MK121 Exam 1 Concepts and Case Studies (Ch.1-5, 7-8) – Flashcards
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*Chapter 1- Marketing: Creating Customer Value and Engagement*
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Objective 1
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Define *marketing*
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The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.
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Outline the steps in the *marketing process*
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1. Understand the marketplace and customer needs and wants. 2. Design a customer-driven marketing strategy with the goal of getting 3. Construct a marketing program that actually delivers superior value 4. Building profitable customer relationships and creating customer delight. 5. Reap rewards of strong customer relationships by capturing value from customers.
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Objective 2
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The importance of understanding the marketplace and customers
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- Help companies to design want-satisfying market offerings - Build value-laden customer relationships by which companies could capture CLV and great share of customers - Result in increased long-term customer equity (CLV of all the company's customers)
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Identify the *five core marketplace concept*
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1. Needs, wants, and demands 2. Market offerings (product, services, and experiences) 3. Value and satisfaction 4. Exchange and relationships 5. Markets
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Objective 3
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Identify the key elements of a *customer-driven marketing strategy*
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1. Diving the market into segments of customers (*Market segmentation*) 2. Selecting which segments it will cultivate (*Target Marketing*) 3. Deciding how (the company) will serve targeted customers (*differentiation* and *positioning*)
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Discuss the marketing management orientations that guide marketing strategy
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1. Production concept 2. Product concept 3. Selling Concept 4. Marketing Concept 5. Societal Marketing Concept
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Discuss *customer relationship management (CRM)*
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- The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction - All about building the right relationships with the right customers - Key to building lasting relationships, aim to produce high *customer equity*
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Identify strategies for creating value for customers and capturing value from customers in return
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*Customer-engagement marketing*: - Aims to make a brand a meaningful part of consumer's conversations - Lives through direct and continuous customer involvement in shaping brand conversations, experience and community - Acquire profitable customers --> build relationships that grows the share of customers
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Describe the major trends and forces that are changing the marketing landscape in this age of relationships
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-*The digital age*: Online, mobile and social media marketing offer new ways to target customers more selectively and engage them deeply. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy. -*The Great Recession*: cause American consumers to rethink their buying priorities and bring their consumption back in line with their incomes. Challenges marketers to balance a brand's value proposition with current times while also enhancing its long-term equity. -*Non-profit-orginazations*: marketers to reexamine their ethical, societal environmental responsibilities
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*FedEx Case*
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Making Every Customer Experience Outstanding
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Starting with a Customer Need
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*Fred Smith* (FedEx's founder and current chairman and CEO) - Undergraduate at Yale, paying his way through school working as a charter pilot - Crossed paths with corporate pilots and saw an emerging trend *Need*: Big business had difficulty getting computer/high-tech components delivered to the right places quickly *Wants*: Repairing these machinery of which is finding their way into the business world. *Demands*: Services for regional or national overnight shipping. - After college and a tour of duty in the Marine Corps, FedEx Corporation was born (w/ *8 aircraft* providing *over-night delivery services* to *35 cities*).
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Putting the Customer First
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FedEx was built on a foundation of *obsessive customer focus*. 1. FedEx's first positioning slogan, "*When it absolutely, positively has to be there overnight.*", had the company build an infrastructure that gives it complete control over the entire shipping process (to ensure it could deliver on that promise) 2. FedEx also used *unconventional "multiform, sequentially numbered" labels* that could be machine-read, in order to communicate shipping information on a real-time basis. This allowed FedEx to *reliably move packages from one city to another in so short a time*, of which gives the company the edge over its competitors (of which are not utilising these tracking systems).
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The Purple Promise
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The customer-driven approach led to the development of the *"purple promise"* - A promise committed to memory by every FedEx employee that they will makes *"every FedEx experience outstanding"*, requiring the *"highest quality service"* from each and one of them. - The promise goes far beyond their traditional service and requires all employees *of all positions* to recognise that what they do impacts how customers perceive the FedEx brand.
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"Leaning tower of packages"
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- *Company satisfaction surveys* show that a majority customer group (Frisbees- customers that steps in, drop off packages, then steps out) were not entirely satisfied with the company's service. - FedEx quickly commissioned a study that finds the majority group only takes up 10% of its drop-off customers. The other 90% are split fairly even into three different behavioural groups. - One of the groups, called *"confirmers"*, are usually *"prepared"* and *"uneasy"*(fearing something would go wrong). - Studies show the latter characteristics is further accentuated with a visual que of *"leaning tower of packages"* stacked behind the counters of FedEx service centres.
