sem 1 book definitions Flashcards
What is marketing?
creates value, happiness out of nothing: through marketing transaction, all about transaction costs/ opportunity cost.
-Is about creating human happiness out of nothing.
-About creating marketing transactions.
The process in which companies create value for customers and build strong customer relationships in order to capture value from customer returns.
Selling is
Selling is a way to communicate with customers.
A state of felt deprivation of some basic satisfaction is termed a:
Need
Which of the following is/are existing demands
a holiday in france
Correct. Existing demands are those that exist, are known to exist, and are currently being satisfied. B, C, D and E are all demands that exist (many people want to holiday on Mars, live forever, live in a crime free society and travel instantaneously), but satisfying these demands is, for the moment, beyond human technology. These are therefore latent demands.
It has been said that free market economies are superior to command economies for which of the following reasons:
A.
market forces are more efficient at allocating resources than a system of central control
B.
market forces minimise waste of the planet’s natural resources by ensuring that they are always used as effectively as possible
C.
the state should not have the power to decide for the individual what he/she should do for a living, how much he/she can earn from doing so, and what he/she can then spend those earnings on: to do so is a denial of basic human rights
D.
market forces ensure that businesses are always accountable to ordinary people through “the democracy of the market”
Correct. Slightly paraphrased, A, B, C and D have all been said in support of free market based economies and market mechanisms
Which of the following are essential for marketing transactions to occur?
A. there must be at least two parties C. all involved must have something of value to offer D. communication E. A, C and D are all true
Correct. Money is not essential, just things of value to exchange and a means for at least two parties to communicate.
A “market” from a marketing perspective is:
a group of consumers willing and able to engage in exchange
Correct. A market is a group of consumers (customers or potential customers) with a demand, not any of the other things. (C) conforms more to the definition of an industry or supply chain.
Marketing management could be carried out by:
Correct. In marketing-led companies, all managers are marketing managers, indeed, all staff are marketers
The marketing philosophy suggests that the achievement of organizational goals is accomplished primarily through:
providing consumer satisfaction
Correct. The others may be important in providing customer satisfaction, for example innovation and product improvement, as long as they are customer led. Otherwise they might be signs of product orientation. Reducing costs may be important if offering the customer the lowest price is the key to providing customer satisfaction; however, being the lowest cost supplier of an unwanted product will provide neither customer satisfaction nor business success.
Which of the following is true of production orientation:
It is often associated with arrogance and conceit on the part of managers
It is a company led philosophy, and often results from managers making what they see as the “best” product, without analysing the market to see if their idea of “best” agrees with that of customers
Which one of the following statements best reflects the marketing philosophy?
“How much customer benefit will come from our new computer system?”
Correct. Marketing led firms evaluate everything they do from the customers point of view. The other statements are more indicative of product, production and sales led organisations.
The controlling function in a company should be:
customers
Correct. If it were otherwise, the company would eventually cease to exist, and all the other functions would vanish. Not even marketing is the controlling function: it is the channel through which customers exert their control.
Which of the following is a/are market oriented definition(s)?
We solve business problems
Correct. E defines itself in terms of the benefit it provides / the demand it supplies. The rest define themselves in terms of what they are or what they do.
Which of the following is/are true of demarketing
Demarketing is the use of marketing to reduce the demand for something. It may be useful to any organisation. It is used to reduce the demand for unhealthy things (like cigarettes). See core text for more detail, and don’t forget: core reading is examinable too.
Need
A state of felt deprivation of some basic satisfaction is termed a
Wants
the form human needs take as they are shaped by culture and individual personality
demands
human wants that are backed by buying power
market offerings
some combination of products, services, information or experiences offered to a market to satisfy a need or want.
