Exam 1 Flashcards
What is Marketing Engineering
A systematic approach to harness data and knowledge to drive effective marketing decision making and implementation through a technology enabled and model supported interactive decision process.
Customer Value Measurement Approaches
Objective Measures of Value
Perceptual Measures of Value
Behavioral Measures of Value
Objective Measures of Value
The hypothetical price for a supplier’s offering at which a particular customer would be at overall economic break-even relative to the best alternative available to that customer for performing a set of functions.
This approach to measuring customer value is typically useful in B2B situations.
Value = benefits - price
Value-in-Use
The price of the product that would equalize the overall costs and benefits to the user of utilizing the product (rather than alternative) in the user’s specific circumstance.
Perceptual Measures of Value
Unconstrained and constrained methods.
unconstrained - focus groups, surveys, ratings
Constrained - conjoint analysis (widely used - field research survey to gain overall ratings for set of potential offerings), benchmarking,
Behavioral Measures of Value
1 - observe choice
2 - capture related characteristics data
3 - link 1 and 2 by using choice model
choice models- the model predicts customers probabilities of purchase and reveals importance weights of characteristics
Customer Lifetime Value
Focuses on long-term relationship, not a single transaction
includes both the economic value and the relationship value associated with a customer.
CLV = (p1 X R1 – C1) + (p2 X R2 – C2) X d +….+ (pn X Rn – Cn) X dn-1.
Where:
R = Gross revenue from that customer
C = Marketing expenditure on that customer
d = 1/(1+r), where r is the discount rate and n is the anticipated lifetime of the customer.
If R and C are constant across periods and there is an initial acquisition cost A, then:
CLV = (R – C)/(1 – p + r) - A
Market Segment
group of actual or potential customers who can be expected to respond in a similar way to a product or service offering
Market Segmentation
process subdividing of a market into distinct subsets of customers.
the segments have similar needs or behave in a certain way.
Primary characteristics of segments
bases - characteristics that tell us why segments differ (needs, preferences)
Descriptors - characteristics that help us find and reach segments (demographics, behavior, etc)
Managing Segmentation
Define segmentation problem
Conduct market research
Build segmentation database
Define market segments
Describe market segments
Implement results!
Targeting
5 steps
1- Create database of customer responses (choices) based either on
test mailing to a sample of prospects/customers, or historical data
of past customer purchases.
2 - Use models such as regression, RFM, and Logit to assess the
impact of independent variables (drivers) of customer response.
3- Score each customer/prospect based on the drivers identified in
Step 2 - the higher the score, the more likely is the predicted
response.
4 - Classify customers into deciles (or smaller groupings) based
on their scores.
5 - Based on profitability analyses, determine the top deciles to which
a marketing action (e.g., mailing of brochure) will be targeted.
Differentiation (What you do to an offering)
Creating tangible or intangible differences on one or more attributes between a focal offering and its main competitors.
Positioning (What you try to do to the minds of customers)
A set of strategies a firm develops to differentiate its offering in the minds of its target customers. Successful positioning will result in the offering occupying a distinct, important, and sustainable position in the minds of the target customers.
Mapping
Techniques that enable managers to develop differentiation and positioning strategies by helping them to visualize the competitive structure of their markets as perceived by their customers. The maps are derived from data of customer perceptions of existing products (and new concepts) along various attributes, perceptions of similarities between brands, preferences for the products, or measures of behavioral response of customers toward the products.
