs Disposal costs
Which four things can customer benefits derive from?
Features
Perceived product benefits relative to other offerings
Service
Company or brand benefits
What are the four different pricing strategies one can employ?
Rapid skimming
Slow skimming
Rapid penetration
Slow penetration
What other than the product/service can contribute to value creation?
Product related services
Total capability of the supplier
Interaction between buyer and seller
Interaction between buyer/seller and third parties
Name six features that lead to value creation in B2B
Length of customer lead time Service to avoid future problems Effectiveness of after sales support Smooth administrative routines Product documentation Trust in supplier
What are the components of value contributions for a customer?
Contribution from suppliers
Cost management
Asset utilization
Revenue growth
What is cost management comprised of?
Direct costs
Indirect costs
What does EVC stand for?
economic value calculation
What are two ways of assessing value?
EVC
Experimentation
Name the three different value propositions
All benefits - full list, risk of value assertion
Favorable points of difference - recognizes that there are alternatives, risk of value presumption
Resonating focus - one or two points that will deliver value to the customer, requires customer value research
Which components comprise the building blocks of a value offering?
How do our value elements compare with those of the next best alternative?
Points of parity - elements with the same performance
Points of difference - elements that make the offering unique, either superior or inferior
Points of contention - elements that are in disagreement with customers
State the value equation
ValueF - PriceF > ValueA - PriceA
Value = Benefits - Costs
What are the eight steps of the value analysis?
- Identify all value elements
- Calculate the magnitude
- Translate value elements into money
- Consider various ways of exploiting the value elements. Clarify circumstances and assumptions
- Build the value models
- Evaluate the various options
- Forge value propositions
- Create the capabilities necessary and get the job done!
What are the four typical characteristics of a service?
Intangibility
Inseparability
Variability
Perishability
Name the seven P’s of service marketing
Product Price Promotion Place People Process Physical evidence
How do services add value to a product?
The context and content of the service around the product creates added value.
Cup of coffee at home
Cup of coffee from a stand
Cup of coffee at Starbucks/barista style place with nice atmosphere
Name the three distinct co-creation phenomena
Encouraging/allowing customer participation in the value creating process
Seeking and encouraging customer participation in product /service design and development
Joint participation of customer experiences by service providers and service receivers
When is value produced?
By paying attention to conditions of use, indirect costs, etc.
Attention to value creation
Result: move from value-in-exchange to value-in-use
How do the twin value paradoxes relate to the paradox of choice?
Customers have more choices that yield less satisfaction
Companies have more strategic options that yield less value
They are both a manifestation of the paradox of choice
What three changes are redefining the role of the consumer?
Isolation to connectedness
Unaware to informed
Passive to active
What are the four parts of the DART model?
Dialogue - learn together
Access - allowing participation
Risk assessment - co-creators also assume risk?
Transparency - reduce asymmetries