Marketing myopia
the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products.
exchange
the act of obtaining a desired object from someone offering something in return
market
the set of all actual and potential buyers of a product or service
marketing management
the art and science go choosing target markets and building profitable relationships with them.
production conception
the idea that consumers will favour products that are available and highly affordable; therefore, the organisation should focus on improving production and distribution efficiency.
product concept
the idea that consumers will favour products that offer the most quality, performance and features; therefore, the organisation should devote its energy to making continuous product improvements.
selling concept
the idea that consumers will not buy enough of firms products unless the firm undertakes a large-scale selling and promotion effort.
marketing concept
a philosophy in which achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.
societal marketing concept
the idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and societies long-run interests
customer relationship management
the overall process of building and maintaining profitable customer relationships by delivering superior customer value satisfaction.
customer perceived value
the customer evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.
customer satisfaction
the extent to which a product’s perceived performance matches buyer’s expectations.
customer engagement marketing
making the brand a meaningful part of consumers’ conversations and lives by fostering directs and continuous customer involvement in shaping brand conversations, experiences and community
consumer generated marketing
brand exchange created by consumers themselves both invited and uninvited by which consumers are playing an increasing role in shaping the own brand experience and those of consumers.
partner relationship management
working closely with partners in other company departments and outside the company to jointly bring greater value to customers.
customer lifetime value
the value of the entire stream of purchases a customer over a lifetime of patronage.
share of customer
the portion of the customer’s purchasing that a company gets in its product categories.
customer equity
the total combined customer lifetime values of all of the company’s customers.
digital and social media marketing
using digital marketing tools such as websites, social media, mobile apps and ads, online video, emails and blogs to engage consumers anywhere, at any time, via digital devices.
strategic planning
the process of developing and maintaining a strategic fit between the organisation’s goals and capabilities and it’s changing marketing opportunities.
mission statement
a statement of the organisation’s purpose -what it wants to accomplish in the larger environment.
business portfolio
the collection of businesses and products that make up the company.
portfolio analysis
the process by which management evaluates the products and businesses that make up the company.
growth-share matrix
a portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share.
product/marketing expansion grid
a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, or diversification.
marketing penetration
company growth by increasing sales of current products to current market segments without changing the product.
market development
company growth by identifying and developing new market segments for current company products.
product development
company growth by offering modified or new products to current market segments.
diversification
company growth through starting up or acquiring businesses outside the company’s current products and markets.
downsizing
reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s overall strategy.
value chain
the series of internal departments that carry to design, produce, market deliver and support a firm’s products.
value delivery network
the network made up of the company, its suppliers, its distributors and, ultimately, its customers who partner with each other to improve the performance of the entire system.
marketing strategy
the marketing logic by which the company hopes to create customer valued and achieve profitable customer relationships.
market segment
a group of customers who respond in a similar way to a given set if marketing efforts.
market targeting
the process of evaluating each market segment’s attractiveness ad selecting one or more segments to enter.
positioning
arranging for a product to occupy a clear distinctive and desirable place relative competing products in the mins of target consumers.
differentiation
actually differentiating the market offering to create superior customer value.
marketing mix
the set of tactical marketing tools - product, price, place and promotion - that the firm blends to produce the response it wants in the target market.
SWOT analysis
an overall evaluation of the company’s strength (S), weakness (W), opportunities (O) and threats (T).
marketing implementation
turing market strategies and plans into marketing actions to accomplish strategic marketing objectives.
marketing control
measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved.
marketing return on investment (or marketing ROI)
the net return from a marketing investment divided by the costs of marketing investments.
marketing segmentation
dividing a market into smaller groups of buyers with distinct needs, characteristics or behaviours that might require separate marketing strategies or mixes.
market (targeting) (targeting)
evaluating each market segment’s attractiveness and selecting one or more segments to enter.
differentiation
differentiating the market offering to create superior customer value
positioning
arranging for a marketing offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of consumers.
geographic segmentation
dividing a market into different geographical units, such as countries, regions, cities or even specific neighbourhoods.
demographic segmentation
dividing the market into segments such as age group, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
age and life cycle segmentation
dividing a market unto different age and life- cycle group.
gender segmentation
dividing a market into different segment based on gender.
incoming segmentation
dividing market into different incomes segments.
psychographic segmentations
dividing a market into different segments based on social class, lifestyle or personality characteristics.
behavioural segmentation
dividing a market into segments based on consumer knowledge, attitudes, uses of a product or responses to a product.
occasion segmentation
dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase or use purchased item.
