Chapter 1 Overview of Strategic Marketing Flashcards
(160 cards)
1
Q
Marketing Orientation Equation
A
Satisfaction = Actual Value - Expectations
Value = Benefits - Costs
2
Q
Satisfaction Equation
A
Actual Value - Expectations
The price of the product must be higher than the customer’s expectations for them to be satisfied.
3
Q
Value Equation
A
Benefits - Costs
As long as we deliver more than we charge, or we give more benefit than the cost of the product or service, we will create value.
4
Q
Customer relationship management
A
the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
5
Q
Relationship building blocks
A
customer value and satisfaction
6
Q
Customer perceived value equation (inequality)
A
total customer perceived benefit > total customer perceived cost
6
Q
Customer perceived value equation (inequality)
A
total customer perceived benefit > total customer perceived cost
7
Q
Higher levels of customer satisfaction lead to
A
greater customer loyalty. Which in return results in better company performance.
8
Q
Customer evangelists
A
spread the word about their good experiences with a brand or product
9
Q
Measuring customer satisfaction (scale 1-10)
A
Net promoter score (NPS):
Promoter 9-10
Passive 7-8
Detractor 0-6
10
Q
Net promoter score (NPS) calculation
A
subtract detractor % from the promoter %
11
Q
NPS range
A
from -100 to 100
12
Q
New customer engagement marketing
A
social media
13
Q
Key to engagement marketing
A
to find ways to enter consumer conversations with engaging and relevant brand messages.
14
Q
Customer generated marketing
A
largely free for generation
The target audience has direct influence on shaping future ads, products, etc.
15
Q
Customer generated marketing pros and cons
A
Pros:
- cost savings
- idea generation
- builds trust
- can expand your audience
Cons:
- quantity vs. quality
- consumers have control over content
- maintaining authenticity is difficult
16
Q
Word-of-Mouth Marketing
A
when a consumer’s interest in a company’s product or service is reflected in their daily dialogues. Consumers say they trust word-of-mouth more than advertising.
17
Q
Partner relationship management
A
working closely with others inside and outside the company to jointly bring more value to customers.
18
Q
The Marketing Process
A
19
Q
Marketing focuses on
A
communicating availability in the right place and the right price.
20
Q
Marketing requires
A
promotion, communicating information that helps customers learn about the product and determine if the product will satisfy their needs.
21
Q
Marketing Mix activities
A
product, distribution, promotion, and pricing
22
Q
Marketing mix
A
they decide what type of each variable to use and how to coordinate the variables
23
Q
Marketing creates value through what?
A
the marketing mix
24
Marketing managers
strive to develop a marketing mix that matches the needs of customers in the target market. They must constantly monitor the competition and adapt their products, distribution, promotion, and pricing to foster long-term success.
25
Before marketers can develop an appropriate marketing mix, they must
collect in-depth, up-to-date information about customer needs.
- age, income, ethnicity, gender, and educational level
- preferences for product features
- attitudes towards competitor's products
- frequency with which they use the product
26
The product variable of the marketing mix deals with
researching customers' needs and wants and designing a product that satisfies them.
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A product could be considered a
bundle of satisfaction that provides value to the consumer.
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Product
can be a good, service, or an idea
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Good
a physical entity you can touch
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Service
the application of human and mechanical efforts to people or objects to provide intangible benefits to customers.
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Ideas
include concepts, philosophies, images, and issues
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Product variable
a product type that lets you sell a single product with different variations. Also involves creating or modifying brand names and packaging and may include decisions regarding warranty and repair services.
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Product variable decisions and related activities are important because
they directly relate to customers' needs and wants.
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To maintain and assortment of products that helps an organization achieve its goals, marketers must
develop new products, modify existing ones, and eliminate those that no longer satisfy enough buyers or that yield unacceptable profits.
35
To satisfy customers, products must
be available at the right time and in appropriate locations.
36
In dealing with the distribution variable, a. marketing manager
makes products available in the quantities desired to as many target-market customers as possible, keeping total inventory, transportation, and storage costs as efficient as possible.
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Supply chain management involves
maintaining a flow of products through physical distribution activities. This includes acquiring resources, inventory, and the interlinked networks that make products available to customers through purchasing, logistics, and operations.
