Sem 1 lecture definitions Flashcards
Define marketing:
The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
>Is about creating human happiness out of nothing.
>About creating marketing transactions.
What type of philosophy is marketing?
An ‘outside-in’ philosophy: start with the market, understand customers and apply that to your company
What is a transaction?
Exchanging things of value
Name 4 Marketing transactions
Buyer/Seller
Charity/Donor
Employee/Employer
Candidate/Voter
What is the departmental/functional view of marketing?
Tools, techniques and models - what you DO
What is the philosophical view of marketing?
Focuses on how you THINK
“we must make what we can sell, not sell what we can make”
What is the main aim of marketing?
Identifying customer needs and satisfying them profitably and ethically.
What are the 4 philosophies of business?
- Production
- Sales
- Product
- Marketing
o Production philosophy:
way to be a successful business is to become a low cost manufacturer of something you can supply in high volumes. (supply large amounts cheaply), but if there are more suppliers than consumers then doesn’t work. Its an inside out philosophy, focuses on the company.
o Sales philosophy:
produce what you want to produce and then if the customers don’t want it you push it hard
o Product philosophy:
more of a tact than philosophy, make successful business by continuously making the product better. However many managers don’t bother to analyse their customers wants and just use their own reference for what is a better product.
What are the benefits of free markets over state-control or socialism?
- Consistent with individual freedom and human rights
- More efficient at allocating resources, setting prices and production levels
- Encourages growth and innovation
- Minimises the waste of natural resources, minimises climate change
Criticisms of free markets and capitalism?
- Equality of opportunity leads to inequality of rewards
- Capitalist economies have booms and recessions (argued this is a necessity for growth)
- Benefits can be destroyed by monopolies and cartels.
- Needs strong laws
What is the societal marketing philosophy?
Needs, Wants and Demands
need
Basic physical and psychological needs (food, water, heat…)
Want
Something you want but won’t necessarily get, e.g. steak, beer, new house. More than a need as its influenced by cultural/personal forces.
demand
A want, but with willingness and ability to pay.
What are the 3 types of demand?
Existing, Latent, Incipient
Whats an existing demand?
Exist and are being served
Whats a latent demand?
Known to exist but cannot be served for some reason, e.g. technological/legal constraints
Whats an incipient demand?
Exist, but undiscovered.
Define a market:
A group of consumers with a demand.
What is the first stage of marketing?
Defining the market in terms of the consumer demand you’re trying to satisfy.
Fully understand consumers and the marketplace in which it operates
What is undifferentiated/mass marketing?
One product for the whole market. E.g. T-model Ford, original Coca Cola.
What are the advantages/disadvantages of undifferentiated marketing?
A: economies of scale
D: rarely works
What is differentiated marketing?
Company tries to satisfy the market, segment by segment. Different product for each segment. E.g. current car market.
What is concentrated/niche marketing?
Making 1 product for 1 segment only. Good for small company with less resources. E.g. super cars.
Small companies have no choice but this as they have limited resources.
Whats the final most narrow targeting type?
Micromarketing (local or individual marketing)
What is the marketing aim/process?
Create value for customers and build customer relationships to capture value from customers in return.
What is 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.
What is the production concept?
The idea that consumers will favour products that are available and highly affordable, therefore, the organisation should focus on improving production efficiency and distribution efficiency.
What is the 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.
What is the selling concept?
The idea that consumers will not buy enough of the firms products unless the firm undertakes a large-scale selling and promotion effort.
What is the 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.
What is the societal marketing concept?
The idea that a companys marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long run interests, and society’s long run interests.
What are the 3 concepts underlying the societal marketing concept?
Society (human welfare)
Company (profits)
Consumers (want satisfaction)
What are the 2 building blocks for a good customer relationship?
Customer value and satisfaction
What is customer perceived value?
The customers evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.
What is customer satisfaction?
The extent to which a products perceived performance matches a buyers expectations.
What is customer engagement marketing?
Making the brand a meaningful part of consumers conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences and community. E.g. social media
What is consumer-generated marketing?
Brand exchange created by consumers themselves - both invited and uninvited - by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers.
E.g. Innocent banana free smoothies
What is partner relationship management?
Working closely with partners in other company departments and outside the company to jointly bring greater value to customers. E.g. every function in the organisation, and the whole supply chain.
What is the ultimate aim of customer relationship management?
To produce high customer equity.
What is customer equity?
The total combined customer lifetime values of all the company’s customers
What is customer lifetime value?
The value of the entire stream of purchases a customer makes over a lifetime of patronage.
How can different customers be divided?
Strangers: low potential profitability, low projected loyalty
Barnacles: high projected loyalty, low potential profitability
True friends: high both
Butterflies: high potential profitability, low projected loyalty
What should you do with each type of customer?
trangers: don’t invest in them at all.