Benefit segmentation
dividing the market into segments according to the different benefits that consumers seek from the product.
ACORN
A Classification Of Residential Neighbourhood.
-used to understand consumer’s lifestyle, behaviour
intermarket (cross-market) segmentation
forming segments of consumer who have similar needs and buying behaviours even though they are located in different countries.
target market
a set of buyers sharing common needs or characteristics that the company decides to serve.
undifferentiated (mass) marketing
a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
differentiated (segmented) marketing
a market coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
concentrated (niche) marketing
a market coverage strategy in which a firm goes after a large share of one or a few segments or niches.
micromarketing
tailoring products and marketing programmes to the needs and wants of specific individual and local customer segments - it includes local marketing and individual marketing.
local marketing
tailoring brands and marketing to the needs and wants of local customer segments - cities, neighbourhoods, and even specific stores.
individual marketing
tailoring products and marketing programmes to the needs and preferences of individual customers.
product position
the way a product is defined by consumers on important attributes - the place the product occupies in consumer’s minds relative to competing products.
competitive advantage
an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices.
value proposition
the full positioning of a brand - the full mix of benefits on which it is positioned.
positioning statement
a statement that summarises company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference).
competitive positioning
concerned with how customers perceive the alternative offerings on the market, compared with each other, e.g how do Audi, BMW and Mercedes medium-price saloon cars compare in value, quality and ‘meaning’ or image.
market segmentation
described as how marketeers can divide the market into groups of similar customers, where there are important differences between those groups, e.g. what are the characteristics of medium-price saloon car buyers that relate to their product preferences and buying behaviour?
customer needs
while positioning and segmentation are different concepts, ultimately they are linked by customer needs, in the sense that the most robust form of segmentation focuses on the customer benefits that matter most to different types of customer, while the strongest competitive positions to take are those where customers recognise that a supplier or product is the one they choose because it best meets their needs.
choice of target markets
evaluating the attractiveness of different market segments, niches or groups of segments, and choosing which should be targets for our marketing.
iteration
understanding competitors’ positioning and the possible positioning strategies open to us should influence our thinking about the attractiveness of different market segments and the choice of market targets, and may change the way we segment our market, leading to revised target choices and positioning approaches.
kotler (1997) competitive differences
- IMPORTANCE- highly values benefit
- DISTINCTIVE AND PRE-EMPTIVE - cannot be easily imitated or performed better
- COMMUNICABLE- can be communicated to customers
- AFFORDABLE
- PROFITABLE
under-positioning
when customers have only vague ideas about a company of its products and do not receive anything special about it, the product becomes an ‘also-ran’
over- positioning
when customers have too narrow an understanding of the company, product or brand
confused positioning
frequent changes an contradictory messages may simply confuse customers about customers about a company’s positioning
doubtful positioning:
the claims made for the company, product or brand may simply not be accepted, whether or not they are true
demographic characteristics measures
gender, age, geographic locations
strategic seperation
is related to management concerns for strategic intent and corporate mission, based on product/ service uses and customer benefits.
managerial segmentation
is concerned primarily with planning and allocating resources such as budget and personnel to market targets.
operational segmentation
focuses on the issue of aiming marketing communications and selling efforts into the distributions channels reach and influence market targets (and their sub divisions)
implementing problems.
- organisation structure
- internal politics
- corporate culture
- information and reporting
- decision- making processes
- corporate capabilities
- operational systems.