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Why has supply chain management become very important to the success of online marketers?
Companies now can make their products available throughout the world without maintaining facilities in each country.
39
The promotion variable relates to
activities used to inform and persuade to create a desired response.
40
Promotion can
increase public awareness of the organization and of new or existing products. It can help to create a direct response by including a link to access a website or order a product.
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Promotional activities can
inform customers about product features. It isn't just advertising.
42
Personal selling
is needed for almost every type of product and provides the revenue that the firm must have to be successful.
43
Sales promotions
such as coupons and other incentives such as online discount codes keep sales dynamic.
44
Publicity
provides information, often in the mass media, is another form of promotion that firms try to manage,
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The promotion mix
focuses integrated marketing communication to inform and persuade consumers to purchase a product.
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Promotion can help
to sustain interest in established products that have been available for decades.
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The price variable
relates to decisions and actions associated with pricing objectives and policies and actual product prices.
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Price is a critical component of the marketing mix because
customers are concerned about the value obtained in an exchange.
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Price is often used as
a competitive tool and intense price competition sometimes leads to price wars.
50
Higher prices can be used competitively to establish
a product's premium image.
51
The marketing-mix variables are often viewed as
controllable because they can be modified. However, there are limits to how much marketing managers can alter them.
52
May prevent a manager from adjusting prices frequently or significantly
Economic conditions, competitive structure, and government regulaqtions
53
Product features cannot be altered very often because
making changes in the size, shape, and design of most tangible goods is expensive.
54
Promotional campaigns and methods used to distribute products ordinarily cannot
be rewritten or revamped overnight. But dramatic changes in price can be made at any time.
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The most flexible variable in the marketing mix
price
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An important element of managing long-term customer relationships and implementing the marketing concept.
Value
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Value
a customer's subjective assessment of benefits relative to costs in determining the worth of a product.
customer value = customer benefits - customer costs
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Consumers develop a concept of value through
the integration of their perception of product quality and financial sacrifice.
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From a company's perspective, there is a trade-off between
increasing the value offered to a customer and maximizing the profits from a transaction.
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Customer benefits
include anything a buyer receives in an exchange.
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Customers judge which type of accommodation offers the best value according to
the benefits they desire and their willingness and ability to pay for the costs associated with benefits.
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Customer costs
include anything a buyer must give up to obtain the benefits the product provides.
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The most obvious cost is
the monetary price of the product, but nonmonetary costs can be equally important in a customer's determination of value.
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Examples of nonmonetary costs
(2) The time and effort customers expend to find and purchase desired products. Another nonmonetary cost is risk.
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To reduce time and effort, a company can
increase product availability, thereby making it more convenient for buyers to purchase the firm's products.
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How can risk be reduced?
by offering good basic warranties or extended warranties for an additional charge. Another risk-reduction strategy is the offer of a 100 percent satisfaction guarantee.
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In developing marketing activities, it is important to recognize
that customers receive benefits based on their experiences. Each marketing activity has its own benefits and costs and must be adapted for its contribution to value. Even the ease of navigating a website can have tremendous impact on perceived value.
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The marketing mix can be used to enhance
perceptions of value.
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A product that demonstrates value usually has
a feature or an enhancement that provides benefits
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Promotional activities can help
to create image and prestige characteristics that customers consider in their assessment of a product's value.
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In some cases, value may be perceived simply as the
lowest price
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Examples of value to customers
- lowest cost
- ease
- features or enhancements
- fast and convenient
- availability or distribution
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Marketing also creates value through the building of
stakeholder relationships
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Individuals and organizations engage in marketing to
facilitate exchanges, the provision or transfer of goods, services, or ideas in return for something of value.
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We assume only that individuals and organizations expect to gain a reward in excess of
the costs incurred.
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For an exchange to take place, the four conditions that must exist are
1. two or more individuals, groups, or organizations must participate and each must possess something of value that the other party desires.
2. the exchange should provide a benefit or satisfaction to both parties involved in the transaction.
3. each party must have confidence in the promise of the "something of value" held by the other.
4. to build trust, the parties to the exchange must meet expectations.
