Midterm Flashcards
Ethics
adhering to some agreed upon human values
ex- rights, obligations, benefits to society, fairness, honesty
why are ethics important?
Morally, but also monetarily. If consumers do not trust a company, they won’t continue to buy products
American marketing association norms and values
- do no harm
- foster trust in the marketing system
- embrace ethical values (honesty, responsibility)- consumer confidence
corporate social responsibility
voluntary firm endeavors that benefit society
stakeholders- employees, consumers, investors, community, suppliers
responsibilities- transparency
benefits- consumer loyalty, avoid legal repercussions, tax cuts
triple bottom line
people, planet, profits
social, environmental, economic
needs of customer now, needs of business now
marketing
needs of customer now, needs of business future
strategic planning
needs of customer future, needs of business now
societal marketing
needs of customer future, needs of business future
sustainable marketing (this is the goal)
Is CSR a necessary cost of business or optional?
Corpsumers are a large part of the market, so yes.
CSR also leads to a quality product, but it is possible to have a quality product without CSR
Moral reasoning model- is something ethical?
what are the relevant facts? what are the ethical issues primary stakeholders? possible alternatives? ethics of alternatives? practical constraints? what actions should be taken?
unethical marketing practices
unsafe products knockoffs planned obsolescence mislabeled products price gauging (increasing price in times of consumer need) price fixing (working with competitors to set price-illegal) deceptive advertising, sales technique puffery- exaggeration
criteria for successful CSR/ corpsumer campaigns
authentic, committed, relevant, knowing customer base
3 dimensions of how customers create value
function, economics, psychology
lessons from meal kit services
retention rates are important. They cast too wide a net. If they focused on the customers that stay, they would have a higher CLV
how to increase customer base CLV
increase margin and yearly profit, reduce discount
CLV= m(r/(1+i-r))- AC
customer aquisiton
find the best/right customers- which type, demographic, etc. Put the most money into those that will stay.
justify acquisition costs- can’t spend 160 on those worth 133, but can on those worth 1400
customer expansion
increase margin- meal kits can’t give much more, can’t sell the things grocery stores can
data mining for cross-selling. Customer retention is most important
increase satisfaction to increase loyalty. Give real value to the right customers who appreciate the value. Incentivize staying.
Switching costs- even if unsatisfied, customers likely to stay if high costs to leave
customer equity
what the whole customer base if worth/aggregate value
what drives customer equity? (4 types of value)
direct value- how much money is a customer driving to you today?
relationship value- retention- how much can we expect in the next years?
Information value- learning from the current base to use in the future. Or monetize data like facebook
communication value- recommendations, referrals, words of mouth, reviews
AIDA funnel
to describe customer decision making process
Awareness, interest, desire, action
why is AIDA weak
emphasis on influence, sales closure, acquisition, ends at purchase. No retention, satisfaction. Doesn’t take into account that the second purchase is different than the first. Fails to capture all touch points- digital/social channels, well informed customers with wide choices. Marketing does not stop at customer acquisition. It is the beginning point.
Customer journey- loyalty loop
- Initial consideration set-trigger
- active evaluation- info gathering, shopping
- moment of purchase
- post purchase experience- ongoing exposure
loyalty loop back to 3
customer builds expectations based on experience. Loop sometimes goes through whole process again
initial consideration set
short list of brands- already in head from all marketing over time. Coke and mcdonalds keeps advertising with 100% awareness to keep at top of consideration set.
Usually 2-4 brands, 1-2 added during active evaluation
company driven marketing huge in initial consideration but goes down by closure, where consumer driven marketing and store interactions important
prospect theory
how customers evaluate value- see graph in notes
Value (on y axis) and gains (on x axis)
based on a reference point in the middle
Same amount of losses makes less value than same amount of gains increases value
risk- loss aversion
humans are more averse to loss than attracted to gains.
Gain has to be 2x loss in order for most people to play the game
Value is judged by changed relative to reference point. Deals marketed as gains even though still using money
Correlation between satisfaction and performance/quality
little correlation
value ratio
what you over out of it vs what you put into it
equity/fairness
correlate to satisfaction
compare to expectation/alternatives
fairness- more satisfied if the price was fair instead of cheap
related to reference point- monkey example
discomfirmation
(dis)satisfaction is when there is a discrepancy , either positive or negative between expectations and actual performance
If low expectations, even a small surprise is great
Southwest manages expectations. Have high satisfaction even though objectively worse than other airlines
Loyalty
active- emotional connection, brand advocate
passive- habitual, no word of mouth, open to switching
