Unit 1: Overview of the Marketing Concept Flashcards
Primary goal of marketing:
driving revenue growth for the organization
The industrial revolution, as companies were striving to move product creation into a more efficient form of mass production, created what we now refer to as the ____________ Orientation.
Production
As income levels in the U.S. and other parts of the world began to rise in the early 1920s, companies leaned into a ____________ Orientation as more active and aggressive tactics to convince consumers to part with hard-earned money were needed to drive the purchase transaction.
Sales
A _____________ Orientation, and _____________________, did not actually rise as a strategic function in the firm until around the 1950s and 1960s.
Market, marketing as a function
Importantly, the ____________ orientation has been shown to lower costs and raise profitability over time.
Market
Therefore, organizations became interested in understanding the holistic needs of customers so that they could create more reliable streams of revenue from satisfied customers who would purchase again in the future and refer others in their network to their preferred products and companies. As competition for customers has increased at a faster and faster rate along with customer expectations, firms must establish and maintain longer-term customer relationships.
what type of orientation?
Market orientation
The _______________ Orientation has emerged as customers have become more and more interested in purchasing from organizations that are striving to make their communities a better place (whether through the improvement of the environment, their employees, or specific causes) in addition to delivering a more than satisfactory product, service, or overall experience.
Societal Marketing
Each orientation can be summarized into a single question that defines a firm’s actions:
Production →
What can we make or do best?
Each orientation can be summarized into a single question that defines a firm’s actions:
Sales →
How can we sell more aggressively?
Each orientation can be summarized into a single question that defines a firm’s actions:
Marketing →
What do customers want and need?
Each orientation can be summarized into a single question that defines a firm’s actions:
Societal →
What do customers want/need and how can we benefit society?
Company website: “Our materials make more possible. When you commit to market-leading innovations, amazing things happen. That’s how we’ve continually enabled new possibilities.”
Product-oriented
Company profile: “Our products are sold in more than 35 markets around the world and our global independent sales force exceeds 2 million. You’ve got dreams. Whether it’s earning a little extra cash or making a full-time commitment, and a sales consultant opportunity offers the freedom, flexibility and, of course, the fun that you’ve been looking for.”
Sales-oriented
Mission statement: “Our vision: 100% slave-free chocolate. Not just our chocolate, but all chocolate worldwide. How we are going to achieve that? It won’t be easy. And it’s pretty complex. But we will accomplish it with the help of Tony’s roadmap. Our roadmap has 3 pillars and shows us the way to 100% slave-free chocolate: raise awareness, lead by example, inspire others to act.”
Societal
Company website: “Our support teams and account managers are some of the longest tenured and best trained you’ll find anywhere. You’ll routinely see the same faces each time you need assistance. With more than 50 offices around the country and 5 on-shore customer care centers, we are focused on being responsive. We think that building lasting relationships is more important than pushing products and we want to know what‘s important to you so we can deliver that – quickly and reliably – 24 x 7.”
Sales-oriented
aspiration decision
(which we can think about in terms of what value the product will represent to what kind of customer) specifies what the firm hopes to achieve in the market.
three steps of the aspiration decision:
(1) segmenting the market to identify possible groups to serve
(2) selecting or targeting a specific group or groups to address
(3) determining the desired positioning in the mind of the selected customers (that is, what should the potential customer be thinking about the product offering, relative to other options?)
The steps in working out the aspiration decision are popularly know as…
STP (segmenting, targeting, and positioning).
Once the aspiration decision has been made, the firm can begin to work out its action plan, the four…
Ps of the marketing mix.
(We use the term mix because the elements all need to work together to form a cohesive plan.)
Three elements of the ________ plan create value for the customers: the ________ offered, the communication to the customer about the product (__________), and the mechanisms to distribute the product to the customer (___________).
action, product, promotion, place
The final element of the mix is the ________ charged for the product. This is primarily the firm’s way to __________ some of the value it has created, generating revenue to fund operations and provide for profit.
price, capture
An organization needs to analyze the market in order to make good aspiration and action plan decisions. Usually this requires an analysis of the five Cs (__________, __________, __________, __________, and __________). To indicate its primacy for marketing decision making, [the exhibit] places the first C - ___________ - in the center of the circle under analysis.
customer, company, collaborators, competition, and context
customer
Which 3 components are included in the Marketing Strategy Framework?
5 Cs (situation analysis), STP (aspiration decisions), and 4 Ps (action plan decisions).
The Marketing Strategy Framework from the HBP reading identifies 3 customer outcomes as the “purpose of marketing
acquiring customers, retaining customers, and incenting customers to be brand ambassadors
buyer stickiness
resistance of customers to switching easily between one supplier of a good or service to another
In January 2014, T-Mobile, which confronted ______________ due to termination fees from other cell phone service providers, offered to pay up to $350 per line for termination fees when a customer switched from other cell phone service providers.
buyer stickiness
The _________ rate is 100% minus the customer ___________ percentage rate, which typically measures customers who discontinue a service or subscription within a specified time period.
churn, retention
coolhunting
context analysis
Observing and predicting the emergence of and changes in cultural trends, visible in clothing fashions, popular music, urban lifestyles, uses of technology, etc.
Place, the third P, refers to __________________, or where and how an organization decides to go to market
distribution channels
distribution channels
the network of individuals and organizations involved in the process of moving a product or service from the producer to the end user
positioning
(1) Defining a value proposition for the target segments. (2) Differentiating a product or service (or its brand) from others in the perception of customers.
A ______________ involves motivating customers to seek out your brand in an active process via tactics such as advertising, customer relationship management (CRM), and sales promotions.
pull strategy
A ____________ involves ensuring the customer is aware of your brand at the point of purchase via tactics such as direct selling to customers in showrooms, packaging designs, or point-of-sale displays.
push strategy
segmentation
A marketing planning process that involves dividing a broad target market into subsets or groups of customers who have common needs or characteristics.
Common Segmentation Variables:
Demographic: (ex. Coke Zero -> Age: young)
Geographic: (ex. Zipcar -> City dwellers and college students)
Psychographic/lifestyle: (ex. Zipcar -> Environmentally concerned)
Benefit sought: (ex. “Bugs” Burger Bug Killers -> Pest elimination, not control)
Usage: (ex. Marriott -> Long stay)
Effective Positioning Statements
- Target customer(s)
- Wants of the customer(s)
- Product type & category, as understood by customer
- Key benefit to be provided to target customer
People are more prone to buying if they view product as a __________.
need
As a rule, consumers attempt to maximize what is called __________________, that is, they want the greatest benefit (economic, functional, psychological) from the lowest possible cost (evaluating, obtaining, using, disposing) fo the product or service.
customer-perceived value (CPV)
Value = Benefit - Cost
“resonance focus” model
involves demonstrating a deep understanding of customer needs and differentiating or highlighting offerings on the few elements that matter most to target customers
“Creating the Demand Landscape”
This methodology involves tracking consumer behaviors through observation, diaries, journals, and interviews, and grouping them into distinct categories of goals, activities, and priorities.
This results in a comprehensive consumer demand landscape, which should also reveal how products, services, or brands intersect with customer activities. Each of these intersections is called a _____________.
touch point
customer relationship management (CRM)
The process of collecting and using the detailed information about individual customers at all of the touch points (intersections between customers’ lives and our products, services, or brands)
This information also enables companies to examine their customer bases in great detail, perform profitability analyses, and engage in a process called ____________________ to target fewer, but more lucrative, customers.
selective relationship management
Net Promoter Score (NPS)
popular approach that is used across industries categorizes customers into one of three groups - promoters, passives, and detractors - that allows employees throughout a company to see right away whether a customer experience was a success or a failure, and why.
Coordination
entails establishing structural mechanisms and processes that allow employees to improve their focus on the customer by harmonizing information & activities across units
Cooperation
means encouraging people in all parts of the company – through cultural means, incentives, and the allocation of power – to work together in the interest of customer needs.
Capability
means ensuring that enough people in the organization have the skills to deliver customer-focused solutions, as well as a defining a clear career path for employees with those skills
Connection
involves developing relationships with external partners to make increasing the value of solutions more cost effective
Building a customer centric culture requires:
Coordination
Cooperation
Capability
Connection
false loyalty
often a result of loyalty-promotions, high switching costs, or proprietary technology
customer lifetime value (CLV)
quantify the present value of the future income stream from a customer calculation is built on
(1) the margin (or profit) that a customer generates from their purchases with us
(2) over each period (typically a year, but could be measured monthly or quarterly)
(3) for the total periods of time they are customers with us (measured by their retention rate)
When we total all the lifetime values for all of our customers, we can call that our total customer lifetime value or ______________.
customer equity
Peloton equipment and service is famously expensive, but Peloton tries to always ensure that its key customers always receive the greatest amount of total benefits for the least amount of total costs.
Maximizing Customer Perceived Value
Due to Peloton’s deep understanding of their customers’ needs to enjoy and feel motivated to engage in their workouts, Peloton highlights the unique personalities of their elite trainers as an important point of differentiation from other exercise platforms.
Resonance-Focus Model
In order to gain a deeper understanding of their customers, last year Peloton tracked several hundred of the customers’ behaviors through observations, diaries, journals, and interviews so that they could group them into distinct categories of goals, activities, and priorities.
Creating the Demand Landscape
Peloton recognizes that an important intersection between its brand and its customers is the purchase/registration process (either online or by phone).
Touch Point
Peloton collects and uses detailed information about its individual customers through all of their touch points to guide the development of product offerings, services, programs, and messages.
Customer Relationship Management
With all of the information about its customer that Peloton collects, they are able to examine their customer base in great detail and perform profitability analyses to target fewer, but more lucrative, customers over time.
Selective Relationship Management
After the customer has an opportunity to experience the machine and classes, Peloton sends them a survey that asks, “How likely are you to recommend us to a friend or colleague?” in order to determine whether a customer experience was a success or failure.
Net Promoter Score
Peloton has established a rigorous recruiting and training system to ensure that its trainers are not just skilled on the equipment but can also be perceived as great DJs, coaches, and TV hosts so they can reliably create an outstanding customer experience.
Building a Customer-Centric Culture
One misstep that Peloton now acknowledges is when it tried to measure customer loyalty while it was a running a program that charged customers a $500 cancellation fee to create a high switching cost for customers interested in moving to a different exercise platform.
Creating False Loyalty, rather than True Loyalty
While Peloton has the expertise and materials to create a new (expensive) machine, it has decided to branch into more categories of non-machine-based exercise (e.g., Yoga) based on its understanding of its customers.
Plan brand extensions based on customer needs, not component similarities
3 basic steps of a customer centricity framework:
- Understand the customer
- Build a Customer-Centric Culture
- Serve the customer
Serve customers: make brand decisions subservient to decisions about ___________
customer relationships
Star customers:
get high value; provide high value
Vulnerable customers:
get low value; provide high value
Free Riders:
get high value; provide low value
Lost Causes:
get low value; provide low value
Marketing Plan Structure
Business Mission Statement
Situation or SWOT Analysis
Objectives
Marketing Strategy, Target Marketing Strategy, Marketing Mix (product, price, place, promotion)
Implementation, Evaluation, Control
The “Situation or SWOT Analysis” in our marketing plan is an outcome of the ______________ in the Framework for Marketing Strategy.
5 Cs Analysis
The “Objectives,” “Marketing Strategy,” and “Target Market Strategy” in our marketing plan are all outcomes of the ________________ set of decisions in the Framework for Marketing Strategy.
“Aspiration” (Segmentation, Targeting, & Positioning or STP)
The “Marketing Mix” in our marketing plan is an outcome of our _____________ set of decision in the Framework for Marketing Strategy.
“Action Plan” (4 Ps)
The “Implementation, Evaluation, Control” factors in our marketing plan are the ______________ in the Framework for Marketing Strategy that we want to be sure to measure and monitor.
Outcomes
A business is concerned with many day-to-day activities. Some of the most important of these activities are the planning and development of a product, its ability to communicate value, its pricing policy, and the distribution strategy. These activities are all a part of:
marketing
Earl is starting a new bank. Before the opening day, Earl had a meeting with all employees. He discussed their mission, defined objectives for the bank for the coming years, and shared who their target market is. He talked about their product offerings and where their future branches would be located. Earl is sharing the bank’s:
marketing plan
A firm that wants to develop a deeper understanding of its customers may optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. This is _____:
customer relationship management