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In the exchange process, the parties
communicate that each has something of value available to exchange.
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Marketing activities should attempt to
create and maintain satisfying exchange relationships.
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To maintain an exchange relationship,
buyers must be satisfied with the good, service, or idea obtained, and sellers must be satisfied with the financial reward or something else of value received.
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The customer relationship often endures over
an extended time period and repeat purchases are critical for the firm.
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A dissatisfied customer who lacks trust in the relationship
often searches for alternative organizations or products.
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Stakeholders
include those constituents who have a "stake", or claim, in some aspect of a company's products, operations, markets, industry, and outcomes; these include customers, employees, investors and shareholders, suppliers, governments, communities, competitors, and many others.
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While engaging in marketing activities,
the firm should be proactive and responsive to stakeholder concerns. This engagement has been found to increase financial performance.
84
Developing and maintaining favorable relations with stakeholders
is crucial to the long-term growth of an organization and its products. For example, well-satisfied employees directly improve customer satisfaction, and dependable suppliers are necessary to make quality products.
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Communities can be
positive contributors to a firm’s reputation, and in turn these communities provide opportunities for a firm to make social and economic contributions.
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Customers and competitors are often considered
to be core stakeholders in developing a marketing strategy.
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Marketing environment
includes competitive, economic, political, legal and regulatory, technological, and sociocultural forces. It surrounds the customer and affects the marketing mix. Their impact on value can be extensive as market changes can easily influence how stakeholders perceive certain products. They can create threats to marketers but also can generate opportunities for new products and new methods of reaching customers.
88
The forces of the marketing environment affect
a marketer's ability to facilitate value-driven marketing exchanges in three general ways:
1. they influence customers by affecting their lifestyles, standards of living, and preferences and needs for products.
2. marketing environment forces can determine whether and how a marketing manager can perform certain marketing activities.
3. environmental forces may shape a marketing manager’s decisions and actions by influencing buyers’ reactions to the firm’s marketing mix.
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Marketing environment forces can
fluctuate quickly and dramatically. Because these forces are closely interrelated, changes in one may cause changes in others.
90
Changes in the marketing environment
produce uncertainty for marketers and at times hurt marketing efforts, but they also create opportunities.
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Marketers who are alert to changes in environmental forces
not only can adjust to and influence these changes but can also capitalize on the opportunities such changes provide.
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The forces of the environment are subject to
far less control
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Firms frequently fail to attract customers with what they have to offer because
they define their business as “making a product” rather than as “helping potential customers satisfy their needs and wants.”
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The marketing concept is based on
the philosophy that consumers purchase the satisfaction and value they derive from a product, not the product itself. Companies that do not pursue such opportunities struggle to compete.
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According to the marketing concept,
an organization should try to provide products that satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals.
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Customer satisfaction
is the major focus of the marketing concept. To implement the marketing concept, an organization strives to determine what buyers want and uses this information to develop satisfying products. It focuses on customer analysis, competitor analysis, and integration of the firm’s resources to provide customer value and satisfaction, as well as to generate long-term profits.
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The marketing concept emphasizes
that marketing begins and ends with customers.
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Research has found a positive association between
customer satisfaction and shareholder value, and high levels of customer satisfaction also tend to attract and retain high-quality employees and managers.
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The marketing concept
It is a management philosophy guiding an organization’s overall activities. This philosophy affects all organizational activities, not just marketing. It is a strategic concept to achieve objectives.
100
A firm that adopts the marketing concept must
satisfy not only its customers’ objectives but also its own, or it will not stay in business long.
101
The overall objectives of a business usually relate to
profits, market share, sales, or probably a combination of all three. The marketing concept stresses that an organization can best achieve these objectives by being customer-oriented. Thus, implementing the marketing concept should benefit the organization as well as its customers.
102
It is important for marketers to consider
not only their current buyers’ needs but also the long-term needs of society. Striving to satisfy customers’ desires by sacrificing society’s long-term welfare is unacceptable.
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The market orientation perspective emphasizes
that marketers first need to determine what customers want and then produce those products rather than making the products first and then trying to persuade customers that they need them.
