Questions form the book Flashcards
What is marketing?
Marketing is a broad term that is constantly changing. However, it is defined as the activity, set of institutions and the processes for creating, communicating, delivering and exchanging offering that have value for customers, stakeholders and society at large. Simply put it is managing profitable customer relationships by for example, offering a service that satisfies a costumer need that hasn’t been met/hasn’t been met well enough on the market.
What steps are important in the marekting process?
There are 5 steps in total where the first four explain how to create value for customers and build important customer relationships.
The first step is to understand the marketplace and the customer needs and wants through reasearch and then managing marketing information and customer data.
The second step is to design a customer driven marekting strategy where companies need to ask themselves to questions: What customers will we serve? and How can we best serve targeted customers? These questions represent market segmentation (choosing what customers fit with the company) and targeting (marketing designed to appeal to the chosen customers).
The third step is constructing a marketing program using the marketing mix of the four Ps: Product, Price, Place and Promotion.
The fourth step consists of CRM - costumer relationship management: building strong relationships and creating customer delight in order to inspire high profit and high loyalty from customers. However it also entails PRM - partner relationship management: building strong relationships with partners, for example suppliers, vendors and retailers.
The fifth step is where the company captures value from customers in return by creating satisfied and loyal customers. This then leads to capturing the customer lifetime value and thereby increasing share of customer ans well as share of market.
Why is it important to keep a good relationship between company and customers?
It is important because that’s how companies make profit. Capturing the lifetime value of customers is the best thing that can happen to a company that wants to make profit. By keeping customers happy and satisfied they also become loyal which makes them marketers themselves, even if they aren’t aware of it. Its also important to be bale to adapt and change based on customer wants and needs, for example changing a product in order to please loyal customers and then making more profit.
Define 5 marketing concepts
The product concept: The idea that consumers prefer products that offer the highest quality, performance and most features and therefore companies should prioritise continuous product improvements.
The production concept: The idea that consumers favour product availability and affordability and therefore companies should prioritise improving production and distribution efficiency.
The selling concept: The idea that consumers will not buy the firm’s products unless it is highly promoted.
The marketing concept: Th idea that knowing and understanding the wants and needs of the targeted market and delivering the desired satisfaction better than competitors is the ideal way of making profit.
The societal marketing concept: The idea that a company’s marketing choices should consider the customers wants, the company’s requirements, customer long-term interest as well as society’s long-term interests.
What are the key elements in Customer driven marketing strategy?
The key elements for customer-driven marketing strategy is market segmentation and targeting. Choosing what group of people you want as your customers and then targeting them in the best way possible.
Give examples of strategies that create value for customers and capture value from customers in return.
The primary example is customer-driven marketing strategy because it is the best one. Using the markeitng concept as a basis can then further the customer relationships which are important for the entire marketing process.
What major trends are altering the marketing world in this day and age?
Right now the biggest trends that are affecting the marketing landscape are urbanization, which comes hand in hand with polarization. Social media is also a powerful issue at hand, since comapnies need to invest in either a marketing team that focuses on social media marketing or perhaps apps that makes purchasing their product easier as well as making the CRM much more efficient.
Explain the marketing environment.
The marketing environment consists of the forces and actors outside of the company that affect the company’s ability to maintain or build successful customer relationships. The marketing environment is something that is constantly changing and could potentially make or break a company - it should be monitored and studied in order to grow a profitable business. There are two branches of the marketing environment - macro and micro environments.
What is a company’s macro-environment?
A company’s macro environment consists of factors that control the company and that the company has very little influence over; these can be divided into 5 categories:
Demographic environment: This entails family structures, urbanisation or birth rates. For example if a war breaks out in a country the wealthy citizens will flee and become higher class citizens in other countries which can affect the market in both the war stricken country as well as the other one.
Economic environment: This factor is about changes in income based on things that happen in society but also changes in spending routines. When the electricity bills went up people were perhaps less inclined to spend as freely as they would if the electricity bill went down instead.
Ecological environment: The use and abuse of natural resources in certain markets. The environmental concern has increased in recent years which puts pressure on companies to become more sustainable.
Political and societal environment: Political factors such as elected governments, laws or pressure groups that can limit or influence various organisations and individuals. Currently most companies want to be socially responsible which involves following certain codes of ethics and unspoken rules within the markets.
Technological environment: New innovations and the digitisation of everything constantly change the layout of the market and the competition.
Cultural environment: Cultural institutions or forces that constantly affect our values and how we perceive things. We have our core beliefs which are with us basically since birth and are hard to change but our secondary beliefs are not as steadfast and are easier to manipulate based on what society deems as appropriate. In this environment media is highly influential.
What is a company’s micro-environment?
The micro environment is the actors and forces the closest to the company that affect its ability to serve its customers. The company has a better chance to influence these factors than the ones in the macro environment. This micro environment consists of six different actors:
Suppliers
Marketing intermediaries
Publics (7)
Competitors
Customers
Company
All of these factors are important for the company because they can have negative or positive influence. This environment is focusing on the relationships inside and outside of the company. All departments of the company need to work in harmony and together in order to create customer value and relationships. Companies need to partner with other companies in the firms value delivery network.
What is a proactive attitude when it comes to responding to the marketing environment?
A proactive attitude towards the constantly changing marketing environment is trying to get ahead of the changes and trying to anticipate the upcoming changes and how that will change the market and the consumer needs. The proactive attitude enables the company to see these changes in the markets as opportunities rather than threats which leads to them growing.
What is a reactive attitude when it comes to the same thing?
A reactive attitude is no preferred in the marketing world since it merely reacts to the changes. Companies with this attitude analyse the environmental forces and design strategies to avoid the threats (changes), they only take advantages of the opportunities given to them.
What are the five types of customer markets?
There are five different customer markets that a company can target depending on what products or services they’re offering. The customer markets can be local, domestic or international. Consumer markets consists of individuals and households that buy for their own personal consumption. Business markets is where products or services get purchased for further processing or use in other companies production process. However, reseller markets buy products or services in order to resell at a profit. Government markets consists of government agencies that purchase products and services to produce public services or transfer them to those who need it. Non-profit markets, otherwise knows as civil society markets that often represent the people they serve and play a vital role in providing critical services that contribute to economic stability and mobility.
Mention the different types of economies.
There are three different types of economies in different countries that need to be monitored by marketers in order to be successful in that market.
Industrial economies - rich markets for many different types of goods
Subsistence economies - consume most of their own agricultural and industrial output and offer few market opportunities.
Developing economies - can offer outstanding economies for the right kinds of products.
What trends primarily affect marketing opportunities?
Six actors primarily affect market opportunities for a company in it’s macro environment.
Demographic forces: These forces might include changes in population structures (size, age etc), but also changes in family structures or if a war breaks out somewhere in the world which leads to immigration and emigration.
Ecological forces: Nowadays it is very common for companies to choose to have a more environmentally stable approach and company value since it has become a passionate topic amongst consumers. Companies are more aware now of the environmental impact they have and try to have as little as possible.
Economical forces: Economical forces could be different types of economies in different countries that offer different market opportunities but also changes in consumer behaviour such as the trends that affect income and spending habits. Could also be the patterns of consumer spending.
Cultural forces: Movements, institutions etc that affect society’s perceptions, basic values, pretences and behaviours. for example boycotts.
Political/Societal forces: Laws and legislation or other political/governmental restrictions put upon organisations that might change depending on the political status of the given country. For example there’s an increased emphasis on ethics and socially responsible behaviour amongst different markets and companies.
Technological forces: Innovations and technological advances that compete in the market after their launch.
What counts as marketing information and consumer insights?
Marketing information is the primary or secondary data that has been retrieved through marketing research in order to better a product or a company’s place in a market. Customer insights is the data that has been collected but about a specific group of customers or individual customers. By gathering insights into customers wants and needs a company can market a product or service in a more profitable and efficient way. Customer insights are derived from marketing information and applied to make better marketing decisions.
Why is gaining consumer insights beneficial?
It helps companies improve their marketing and/or customer relationships by customising offers or deals to a certain customer/customer group.
Why is it necessary to assess market information needs?
The needs of the market need to be met, usually that is how a product/company keeps its place in the market; by filling the empty spots. Assessing marketing information is usually done by MIS (marketing information system) - people or procedures that assess informational needs, developing the needed information and helping decision-makers to use the information to generate and validate accurate customer and market insights.
How does market information develop?
Market information develops customer insights which in turn develop better marketing decisions but also profit.
What is the marketing research process?
It a process where you choose one of the already existing methods to gather marketing information. there are three steps included in this process that also make up the marketing information system:
Internal data: Checking for data that has already been collected and can be used in this research as well (secondary data). The issue with this is that the data has been collected for a different purpose and doesn’t really offer accurate customer insights.
Marketing intelligence: Basically consists of analysing the market and all the public information that comes with it to properly understand consumers, competitors and any developments in the marketplace.
Market research: This process has 4 steps.
- Defining the problem and research objectives: is the research going to have the objective of exploratory research, a descriptive research or casual research.
- Developing the research plan for collecting information: This is done by going through secondary and primary data through different research approaches such as observational research, ethnographic research, servery research or experimental research. Developing a sampling plan is also included in this step.
- Implementing the research plan: Collecting and analysing the data and using it to improve customer relationships (CRM).
- Interpreting and reporting the findings: Shouldn’t be left to the analysts since they don’t specialise in taking company affecting decisions.
How do you analyse and use marketing information? Using big data and marketing analysis.
Big data means the data you can actually use form all the data you have collected. 99.9% of the data collected is thrown away because the big data offers the big insights which was the whole goal of the market research.
What two approaches can be taken in order to understand costumers?
Two approaches to understanding customers are through big data or through ethnographic research. Big data collects so much data about customers and then they rinse through it, however, ethnographic research offers high-quality consumer insights that can generate an understanding of what creates value and activates purchasing power.
How does international marketing research differentiate from ‘regular’?
Although international marketing research follows the same process as domestic ones the differ when it comes to deriving data. International marketing research may face issues when it comes to finding good secondary data. Even when secondary information is available it is hard to compare it and combine it due to it coming from multiple sources. Other problems include translation problems, society’s attitude towards marketing research etc.
What are the ethics and public policy in marketing research?
The two major public policy and ethics issues are intrusions on consumer privacy in marketing research and the misuse of research findings.
What are the criteria for extracting secondary data versus primary data?
Criteria for extracting primary and secondary data:
Primary data: To collect primary data there needs to be decisions made regarding research approaches, contact methods, sampling plans and research instrument
Secondary data: Needs to be relevant to the research in question, accurate and reliably collected and resourced, current in the sense that it’s up to date, impartial and objectively collected and reported.
What characteristics affect consumer behaviour?
There are four major characteristic groups that affect consumer behaviour.
Cultural: which is the biggest one and consists of culture, subcultures and social class.
Social: Second largest and consists of family, roles and status and reference groups.
Personal: third largest and consists of age-and life cycles, occupation, economic status (income), lifestyle and personal and self concept.
Psychological: smallest one but closest to the buyer and consists of beliefs and attitude, learning, motivation and perception. How we value products and brands.
What are the different types of buying decision behaviours?
Complex buying behaviour: occurs when a consumer has high involvement (interest) in a product or service and there are significant differences between the brands that offer it.
Dissonance-reducing buying behaviour: occurs when a consumer has high involvement in a product or service but there are few differences between the brands that offer it.
Habitual buying behaviour: occurs when there is low involvement in a product or service and few differences between the brands that offer it. ex. ketchup or salt selection.
Variety-seeking buying behaviour: occurs when a consumer has low involvement in a product or service but there are significant differences between the brands that offer it. ex. cookies. Products that are susceptible to this type of buying behaviour try to induce the habitual buying behaviour by offering discounts and so on.
What is the buyer decision process? What is the buyer decision process for new products?
Its the process the buyer goes through when deciding to purchase a new product. in some occasions some of the steps may be skipped, for example a frequent makeup buyer might go directly from need recognition to purchase decision. It consists of multiple steps:
Need recognition: Realising a problem or a need.
Information search:
Evaluation of alternatives: evaluating the product through either accessing it for a shorter amount of time or perhaps having a chance to try it.
Purchase decision: Whether the product will satisfy the need or solve the problem the consumer has.
Post-purchase behaviour: Might include dissonance but overall occurs after a purchase.
What is a business market?
A business market is a type of market that is accessible to other businesses/organisations. Business markets is where Companies can sell products or services to other companies or organisations. However, they differ from regular consumer markets on certain points:
Market structure and demand: Usually B2B marketers have fewer but larger buyers which means that they cater to only a few business partners. However that also means that there is a different type of market demand - business demand/derived demand which means that the demand derives from the demand for consumer goods. I.e. fabric demand is derived from the consumers demand for clothing and if the clothing sales decreases, so does the fabric sales. This usually means that B2B marketers also promote their products to the final costumers.
Nature of the buying unit: In comparison to consumer purchases, business purchases involve more decision participants and more professional purchase effort.
Types of decisions and the decision process: Business buyers face more complex business decisions, partially because the purchases often involve large amounts of money, complex technical and economic considerations and interactions among many people at different levels of the company. It’s also more complex because the purchases call for detailed product specifications, written purchase orders, careful supplier searches and formal approval; as well as building close and friendly relationships between customers and suppliers. This is caused by B2B marketers keeping customer sales and creating customer value by meeting current needs and by partnering with customers to help them solve their problems. However, this also caused many customer companies to start practising supplier development - systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.
What does business buyer behaviour entail?
Business buyer behaviour research stems from marketers need and want to know how business buyers respond to various marketing strategies. There’s a model that describes marketing stimuli and other stimuli from the environment affect the buying organisation, the buying centre and the buying decision process which in turn affects the buyer responses. A big role in the business buyer behaviour is the buying centre; this consists of multiple other roles but the roles are ever changing because it depends on what products are being purchased and if certain personell at a company are interested in that product and so on. Even though these are the official roles and are parts in a model explaining the business buying process it’s not set in stone; meaning that the different roles can be held by different people for each purchase or perhaps the same person. Those roles/participants in the buying process include:
Users: members of the organisation that will use the product or service in question. Usually initiate the buying process and will help define product specification.
Influencers: Affect the buying decision and often help define specifications and also provide information for evaluating alternatives.
Buyers: members of the buying organisation who make the purchase. Have formal authority and their major role is selecting vendors and negotiating.
Deciders: have the formal and informal power to select or approve final suppliers. In routine buying the buyers are also the deciders, or at least the approvers.
Gatekeepers: people in the organisation that determine where and who the information about the purchase goes. They control the flow of information.
Explain the business buyer decision process.
The business buyer process consists pf multiple steps as well as participants. Firstly the business buyer process employs a buying center, decision-making unit of a buying organisation. The buying unit consists of five roles: users, influencers, buyers, deciders and gatekeepers. The process includes the following eight steps that represent a generalised version of the different stages in the business buying process, however usually this only applies in the case of a new-task buying situation:
Problem recognition: The first stages of the business buying process in which someone in the company recognises a problem or need that can be met by acquiring a product or service. The problem recognition is usually performed by someone with the ‘user’ role. The problem can arise from internal or external stimuli in the environment. Internally the company may launch a new product that needs new and improved production equipment and materials. Externally, the buyer may get new ideas while having a chat with a friend.
General need description: In this stage the buyer describes the characteristics and quantity of the product or service they wish to acquire. This is usually a problems with few challenges if it is regarding a standard item, however, with more complex items the buyer may need to assemble a team (engineers, users, consultants) that work together to rank the importance of products reliability, durability, price and other desired attributes.
Product specification: In this stage the buyer conducts a product value analysis to evaluate the different components and to reduce the price. This stage is where the buying organisation decides and specifies what the best technical product and characteristics for the needed product. Its important to add that the general need description and product specification are written with care and that the agreements are written in the interest of the suppliers only.
Supplier search: This stage is where the buyer tries to find the be
st suppliers for the product/service needed. This is done by reviewing trade directories, doing computer searches, phoning other companies for recommendations and so on. The newer the buying task and the more expensive the item the harder it will be to find a suitable vendor.
Proposal solicitation: In this stage the buyer invites qualified vendors to submit written proposals. In some cases the suppliers will send a catalogue or a salesperson and in larger business opportunities the suppliers will send a detailed written proposal or presentation from each potential candidate.
Supplier selection: During this stage the buying centre will most often look through a list of the most desirable supplier attributes and their relative importance and then use that to rate the suppliers in order to find the best one. The attributes include: product and service quality, reputation, on-time delivery, ethical corporate behaviour, honest communications and competitive prices.
Order-routine specification: In this stage the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties. In certain cases companies might use blanket contracts which create a long-term relationship where the supplier promises to resupply the buyer at a set price for a set period of time. Many large buyers practice the *vendor-managed inventory, in which they turn over ordering and inventory responsibilities to their suppliers. In these systems the buyers share sales and inventory information directly with key suppliers.
Performance review: The stage in which the buyer assesses the performance of the supplier and decides to continue, modify or drop the arrangement. Here the buyer may contact customers and ask them to rate their satisfaction with this supplier.
What is E-procurement?
E-procurement or electronic purchasing as its also referred to, is where companies can purchase products or services they need through electronic connections between buyers and sellers. This gives buyers access to new suppliers, lowers purchasing costs, and hastens order processing and delivery. This enables business marketers to connect with customer support services and maintain ongoing customer relationships. E procurement can be used in several ways, for example through reverse auctions where companies can post their purchasing request and have suppliers bid for the business. Otherwise they can engage in trading exchanges, through which companies work collectively to facilitate the trading process. Companies can also set up their own company buying sites or create extranet links with key suppliers e.g. by creating direct procurement accounts with vendors.
Explain business-to-business digital and social media marketing.
Business-to-business (B2B) digital and social media marketing is important so that business marketers can engage business customers and manage customer relationships. Business marketers must be very engages and enlightened to make sure that the derived demand is always met and high. B2B marketers know that they aren’t really targeting business customers, they are targeting individual customers that purchase through other businesses or individuals within a company that affect buying decisions (one of the participants in the buying centre for example).