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Customer-Centric Solution
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The Purple Promise drove the company to make a *system-wide decision*: 1. Built a wall with five pre-sorted windows behind the counters 2. Employees were trained to thank the customer, then slip the package through the corresponding window. For the confirmers, this organised and precise visual que shows the package is safe and on its way.
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The Purple Promise Today
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- Maintained a customer-centric culture by *embracing social media*. - The customer service function at FedEx often pursues the goal of *delighting customers through social channels* (including social networks) - *More action than talk*; engages them and helps solve their problems
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Chinks in the Armor
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- Viral videos of FedEx employees in Maryland and Philadelphia mishandling packages and stealing packages respectively. - Similar bad press for UPS, but FedEx took responsibility when it needed to by firing offending employees and made restitution for damages. - Today, the company continues to focus on its goal by putting their customers first.
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*Chapter 2- Company and Marketing Strategy: Partnering to Build Customer Engagement, Value and Relationships*
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Explain company-wide strategic planning and its four steps
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1. defining the company's mission (should be market oriented, realistic specific, motivating and consistent) 2. setting supporting objectives and goals 3. designing a business portfolio 4. developing functional plans (detailed marketing plans in line with the company-wide plan)
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Discuss how to design business portfolios and develop growth strategies
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- Produce one that best fits the firm's strengths and weaknesses to opportunities in the environment - Analyse and adjust its current business portfolio, *develop growth* and *downsizing* strategies for adjusting the future portfolio
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Explain marketing's role in strategic planning
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-Provides a marketing concept philosophy and inputs regarding *attractive* market opportunities (measured by size and ability to pay) -Design strategies for reaching unit's objectives and helps to carry them out profitably (within individual business units).
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How marketing works with its partners to create and deliver customer value
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- Marketers alone cannot produce superior value for customers. - Must practice partner relationship management, working closely with partners in other departments to form an effective *value chain* that serve the customer.
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Describe the elements of a *customer value-driven marketing strategy*...
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4 steps of a Customer-Driven Marketing Plan 1. *Market segmentation*: divide big market into actionable segments 2. *Targeting*: evaluate attractiveness of segments; pursue/ enter best 3. *Differentiation*: give market offering superior customer value 4. *Positioning*: create clear, distinctive memorable place in minds of target customers it then designs an integrated marketing mix...
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...and mix, and the forces that influence it
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The marketing mix consists of... 1. *Product*: what is it? 2. *Price*: what is the prices vs the cost? 3. *Place*: where is it distributed? 4. *Promotion*: events, advertisements, PR ...to produce the response it wants in the target market.
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List the *marketing management functions*, including the elements of a *marketing plan*
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1. Marketing analysis 2. Planning 3. Implementation 4. Control 1. Executive summary 2. Current Marketing situation (SW) 3. Threats and Opportunities (OT) 4. Objectives and Issues 5. Marketing Strategies 6. Action Programs 7. Budget 8. Controls
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Discuss the importance of measuring and managing marketing return on investment
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- In a tighter economy, marketers must ensure that marketing dollars are being well spent (adding value in line with firm's costs) - *Customer-centered measures* of marketing impact increasingly used as a key input into their strategic decision making.
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Objective 6 (from syllabus)
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Discuss environmental factors that may make it harder or easier to reach intended audience
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- Company have to coordinate closely with *supply chain partners* in keeping environment *promises* and creating relative *value*. - Ethical breaches in the supply chain leads to bad PR (MacDonalds selling affordable trash) - One of Starbuck's pillars of success is to show *social responsibility* (w/ fair trade coffee beans)
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*Chapter 3- Analyzing the Marketing Environment*
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Describe the environmental forces that affect the company's ability to serve its customers...
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*Microenvironment* consists of: - actors close to the company that combine to form its value delivery network or that affect its ability to serve its customers - the company, suppliers, customers, competitors... *Intermediaries*: market researchers, media folks, etc. *Publics*: anyone who has an interest in or an impact on a company's business practices and objectives (lobbyists, investors, etc.)
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...(continued)
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*Macroenvironment* consists of larger societal forces that affect the entire microenvironment. 1. Demographic 2. Economic 3. Natural 4. Technological 5. