Week 1 (Two Readings) Flashcards
The “first principles” of marketing strategy
Robert W. Palmatier & Andrew T. Crecelius
Pg. 5-26
Four first principles, or
underlying assumptions, that firms must address when designing and implementing an effective marketing strategy:
(1) All customers differ.
(2) All customers change.
(3) All competitors react.
(4) All resources are limited.
(1) All customers differ.
Marketers can apply tools such as
segmentation, targeting, and positioning (STP) to understand
how customers differ and develop specialize offerings and
messages to meet the needs of unique customers or segments.
(2) All customers change.
Due to intense global competition, products, markets, and customers are changing at a rapid pace, such that all customers change even faster
(3) All competitors react.
trends are accelerated by thriving competitive
rivalries across markets and countries; all competitors react more rapidly and decisively than ever
(4) All resources are limited.
Hmmm, duh?
Business practitioners
and academics borrowed two aspects of military strategy:
Decisions and actions could lead to differential advantages
In more recent decades, thought leaders have added facets, including the idea that a differential advantage must be ________ and the notion that a business strategy’s goal is to ______
sustainable
enhance firm performance
Overall then, marketing strategy has evolved to incorporate five facets:
(1) decisions and actions,
(2) differential advantages over competitors,
(3) sustainable advantages,
(4) a goal to enhance firm performance, and
(5) the customer perspective
The inconvenient yet inevitable conclusion is this:
No single marketing strategy
works for every firm, in every place, or for all time
First principle #1: All customers differ →
managing customer heterogeneity
-customers diverge wildly in their needs, perceptions, and behaviors
-
The most basic source of customer heterogeneity is _________, defined as each person’s consistent and stable manner of reacting to stimuli in a given domain
individual differences,
A second source of customer heterogeneity is ________, the set of events that define a person’s life and
drive his or her preferences, independent of individual differences.
life
experiences,
First principle #2: All customers change →
managing customer dynamics
All customer change as a fundamental assumption
of marketing
Why?
New technology can radically change customer preference
Sources of customer dynamics
Extant literature suggests three levels
of such sources:
1) Individual
2) Product market
3) Environment
1) Individual
Dramatic change can follow discrete life events. Divorce leads to less consumption of an exspouse’s preferred brands; a new job may require eating out
more
2) Product market
Customer responses to product/
service attributes and marketing efforts are contingent on
whether the offering is in its early, growth, maturity, or decline stage
3) Environment
(i.e., economy, government, culture, or industry)
For example, as the popularity of
green ideals grew, so did consumer responses to corporate
strategies that focus on broader societal goals such as
protecting natural resources
Firms that do not account for changing customer
preferences tend to fail
Word
customer lifetime value (CLV)
compute the present value of a customer’s future cash flows, according to customer-level metrics
for acquisition cost, ongoing marketing costs, ongoing margin, expected retention rate, and a discount rate applied to
future profits
First principle #3: All competitors react →
managing sustainable competitive advantage
All competitors react as a fundamental assumption
of marketing
SCA
Sustainable competitive advantage
First principle #4: All resources are limited →
managing resource trade-offs
All resources are limited as a fundamental
assumption of marketing
New areas of research in marketing strategy,
consumer behavior, and marketing analytics: the
future is bright
Jagdish Sheth
Marketing discipline was organized around three things:
1) around channels, which led to the institutional school;
2) around products which led to the commodity school;
3) and around functions or activities which is referred to as the functional school of marketing
Marketing as a discipline (definition, description, and
explanation) is about a ______ years old.
Modern marketing practice is about _____-years old
100
200
Starting in the sixties, marketing began to diverge into
three distinct subdisciplines:
Marketing Strategy,
Consumer Behavior,
and Marketing Analytics
There
are six new areas of research which look very promising
toward revitalization of marketing strategy
(1) Creating Value for Customers
(2) Brand Value
(3) Discipline of Selling
(4) Science of Pricing
(5) Reverse Marketing
(1) Creating Value for Customers
In other words, you can always win
customers if you offer a superior product with
a reasonable price in a customer-friendly service
(2) Brand Value
Brands
independent of the products are becoming more and
more real and it is resulting in earning royalties through
licensing the brand.
Example Disney
(3) Discipline of Selling
Selling is gaining respect in
marketing as a field of scientific inquiry
(4) Science of Pricing
As mentioned before, industry
leads in pricing research. It has resulted in concepts of
psychological pricing; price deals (two for one, for example); and dynamic pricing in many services such as the
airlines and the ridesharing services
(5) Reverse Marketing
It is also referred
to as demand-driven making (manufacturing) as
opposed to making the product, storing it in the warehouse, displaying at the retail outlet, and waiting for
customers to shop and buy it.
(6) Role of Marketing in Society
Interdependence
between marketing and society is the heart of research
in macro marketing including the impact of public policy on consumption (demand) and on production (supply)
Below are seven areas of new frontiers of research
- Focus on User Experiences
- Mindful Consumption
- Shared Consumption
- Cross-Cultural Consumption
- Low-Income Consumers
- Consumption of Free Goods
- Digital Firs
There are three types of “free” goods:
1) Social Media and search engines
2) parks and
recreation places; museums and public libraries; and of
course highways and freeways.
3) products and
services that are subsidized by the governments and the
world organizations. These include school meals, public
transit, non-thermal energy (solar, wind, electric) water,
and other municipal services
There are at least six new frontiers of research in marketing analytics.
- Text Mining
- Emoji Analytics
- Video Analytics
- Imaging Research
- Fuzzy Logic
- Forensic Research
Marketing strategy has evolved to incorporate:
1) Decisions and actions
2) Differential advantages, over competitors
3) Sustainable advantages
4) A goal to enhance firm performance
5) Customer perspective