What are institutional and government markets? Mention some legislation issues.
Institutional and government markets are similar to business markets but have more regulations surrounding them which might make it hard to make beneficial business agreements with them. Institutional market include: schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care. Governmental markets include: national, regional and local units that purchase or rent goods and services for carrying out the main functions of government. A legislation issue that could complicate deals for governmental marketers is the European commission competition legislation that includes principles of non-discrimination or proportionality - meaning that a government can’t say that a product needs ti contribute to the growth of a certain municipality because the product doesn’t have a natural correlation to the citizen growth.
What major influences are there on business buyers?
There are multiple factors that affect the business buyers majorly, but they can be divided into groups of four:
Environmental influences: Economic developments, supply conditions, technological change, political and regulatory developments, competitive developments, culture and customs.
Organisational: Objectives, policies, procedures, organisational structures, systems.
Interpersonal: Authority, status, empathy, persuasiveness.
Individual: Age, income, education, job position, personality, risk attitudes.
Explain the different types of buying situations.
There are three types of buying decisions:
Straight re-buy: a business buying situation where the buyer routinely reorders something without any modifications.
Modified re-buy: a business buying situation where the buyer wants to modify product specifications, prices, terms or suppliers
New-task: a business buying situation where the buyer purchases a product or service for the first time.
What is market segmentation and what role does it play in contemporary markets?
Market segmentation is the practice of segmenting (dividing) the market into different groups based off of certain factors. It is extremely important for a company to establish their market segment as it is through that they find their target customers. A company can have multiple market segments but a good and successful company and marketer knows you can’t please everyone and if you try you might not be able to offer your actual customers good quality or good CRM. The following factors decide the segment groups:
Geographic segmentation: Dividing a market into different groups based on what nation, region, city, neighbourhood that customers live in. For example, Wester Europe or the middle east, rural areas or metropolitan area.
Demographic segmentation: Diving a market into different groups based on age, family structure, gender, income, occupation, generation and nationality. For example, Italian or Thai, Millennials or Gen Z.
Psychographic segmenation: Dividing a market into different groups based on social grade, lifestyle and personality. For example, Achievers lifestyle or survivors lifestyle, Compulsive personalities or Authoritarian personalities.
Behavioural segmentation: Dividing a market into different groups based on occasions, benefits, user status and rates, loyalty status and attitude towards the product. For example, Holiday or Regular occasions, Non-user or Ex-user status
These four are most commonly used for consumer markets, however while some business markets use the four previously mentioned there are also some more:
Operating characteristics, purchasing approaches, situational factors and personal characteristics.
What is market targeting and how do you execute it successfully?
Market targeting is the approach a company takes to introduce and establish their product in a market segment. Market targeting’s first step is deciding your target market by evaluating it based on:
Segment size and growth: Size of the company might determine if a large and fast growing segment is right
Segment structural attractiveness: long term, does the market have a lot of aggressive competition = not attractive
Company objectives and resources: Some segments don’t fit with the company’s image.
The second step is actually selecting your segments and that is done based on certain criteria. The market segment needs to be: *Measurable*: The size, purchasing power and profiles should be measurable. However, a lot of segmentation variables are hard to measure (religious etc.) *Accessible*: the segments should be effectively reached ans served *Substantial*: large or profitable enough segments *Differentiable*: the segments should be conceptually distinguishable and respond differently to different marketing mix elements and programmes. *Actionable*: effective programmes can be designed for attracting and serving the segments (targets). After that you choose a marketing strategy.
What different marketing strategies are there?
Undifferentiated marketing (mass marketing): a market coverage strategy where the firm decides to ignore market segment differences and go after the whole market with one offer, ex. Coca-Cola
2. Differentiated marketing: a market coverage strategy where the firm decides to target several market segments and design separate offers for each.
3. Concentrated marketing: the firm goes after a large share of one or a few smaller niches, e.g. consultancy company specialised in small business or local market which bigger competitors don’t usually serve.
4. One-to-one marketing: the practice of tailoring products and marketing programmes to suit the tastes of specific individuals and locations. Includes local marketing and individual marketing. Also labelled one-to-one marketing sice it treats every customer individually.
How do you design customer-driven marketing?
Segmenting: Dividing the market into smaller groups based on certain factors that connect them. One segment should only require one marketing strategy and mix.
2. Targeting: The process of evaluating the different segments attractiveness and selecting one or more.
3. Differentiation: Differentiating the market offering to create superior customer value.
4. Positioning: arranging for a market offering to create superior customer value.