EVC
the economic value to customer
why segment markets
- better understanding of customer needs
- enhanced profits
- enhanced opportunities for growth
- retention of customers
- targeted communications
- stimulation of innovation
- market segment share
criteria for segmentation
- effective
- identifiable
- profitable
- accesible
- actionable
factors thar govern attractiveness of segments
- segment size
- segment growth
- profitability of segment
- current and potential competition
- capabilities of business
differentiated market
offer differentiated product and marketing segments for each of the different segments
focused market
-specialises in one segment
sustainable differential advantage
- customer benefit
- unique
- sustainable (difficult to copy)
- profitable
equation: customer expresses choice in:
value= utility - price
firm profit=
price- cost
product drivers
important parameters for differentiated advantage
- performance
- features
- reliablity
- conformance
- durability
- operating costs
- serviceability
service drivers (service differentiators)
- credit, finance
- ordering facilities
- delivery
- installation
- training and consulting
- after sales services
- guarantees
- operational costs
personal drivers
- professional
- courtesy
- trustworthy
- reliability
- positive
- responsive
- communicative
image drivers
- sociopsychological confidence
- economic confidence
- reliablity
- adverstising
socio-psychological confidence
when customers perceives a brand as enabling them to make a positive personal or social statement
economic confidence
when brand/company creates image of reliability/ performance or value
image drivers reliability
superior product performance
better services
top quality personnel
cost driver (factors)
- economies of scale
- experience
- capacity utilisation
- linkages
- interrelationships
- intergration
- timing
- location
- institutional factors
- marketing strategy
marketing plan
- background situation: current performance, background analysis, opportunities and options
- marketing objectives and financial objectives
- marketing strategy
- marketing mix: product, price, promotion, distribution, services, staff
- action plans,
- budget
- organisational implication
marketing management consist of
- identifying target markets
- markting research
- product development
- marketing mix
- monitoring
existing markets
are those where customers are satisfied with existing products
latent markets
consist of customers with defined needs which haven’t been met yet by competitors.
incipient markets
needs customers have but dont know they have until a product or service appears, which triggers recognition of that certain want or need.
innovation
meeting latent or incipient needs, offers real opportunities for profit
ACORN classification of residential neighbourhood (A)
agricultural areas
ACORN classification of residential neighbourhood (B)
modern family housing, higher incomes
ACORN classification of residential neighbourhood (C)
older housing of intermediate status
ACORN classification of residential neighbourhood (D)
Poor quality older terraced housing
ACORN classification of residential neighbourhood (E)
better off council estates
ACORN classification of residential neighbourhood (F)
less well off council estates
ACORN classification of residential neighbourhood (G)
poor council estates
ACORN classification of residential neighbourhood (H)
multiracial areas
ACORN classification of residential neighbourhood (I)
high-status, non family areas
ACORN classification of residential neighbourhood (J)
affluent suburban housing
ACORN classification of residential neighbourhood (K)
bette- off retirement areas
market traps to be avoided
- peripheral business
- illusion business
- dead-end business
peripheral business
ares where the firm can take a stone and secure competitive position, but where the market doesnt deliver the benefits the company needs
illusion business
areas where the market appears v attractive, because it’s large, dynamic, expanding, etc. however firms can only hod a weak position
dead end business
markets that are not attractive and where the firms can only take an ‘also ran’ position.
core business
- where firms should try to seek to position itself in
- markets offering the benefits and returns needed, where the firm can take a strong, defensible position.
customer defined markets
substitutes in use
competitor defined markets
focuses on competitors that could possibly serve the needs of the group of customers
market characteristics that influence assessment of market attractiveness:
- size of segment
- segment growth rate
- stage of industry evolution
- predictability
- price elasticity and sensitivity
- bargaining power of customers
- seasonality and cyclicality of demand
issues reflecting the broader economic characteristics of market and tech used:
- barriers to entry
- barriers to exit
- bargaining power of suppliers
- level of technology utilisation
- investment required
- margins available
competitive factors in assessing attractiveness of the market
- competitive intensity
- quality of competition
- threat of substitution
- degree of differentiation
general business environment factors in assessing attractiveness of the market
- exposure to economic fluctuations
- exposure to political and legal factors
- degree of regulation
- social acceptability and physical environment impact
market growth
defined a min. market value to be of interest
5 factors govern the attractiveness of the segment
- segment size,
- segment growth
- profitability of the segment
- current and potential competition
- capabilities of the business
product
anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.
