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MKT exam 1
| Question | Answer |
|---|---|
| Profits= | Revenue-Costs |
| Marketing is the set of business activties that | • manage profitable customer relationships • satisfy customer needs |
| Market Offerings | Goods, Services, Experiences, etc |
| 3 players in marketing | Company, Consumers, Competitors |
| 4 decisions in marketing | Product, Price, Promotion, Place |
| Production Concept | Consumers favor products that are available and highly affordable. • Focus on improving production and distribution efficiency • “It’s right here and it’s affordable, so why not buy it?” |
| Product Concept | Consumers prefer products with the best features and performance (including quality). • Concentrate on making and improving products. • “It’s so special, it’s worth buying |
| Selling Concept | Marketing = Selling Things & Collecting Money! • People will buy more if aggressive sales techniques are used • “Ok, ok! You’ve convinced me. I’ll buy it” |
| Marketing Concept | Focuses on customer wants and needs to distinguish products • Integrates all organizational activities to satisfy these wants and needs • Achieves long-term goals by satisfying wants and needs legally and responsibly |
| Issue with Production Concept | Doesn’t consider if what is produced meets market needs |
| Issue with Product Concept | Product orientation may work sometimes, but usually firms must determine what customers want and then produce it |
| Issue with Selling Concept | Even the greatest sales force often cannot convince people to buy what is not needed or wanted |
| Marketing Myopia | Focus too much on products, productions or sales and not enough on customer needs |
| Mistakes that lead to marketing myopia | Firms define their business too narrowly • Assume customers will always want the same solution • Ignore changes in preferences, behaviors and technology |
| Societal Marketing Concept | Principles of social responsibility in marketing, organizations must satisfy customer needs and wants, Enhance individuals’ and society’s long-term best interests |
| Strategic planning | Managerial process of creating and maintaining a fit between the organization’s objectives & resources and the evolving marketing opportunities |
| Strategic planning goals | Long-run profitability & Growth |
| Business portfolio | Collection of business, brands or products that a company own |
| Strategic business units (SBUs) | One distinct business or product lines within that portfolio that can be planned separately |
| Portfolio Analysis | Evaluate the current business portfolio |
| Portfolio Planning | Shape the future portfolio |
| Growth share Matrix figures | Star, Question Mark, Cash Cow, Dog |
| Star | A fast-growing market leader • Strategy: Protect share by investing heavily |
| Question Mark | Rapid growth but poor share • Strategy: (1) Heavy investment (2) M&A or (3) Reduce investment |
| Cash Cow | Generate more cash than needed to maintain share • Strategy: Maintain share but allocate excess cash to other brands |
| Dog | Low potential & small market share • Strategy: (1) Harvest or (2) Divest |
| Portfolio Analysis helps decide whether to | Build – increase investment/share (Question Mark/Star) Hold – maintain the current position (probably Cash Cow) Harvest – reduce investment and maximize short-term cash (Except Star) Divest – Sell or discontinue (probably Dog/ Question Mark |
| Existing Product+ Market | Market Penetration Goal: Increase market share among current customers |
| Existing Market, New Product | Product Development Goal: Increase share of wallet among current cutomers |
| New Market, Existing Product | Market Development Goal: Increase Market Size |
| New Market, New Product | Diversification Goal: Gain market entry |
| Mass Marketing | Assumes that customers’ needs, wants, and demands are quite homogeneous. • In general, the company will only offer one type of product or one strategy |
| Customer Heterogeneity | All customers are different in terms of their need/want o Individual differences o Life experiences o Functional needs o Self-identify/image o Marketing activities |
| Ignoring customer heterogeneity is | the recipe for failure, at least in the long run |
| Marketers need to | Break down a large market into smaller groups • Understand the unique needs and preferences of each group |
| STP | Segmentation, Targeting, Positioning |
| Segmentation | “Slice” the market • Develop profiles of segments |
| Targeting | Evaluate segment attractiveness • Select target segments |
| Positioning | Deciding on a unique “position” in the consumer’s mind |
| Segment | A group of consumers that are similar on one or more dimensions • Similar (homogenous) within group, different (heterogeneous) between groups |
| Types of Segmentation | Geographic, Demographic, Psychographic, Behavioral |
| Geographic | • Urban/Rural- where they are • Region • State • Country • Time zone |
| Demographic | • Age- who they are • Gender • Income • Occupation • Family size • Education • Religion |
| Psychographic | • Values’ Goals- why they buy • Needs • Pain points • Interest • Lifestyles • Personality • Social status |
| Behavioral | • Usage level- how they buy • Purchase habit • Loyalty • Responsiveness • Spending habit |
| Lifestyle segmentation: | psychographic |