104
A market orientation requires
the “organizationwide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organizationwide responsiveness to it.”
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Market orientation is linked to
new product innovation by developing a strategic focus to explore and develop new products to serve target markets.
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All are important in developing and carrying out a market orientation
Top managers, marketing managers, nonmarketing managers (those in production, finance, human resources, and so on), and customers.
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The six values required by organizations striving to become more market oriented
Trust, openness, honoring promises, respect, collaboration, and listening.
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A market orientation should recognize
the need to create specific types of value-creating capabilities that enhance organizational performance.
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Market orientation involves
being responsive to ever-changing customer needs and wants.
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To implement the marketing concept,
a market-oriented organization must accept some general conditions and recognize and deal with several problems. Consequently, the marketing concept has yet to be fully accepted by all businesses.
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Management must first
establish an information system to discover customers’ real needs and then use the information to create satisfying products.
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The key in implementing the marketing concept
Listening and responding to consumers’ frustrations and appreciation
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To satisfy customers’ objectives as well as its own, a company also must
coordinate all of its activities. This may require restructuring its internal operations, including production, marketing, and other business functions. This requires the firm to adapt to a changing external environment, including changing customer expectations.
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Companies that monitor the external environment can often predict
major changes and adapt successfully.
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If marketing is not included in the organization’s top-level management,
a company could fail to address actual, and evolving, customer needs and desires. Implementing the marketing concept demands the support not only of top management but also of managers and staff at all levels of the organization.
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Customer relationship management
focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships.
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What should be the fundamental goal of every marketing strategy?
Achieving the full profit potential of each customer relationship. Marketing relationships with customers are the lifeblood of all businesses.
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At the most basic level, profits can be obtained through relationships in the following ways:
1. by acquiring new customers
2. by enhancing the profitability of existing customers
3. by extending the duration of customer relationships
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In addition to retaining customers, companies also should focus on
regaining and managing relationships with customers who have abandoned the firm.
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Implementing the marketing concept means
optimizing the exchange relationship, otherwise known as the relationship between a company’s financial investment in customer relationships and the return generated by customers’ loyalty and retention.
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Relationship marketing
refers to "long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges.” Relationship marketing continually deepens the buyer’s trust in the company, and as the customer’s confidence grows, this, in turn, increases the firm’s understanding of the customer’s needs. Buyers and marketers can thus enter into a close relationship in which both participate in the creation of value.
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Successful marketers respond to
customer needs and strive to increase value to buyers over time. Eventually, this interaction becomes a solid relationship that allows for cooperation and mutual dependency.
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Relationship marketing begins with
creating a product image and impression.
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Relationship marketing 1) strives to and 2) focuses on...
1. strives to build satisfying exchange relationships between buyers and sellers by gathering useful data at all customer contact points and analyzing that data to better understand customers’ needs, desires, and habits.
2. It focuses on building and using databases and leveraging technologies to identify strategies and methods that will maximize the lifetime value of each desirable customer to the company. It is imperative that marketers educate themselves about their customers’ expectations if they are to satisfy their needs; customer dissatisfaction will only lead to defection.
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To build long-term customer relationships, marketers are increasingly turning to
marketing research and data analytics. By increasing customer value over time, organizations try to retain and increase long-term profitability through customer loyalty.
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Ensuring customer satisfaction is not just a one-way street. Customers themselves contribute to the relationship by
their purchase behaviors and their use of resources to maximize customer satisfaction. For example, customers can do pre-purchase research and spend time experiencing or examining the product before purchasing it.
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Managing customer relationships requires
identifying patterns of buying behavior and using that information to focus on the most promising and profitable customers. Companies must be sensitive to customers’ requirements and desires and must establish communication to build their trust and loyalty.
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Customer lifetime value predicts
the net value (profit or loss) for the future relationship with the customer.
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A customer’s value over a lifetime represents
an intangible asset to a marketer that can be augmented by addressing the customer’s varying needs and preferences at different stages in his or her relationship with the firm. It is a key measurement that forecasts a customer’s lifetime economic contribution based on continued relationship marketing efforts.
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In general, when marketers focus on customers chosen for their lifetime value,
they earn higher profits in future periods than when they focus on customers selected for other reasons.