service
an activity, benefit or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything
consumer product
a product brought by final consumers for personal consumption
convenience product
a consumer product that customers usually buy frequently, immediately and with minimal comparison and buying effort
shopping products
a consumer product that customer, in the process of selecting and purchasing usually compares on such attributes as suitability, quality, price and style.
speciality products
a consumer product with unique characteristics or brand identification for which a significant number of buyers is willing to make special purchase effort.
unsought products
a consumer product that the consume either does not know about or does not normally consider buying
industrial product
a product bought by individual or organisation for further processing or for use in conducting business
social marketing
the use of commercial and marketing concepts and tools in programmes designed to influence individual behaviour to improve their well-being and that of society.
product quality
the characteristics of a product or service that bear on its ability to satisfy customer needs
brand
a name or term, sign or symbol or combination that identifies the products or services of one of the sellers or group of sellers from their competitors
packaging
the activities of designing and producing the container or wrapping for a product
product line
a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price range
product mix/ portfolio
the set of all product lines and items that are particular seller offers for sale
service intangibility
services cannot be seen, tasted, felt, heard or smells before they are brought
service inseparability
services are produced and consumed at the same time and cannot be separated from their providers
service variability
the quality of services may vary greatly depending on who provides the and when, where, how they provide it
service perishability
services cannot be stored for later sale or use
service profit chain
the chain that links service firm profits with employee and customer satisfaction
internal marketing
orienting and motivating customer contact employees and supporting service employees to work as a team to provide customer satisfaction
What type of philosophy is marketing?
An ‘outside-in’ philosophy: start with the market, understand customers and apply that to you r company
What is a transaction?
Exchanging things of value
brand equity
the differential effect of the brand name has on customer response to the product or its marketing.
idea generation
systematic search for new ideas
customer value based pricing
setting price based on buyer’s perception of value rather than on the sellers cost
good value pricing
offering just the right combination of quality and good services at a fair price
value added pricing
attaching value adding features and services to differentiate a company’s offers and charging higher prices
cost based pricing
setting the price at a reasonable price based on the cos of production, manufacturing and distribution, as well as a fair rate of return for effort and risk
fixed costs (overhead)
costs that do not vary with productions
market skimming prices
setting a high price for a new product to skim max. revenue layer by layer from segments willing to pay a higher price, company makes fewer but more profitable sales
marketing penetration prices
where they set a low prices for new product to reach as many people as possible
product line pricing
setting price between various products in a product line based on cost differences between the products.
optional product pricing
pricing of options accessories along wth main product
captive price product
setting a price for products that must be used along side main product, i.e razor blades for razor
segmented prices
selling a product for different prices where the differences is not based on cost.
FOB origin pricing
geographical pricing strategy, in which goods are places free on a board and customers pay the freight from the factory to the destination
zone pricing
geographic price strategy where depending on the zone you’re in you get the same product for more/less
dynamic pricing
adjusting prices continually to meet the characteristics and needs of individual customers and situations
vertical marketing system (VMS)
channel/structure in which wholesalers, producers and retailers act as a unified front. one channel member owns the others, therefore has more power over them and the rest have to submit.
horizontal marketing system
channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
push strategy
a promotion strategy that calls for using a sales force and trade promotion to push the product through channels. the producer promotes the product to channel members who in turn promote it to final customers
pull strategy
promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating demand vacuum that ‘pulls’ the product through he vacuum.