| Requirements for effective segmentation | Differentiable, Measurable, Substantial, Accessible, Actionable |
| Differentiable | Separation of customer types between segments Does the difference matter for marketing? |
| Measurable | Segment membership can be identified. characteristics, size and growth of segments can be measured Can we identify? |
| Substantial | Must be profitable to service the segment |
| Accessible | Segments can be (or will be) served by the company Can the company reach and serve the segment? |
| Actionable | The company can use a mix of the 4 P’s to target |
| More segments | Higher cost, higher revenue Increased complexity • Decrease segment size • Better match consumer needs • More price discrimination |
| Targeting | The process of evaluating segments and selecting one or more segments as the focus of certain marketing mix decisions (4P) |
| Why targeting matters | Prioritize customers who are more valuable or more likely to respond Avoid spending on unprofitable segments More relevant and consistent value • Tailor product and marketing strategies to specific needs • Improve customer experience and satisfaction |
| Targeting helps | firms spend less, focus better, and deliver more value to the customers that matter most. |
| How Do We Know a Segment Is Worth Targeting? | Customer needs, differentiation, firm fit, sustainable, identifiable and measurable, financially valuable, |
| Customer Needs | Does the segment really want what we offer? |
| Differentiation | Is it clearly different from competitors? |
| Firm fit | Do our strengths match their needs? |
| Sustainable | Can we serve and retain them over time? |
| Identifiable and measurable | Can we recognize and track this segment? |
| Financially valuable | Will targeting this segment be profitable |
| Target Market | Group of people or clients who share common needs or characteristics that a company decide to serve |
| Targeting Strategies | Undifferentiated, differentiated, concentrated, micro |
| Unidfferentiated | Mass marketing |
| Differentiated | Segmented marketing |
| Concentrated | Niche marketing |
| Micro | Individual/local level marketing |
| Choosing a trageting strategy | Consider Group of people or clients who share common needs or characteristics that a company decide to serve |
| Product | Customization, different features |
| Price | Price discrimination |
| Promotion | Advertising, media selection |
| Place | Distribution channels |
| Take sales from competitors | Gain market share |
| Take sales from the same company | Cannibalization |
| Positioning | The firm’s effort to create a distinct and valued position in consumers’ minds |
| Postion | The place a brand occupies in consumers’ minds relative to competing offerings |
| Steps in Effective Positioning | 1. Understand competitors 2. Identify important attributes 3. Choose your desired position |
| Pecreptual Product Map | A visual representation of how consumer perceive competing brands |
| Axes= important attributes | Healthy – Unhealthy Premium – Affordable Traditional - Innovative |
| Distance matters | Brands locate close together are perceived as more similar Brands farther apart are perceived as more different |
| Frame of reference | The category or set of alternative against which consumers compare a brand |
| Points of Parity | • What customers expect |
| Points of Difference | What makes the brand stand out |
| Needs | A state of deprivation |
| Wants | The sepcific way to satisfy needs |
| Demands | Wants for specific products or services |
| Consumer Decision Process | Recogniton of Need, Information Search, Evaluation of Alternatives, Purchase Decision, Post-Purchase Evaluate |
| Need recognition | Need or want for a particular product/service • Occurs when buyers are faced with an imbalance between actual and desired states • Triggered when consumer is exposed to internal of external stimulus |
| Internal Stimuli | Occurences the consumer experience |
| External Stimuli | Influences from an outside source |
| Information Search | Search information to help identify alternative products |
| Evaluation of Alternatives | • Weighing the pros and cons of each product • Attributes often compared: • Price • Performance/ features • Design/ brand image Everything depends on individual customer |
| Purchase Decision | • Consumer decide : • Whether to buy • What to buy • How to pay • When to buy • Could depend on promotions, urgency, or payment options |
| Post-Purchase Evaluation | Satisfied or dissatisfied? Why? • Update information • experience with the purchase • information on other products observed • Consumer’s feeling/evaluations after the sales is important Repeat purchase/ product review |
| Involvement | The amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. |
| Routine response behavior | Exhibited by consumers buying frequently purchased, low-cost goods and services |
| When involvement is high | Use extensive and informative promotion to target market |
| When involvement is low | Use in-store promotion Focus on package design and in-store displays Use coupons, BOGO, cents-off |
| Customer lifetime value | total revenue from a single customer form their first to final purchase |
| Customer equity | Total combined customer lifetime values of all the company’s customers |
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