Butterflies: enjoy them whilst around and know it won’t be long term, just make it as profitable as possible.
True friends: make continuous relationship investments to delight these customers and nuture, retain and grow them. Wants to turn them into ‘true believers’ who come back regularly and tell others.
Barnacles: attempt to make them profitable, but if you cannot, they should be ‘fired’.
What is digital and social media marketing?
Using digital marketing tools such as websites, social media, mobile apps and ads, online video, email and blogs that engage consumers anywhere, at any time, via their digital devices.
How much does social media marketing account for out of marketing budgets?
10%, will rise to 20% in the next 5 years.
What are the 5 tasks of management marketing?
- Identifying target markets
- Marketing research
- Product development
- Marketing mix
- Monitoring
Why is it sometimes that basic needs are not the most prevalent?
Other factors can be rated highly because customer expectations are progressive. Once consumers have grown used to a benefit, it ceases to be a competitive discriminator.
Customers expect all products to be safe and reliable, choice is now based on the additional features and services that competitors offer.
What factors govern the attractiveness of the segment?
Segment size
- Segment growth
- Profitability of the segment
- Current and potential competition
- Capabilities of the business
What does STP stand for?
Segmentation, Targeting, Positioning
What is market segmentation?
Dividing a market into smaller segments
What is a market segment?
A group of customers or potential customers with a similar demand.
What are Kotler’s 4 bases for segmentation?
- Geographic
- Demographic
- Psychographic
- Behavioural
Why would a company segment based on geographic?
- Concentration of limited resources
- Obvious geographic variations in demand
- Different norms based on location
Segmentation-
o
o Define the market
o Segment the market
o Profile segments
Targeting-
o
Targeting-
o Select target market segment
Positioning-
o
Positioning-
o Marketing mix and differential advantage
What is the most common type of segmentation?
Demographic: what customers are
Give examples of demographic segments:
Age, education, gender, race, religion, nationality, occupation, income, life stage
How are segments made with this?
Often variables combines to form segments. Simple and advanced multivariate segmentation.
Who developed the Socio Economic Class classification?
UK Market Research Society
What are the 6 class brackets?
A, B, C1, C2, D, E
A
upper middle”
o successful business/ professionals/ senior mangers
upper middle: successful something - 3%
B
Middle: middle management/professional - 20%
o middle management/ professionals/ senior managers
C1
Lower middle: white collar, small trades, supervisory - 28%
C2
C2: Skilled workers: skilled blue collar - 21%
D
Semi & unskilled workers: labourers - 18%
E
Lowest Subsistence level - 10%
What are the criticisms of Socio Economic Class classification?
- Poor guide to aspirations and potential upward mobility
- Poor guide to disposable income
- Occasionally modified to cope with change
- Classes often grouped and used as broad indicators e.g. ABC1
What are geodemographics?
Based on the premise than the profile of people can broadly be inferred from the type of neighbourhood in which they live.
How do geodemographics work?
Type of neighbourhood works at a postcode level and sub-postcode level (very precise) - need computers for data, advanced multi-variant.
What is psychographic segmenting based on?
How people think: personal products bought to show others about ourselves. Sometimes described as social class.
What are the segmentation variables for psychographic?
Personality, made up of self image, aspirations, fears, prejudices.
Becoming more important as these days people are freed of their demographics
What is behavioural segmentation?
According to how people behave.
What are 6 examples of behavioural segmentation?
- Benefits sought
- User status (occasional or frequent)
- Usage rate
- Loyalty status
- Use occasion
- Buyer readiness stage
What are the buyer readiness stages?
Unaware, awareness, knowledge, linking, buying intention.
What is the next stage after segmenting the market?
Develop segment profiles.
To target and position , what do we need to know about market segment members?
- What product are they likely to demand?
- Where are they likely to live?
- How much are they likely to spend?
- Where and how likely are they to shop?
- What media are they likely to engage in?
What are the steps of selecting the TMS?
- Define measures of segment attractiveness
- Evaluate attractiveness of market segments
- Select TMS
What are 7 features of segment attractiveness?
- Right size
- Growth
- Profitability
- Competition
- Accessibility
- Actionability
- Risk
How do you know if a difference is worth establishing?
To the extent it satisfies:
- Important
- Distinctive
- Superior
- Communicable
- Pre-emptive (competitors cannot copy)
- Affordable
- Profitable
What are the 4 different types of potential markets to serve?
- Core business (strong competitive position, high market attractiveness)
- Peripheral businesss (strong competitive position, low market attractiveness)
- Illusion business (weak competitive position, high market attractiveness)
- Dead-end business (weak competitive position, low market attractiveness)
What is a product?
Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.
What is a consumer product?
A product bought by final consumers for personal consumption.
Whats an industrial product?
A product bought by individuals and organisations for further processing or for use in conducting a business.
What is a convenience consumer product?
A consumer product that customers usually buy frequently, immediately and with minimal comparison and buying effort.
Whats a shopping consumer product?
Less frequent purchase, much planning and shopping effort, comparison of brands on price, quality and style
What is a speciality consumer product?
Strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity.
Whats an unsought consumer product?
Little product awareness or knowledge (or, if aware, little or even negative interest).
What is a service?
An activity, benefit or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything.
What is positioning?
Creating the offer to satisfy the demands of the TMS perfectly, or at least better than the competition.
What is conceptual positioning?
What is conceptual positioning?
Gaining a position in the customers minds.
What is a useful guide to positioning?
The marketing mix: 4 P’s.
What are the 4 P’s?
Product
Price
Place
Promotion
What is important when considering staging of product?
Analysis of the market should come before creation of the product.
What are other key things to consider regarding product?
- Innovation and new product development
- Product life cycle
- Branding
- FMCG v durables
- B2B or B2C
- Tangible goods or intangible services
Define price:
The amount of money charged for a product or service, or the sum of the values that customers exchange for benefits of having or using the product or service.
What are the 4 non-marketing views on price?
Economics: price sole influence on demand
Cost-based: cost plus driving/break even analysis
Company financial objectives: short v long run
Competitor based: going rate, me too, premium or penetration pricing
What is value based pricing?
Customers do not buy ‘cheap’, they buy best value. Price equals quality effect - social status, perception. Setting price based on buyers perceptions of value rather than on the sellers cost.
What are the three types of cost?
Fixed, variable, total
What is price aside from a source of revenue?
It conveys a message. It is not an afterthought, it should be viewed strategically.
How is price a part of R&D?
Target costing, i.e. knowing the price before manufacture.
Why do service industries have complex price structures?
Intangible goods have perishability; services cannot be stored; uneven demand is inefficient so they try to make it even by changing price. So services are cheaper in slack times.
What is market penetration pricing?
What is market penetration pricing?
Setting a low price for a new product in order to attract a large number of buyers and a large market share.
What is market skimming pricing?
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
What does place regard?
Physical and non-physical distribution: where and how the customer buys; needs to be consistent with other P’s.
What is an important part of place?
The entire customer experience. E.g. Rolls Royce dealership vs. IKEA.
How does place relate to profiling?
TMS’s shopping habits
What are the three main types of distribution?
Shops
Non-shop shopping
Direct selling
Wear are 3 types of non-shop shopping?
- Mail order/catalogue
- Teleshopping
- Internet shopping
What are the benefits of non-shop shopping?
Distribution even if shops refuse
- Access to geographically dispersed TM’s
- Lower costs
- Full control of marketing mix
What is promotion for?
- Communicating the value created elsewhere in the marketing mix
- Creating value
Give 10 types of marketing communications:
- Advertising
- Sales promotion
- Direct marketing
- Internet advertising
- Publicity/PR
- Point of Purchase
- Packaging
- Direct selling
- Sponsorship
- Product placement
What are the extra P’s to make it 5 or 7?
- People
- Process
- Physical evidence
What is a key part of creating value as part of positioning?
Creating a differential advantage. Difference in a valuable way. A customer benefit, not competitive advantage.
What are key points of a differential advantage?
- Must be one way in which your offer is the best for the customer and one reason why your customer comes to you first.
- Consistent message from the marketing mix
- Needs to sustainable and defensible
What are 4 reasons for repositioning?
- Markets change
- Markets mature
- Competitors react
- Macro-environemnt- PEST changes
What are some unexpected things that marketers have added to the concept of a product?
What are some unexpected things that marketers have added to the concept of a product? Organisations Persons Places Ideas
What is TQM?
Total quality management is an approach in which all of the company’s people are involved in constantly improving the quality of products, services and business processes.
What is a brand?
A name, term, sign, symbol or a combination of these, that identifies the products or service of one seller or group of sellers and differentiates them from those of competitors
What are the four service characteristics?
- intangibility
- inseparability
- perishability
- variability
What are the 4 stages of major brand strategy decisions?
Brand positioning
Brand name selection
Brand sponsorship
Brand development
What are the 4 ways a brand can develop?
Line extension: existing product category, existing brand name
Brand extension: new product category, existing brand name
Multibrands: existing product category, new brand name
New brands: new product category, new brand name
What is idea generation?
The systematic search for new product ideas.
The systematic search for new product ideas.
What are the 5 stages of a product life cycle?
- Product development
- Introduction
- Growth
- Maturity
- Decline
