Lecture 1 Flashcards
marketing
art & science of creating value by designing & managing successful exchanges
dual value creation
process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return
ways offering can deliver value to customers
functional
monetary/economic
psychological
ways offering can deliver value to company
revenue but also CLV, user base
product orientation
- try to increase market share and lower price, build distribution network and increase profits
- often devolves into competing on 2 dimensions (price & quality
sales orientation
make people want stuff
Ex. use of clever ads, jingles
demand orientation
desires of customers should guide firm actions (find out what people want 1st, then make it)
- made possible w/ good research/data analytics
- BUT, stifles innovation, customers don’t know what they want, all companies making the same thing & same price stifles competition
competitor orientation
looking outward to competitors, using game theory and mgmt strategy
- takes eye off customer
customer centricity
AKA market orientation, value marketing
- aligning ENTIRE co development and delivery of offering w/ current and future needs of select group of customers in order to max their LT financial value to firm
understand AND anticipate needs; focus marketing on more valuable members
-understand, attract, and keep most valuable customers
customer centricity as an outside-in strategy
start w/ customer: their current & future needs, any pain points they have w/ current offering standards
how is customer centricity different from demand orientation?
it also looks @ FUTURE needs of a select group of target customers (usually the most loyal customers)
what customer centricity IS NOT
having CRM – data does not automatically mean insights; you have to have insights AND understand needs to be customer centric
strategic analysis
use 5 C’s: customer, company, collaborators, competitors, context
-used to define target market
5C’s: company
development of distinctive and hard to imitate resources SWOT analysis (SW = internal factors) (OT = external factors)
- resources of strategic biz unit managing offering enables fulfillment of customer needs
5C’s: customer
customer needs, key decision and value drivers, segmentation, CLV, targeting
- needs co aims to fulfill using offering (B2B or B2C)
- has influence on defining other 4 C’s, changing this would change all the rest
5C’s: collaborators
partners/suppliers/distributors
leveraging strengths to reach common goals & create value for target customers
5C’s: competitors
all those aiming to fulfill same customer need (don’t ignore substitutes!)
market space, positioning
positioning = how firm’s offerings are perceived relative to competitor’s offerings
5C’s: context
market potential, market attractiveness P = political and legal E = economic S = social T = technological
OVP
3V model
-optimal value proposition - intersection of company, collaborator, and customer value; value delivery is balanced across 3 entities
- has to deliver value superior to competition
tactical
4P’s / marketing mix - defining attributes of actual offering that’ll create market value (tools to deliver OVP)
product, price, promotion, place
marketing plan steps
- situational analysis = 5C’s
- strategic options/objectives = STP (segment, target, position)
- Implementation & Eval = 4P’s, metrics, forecasts and budgets
*GSTIC
4P’s: product
offering: product, service, platform
- key functional characteristics & perhaps includes brand
4P’s: price
how we communicate and extract value; price charged for benefits received
4P’s: promotion
how to communicate value to customers
- incentives (monetary or nonmonetary to enhance offering value) and communication to current and potential customers
4P’s: place
how we deliver offering; distribution
- channels thru which it’s delivered to customer
focus on the customer
customers want the benefit
not all customers are equal; focus on most valuable
why rethink product-centric approach?
- technology: product lifecycles are way shorter, you can’t enjoy innovation for as long
- global competition; increasingly borderless environments means more markets but also more competition
- customer power: customers can find cheaper options immediately
value proposition
- defines value the offering aims to create for relevant market participants
- co’s expectation of value it’ll create; an ideal representation of benefits customer will receive from offering
value relationships
creating and capturing value b/w co, customer, collaborators
3 value relationships on co. side, 3 on competitive side
top-down approach to biz model
- start with customer analysis (ID need to be satisfied) or co resource analysis (to ID core competencies/strategic assets that could create competitive advantage)
- ID target market and create OVP
bottom-up approach to biz model
- start with product development (deliberate R&D process, incorporating new advancements in tech)
- ID target customers and unmet needs
when to update a biz model
when one of the 5C’s changes, or when value proposition for relevant entities is no longer optimal
GSTIC
- goal = ultimate criterion for success; ID focus and benchmarks
- strategy = 5C’s; ID target market and value proposition
- tactics = 4P’s
- implementation = define infrastructure, business processes and implementation schedule to outline logistics of strategy and tactics
- control = evaluating progress and analyzing change
setting goals
- focus: monetary or strategic (not mutually exclusive)
- benchmarks: quantitative (relative or absolute) or temporal
- market objectives: more specific goals outlining changes in behavior of 5C’s that’ll enable ultimate co goal attainment
temporal goals, aka setting a timeline, is a key strategic decision bc strategy adopted to implement goals is often contingent on time horizon
defining implementation
- biz infrastructure = functional/divisional teams, organizational structure
- biz processes = managing flow of info, goods, services, and $$; market planning, resource mgmt, mktg mix mgmt
- schedule = optimal timing and sequence to perform individual tasks to optimize effectiveness and cost-efficiency
controls
- performance evaluation of outcomes of actions w/r/t goals set; ID any gaps and modify accordingly
- environmental analysis = make sure action plan is optimal w/r/t operating environment (look for new opportunities or potential threats)
when to update market plan
- performance gaps (caused by inaccurate info or assumptions, logic flaws, implementation errors)
- change in target market (5 C’s)
creating company value
process of capturing value derived from market exchange in which co creates value for customers and collaborators
- monetary
- strategic (functional and psychological)
managing profit by incr. sales rev
- best for LT profitability
- incr sales volume: managing customer adoption (market growth = customers new to category, or stealing market share) and customer usage (market penetration = focus on current customers)
- optimize price: consider customer price elasticity bc that affects sales volume change; “price” also includes monetary incentives, prices throughout retail channel
managing profit by decr costs
- decr COGS, R&D, mktg, cost of capital
- achieve economies of scale (lower per-unit cost bc of greater manufacturing and sales volume), move up the learning curve (becoming more productive), achieve economies of scope (synergies among different offerings in portfolio)