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The ability to identify individual customers allows marketers to
shift their focus from targeting groups of similar customers to increasing their share of an individual customer’s purchases. The emphasis changes from share of market to share of customer.
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Focusing on share of customer requires
recognizing that all customers have different needs and that not all customers weigh the value of a company equally.
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The most basic application of this idea is the 80/20 rule:
80 percent of business profits come from 20 percent of customers. The goal is to assess the worth of individual customers and thus estimate their lifetime value to the company.
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The concept of customer lifetime value may include not only an individual’s tendency to engage in purchases but also
his or her strong word-of-mouth communication about the company’s products.
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Customer lifetime value can be calculated by
taking the sum of the customer’s present value contributions to profit margins over a specific time frame. Although this is not an exact science, knowing a customer’s potential lifetime value can help marketers determine how best to allocate resources to marketing strategies to sustain that customer over a lifetime.
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Marketing is
the business function responsible for creating revenue to sustain the operations of the organization and to provide financial returns to investors. It is necessary to advance a global economy.
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Innovation in operations and products
drive business success and customer loyalty.
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Marketing activities help to
produce the profits that are essential to the survival of individual businesses.
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Without profits...
Without profits, businesses would find it difficult, if not impossible, to buy more raw materials, hire more employees, attract more capital, and create additional products that, in turn, make more profits. Without profits, marketers cannot continue to provide jobs and contribute to social causes.
140
Besides contributing to the well-being of our global economy, marketing activities help to improve
the quality of our lives.
141
Studying marketing allows us to
understand the importance of marketing to customers, organizations, and our economy. Thus, we can analyze marketing efforts that need improvement and how to attain that goal.
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Understanding marketing enables us to
evaluate corrective measures (such as laws, regulations, and industry guidelines) that could stop unfair, damaging, or unethical marketing practices.
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Knowledge of marketing helps you to
evaluate public policy toward marketing that could potentially affect economic well-being. Thus, understanding how marketing activities work can help you to be a better consumer, increase your ability to maximize value from purchases, and understand how marketing is a necessary function in all organizations.
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Technology, especially information technology, helps marketers to
understand and satisfy more customers than ever before.
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The global spread of mobile devices has enabled marketers and consumers to
forge new relationships that challenge how the traditional marketing-mix variables are implemented. Evolving software tools make it easy to create, store, share, and collaborate.
146
The sharing economy or the "gig economy"
The economic model that helps to create successful new-product concepts by harnessing peer-to-peer power and sharing underutilized resources. Firms that specialize in peer-to-peer services are using independent contractors to provide services. These contractors essentially run their own businesses and take on service jobs, or “gigs,” whenever they desire to earn income using their own resources.
147
Big data
Defined as massive data files that can be obtained from both structured and unstructured databases.
Marketers have new methods to store, communicate, and share information through advanced platforms that access what has been.
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The internet allows companies to
provide tremendous amounts of information about their products to consumers and to interact with them through email and websites as well as Instagram and Twitter.
149
The success of our economic system depends on
marketers whose values promote trust and cooperative relationships in which customers and other stakeholders are proactively engaged and their concerns are addressed through marketing activities.
150
Part of strategic planning and the implementation of marketing activities
Social responsibility and ethical conduct.
151
In the area of the natural environment, companies are increasingly embracing the notion of
Green marketing
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Green marketing
a strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment. Such initiatives not only reduce the negative impact that businesses have on the environment but also serve to enhance their reputations as sustainability concerns continue to grow.
153
By addressing concerns about the impact of marketing on society, a firm can
contribute to society through socially responsible activities as well as increase its financial performance.
154
Marketing positions are among the most secure positions because of
the need to manage customer relationships.
155
Without businesses,
the economic system that supports jobs and contributes to a standard of living would not exist.
156
Marketing
the process of creating, pricing, distributing, and promoting goods, services, and ideas to facilitate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment.
157
The essence of marketing is
to develop satisfying exchanges from which both customers and marketers benefit.
158
Organizations generally focus their marketing efforts on a specific group of customers called
a target market.
159
A target market is
the group of customers toward which a company directs a set of marketing efforts.
