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1

marketing

art & science of creating value by designing & managing successful exchanges

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dual value creation

process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return

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ways offering can deliver value to customers

functional
monetary/economic
psychological

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ways offering can deliver value to company

revenue but also CLV, user base

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product orientation

-try to increase market share and lower price, build distribution network and increase profits
-often devolves into competing on 2 dimensions (price & quality

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sales orientation

make people want stuff
Ex. use of clever ads, jingles

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demand orientation

desires of customers should guide firm actions (find out what people want 1st, then make it)

-made possible w/ good research/data analytics
-BUT, stifles innovation, customers don't know what they want, all companies making the same thing & same price stifles competition

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competitor orientation

looking outward to competitors, using game theory and mgmt strategy

- takes eye off customer

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customer centricity

AKA market orientation, value marketing
- aligning ENTIRE co development and delivery of offering w/ *current and future* needs of select group of customers in order to max their LT financial value to firm

understand AND anticipate needs; focus marketing on more valuable members
-understand, attract, and keep most valuable customers

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customer centricity as an outside-in strategy

start w/ customer: their current & future needs, any pain points they have w/ current offering standards

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how is customer centricity different from demand orientation?

it also looks @ FUTURE needs of a select group of target customers (usually the most loyal customers)

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what customer centricity IS NOT

having CRM -- data does not automatically mean insights; you have to have insights AND understand needs to be customer centric

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strategic analysis

use 5 C's: customer, company, collaborators, competitors, context

-used to define target market

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5C's: company

development of distinctive and hard to imitate resources
SWOT analysis (SW = internal factors) (OT = external factors)

- resources of strategic biz unit managing offering enables fulfillment of customer needs

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5C's: customer

customer needs, key decision and value drivers, segmentation, CLV, targeting

-needs co aims to fulfill using offering (B2B or B2C)
- has influence on defining other 4 C's, changing this would change all the rest

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5C's: collaborators

partners/suppliers/distributors

leveraging strengths to reach common goals & create value for target customers

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5C's: competitors

all those aiming to fulfill same customer need (don't ignore substitutes!)

market space, positioning

positioning = how firm's offerings are perceived relative to competitor's offerings

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5C's: context

market potential, market attractiveness
P = political and legal
E = economic
S = social
T = technological

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OVP

3V model
-optimal value proposition - intersection of company, collaborator, and customer value; value delivery is *balanced* across 3 entities

- has to deliver value superior to competition

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tactical

4P's / marketing mix - defining attributes of actual offering that'll create market value (tools to deliver OVP)
product, price, promotion, place

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marketing plan steps

1. situational analysis = 5C's
2. strategic options/objectives = STP (segment, target, position)
3. Implementation & Eval = 4P's, metrics, forecasts and budgets

*GSTIC

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4P's: product

offering: product, service, platform
- key functional characteristics & perhaps includes brand

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4P's: price

how we communicate and extract value; price charged for benefits received

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4P's: promotion

how to communicate value to customers
- incentives (monetary or nonmonetary to enhance offering value) and communication to current and potential customers

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4P's: place

how we deliver offering; distribution
- channels thru which it's delivered to customer

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focus on the customer

customers want the *benefit*
not all customers are equal; focus on most valuable

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why rethink product-centric approach?

-technology: product lifecycles are way shorter, you can't enjoy innovation for as long
-global competition; increasingly borderless environments means more markets but also more competition
-customer power: customers can find cheaper options immediately

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value proposition

- defines value the offering aims to create for relevant market participants
- co's expectation of value it'll create; an ideal representation of benefits customer will receive from offering

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value relationships

creating and capturing value b/w co, customer, collaborators

(3 value relationships on co. side, 3 on competitive side)

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top-down approach to biz model

- start with customer analysis (ID need to be satisfied) or co resource analysis (to ID core competencies/strategic assets that could create competitive advantage)
- ID target market and create OVP

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bottom-up approach to biz model

- start with product development (deliberate R&D process, incorporating new advancements in tech)
- ID target customers and unmet needs

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when to update a biz model

when one of the 5C's changes, or when value proposition for relevant entities is no longer optimal

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GSTIC

- goal = ultimate criterion for success; ID focus and benchmarks
- strategy = 5C's; ID target market and value proposition
- tactics = 4P's
- implementation = define infrastructure, business processes and implementation schedule to outline logistics of strategy and tactics
- control = evaluating progress and analyzing change

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setting goals

- focus: monetary or strategic (not mutually exclusive)
- benchmarks: quantitative (relative or absolute) or temporal
- market objectives: more specific goals outlining changes in behavior of 5C's that'll enable ultimate co goal attainment

temporal goals, aka setting a timeline, is a key strategic decision bc strategy adopted to implement goals is often contingent on time horizon

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defining implementation

- biz infrastructure = functional/divisional teams, organizational structure
- biz processes = managing flow of info, goods, services, and $$; market planning, resource mgmt, mktg mix mgmt
- schedule = optimal timing and sequence to perform individual tasks to optimize effectiveness and cost-efficiency

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controls

- performance evaluation of outcomes of actions w/r/t goals set; ID any gaps and modify accordingly
- environmental analysis = make sure action plan is optimal w/r/t operating environment (look for new opportunities or potential threats)

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when to update market plan

- performance gaps (caused by inaccurate info or assumptions, logic flaws, implementation errors)
- change in target market (5 C's)

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creating company value

process of capturing value derived from market exchange in which co creates value for customers and collaborators

-monetary
-strategic (functional and psychological)

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managing profit by incr. sales rev

-best for LT profitability
-incr sales volume: managing customer adoption (market growth = customers new to category, or stealing market share) and customer usage (market penetration = focus on current customers)
-optimize price: consider customer price elasticity bc that affects sales volume change; "price" also includes monetary incentives, prices throughout retail channel

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managing profit by decr costs

- decr COGS, R&D, mktg, cost of capital
- achieve economies of scale (lower per-unit cost bc of greater manufacturing and sales volume), move up the learning curve (becoming more productive), achieve economies of scope (synergies among different offerings in portfolio)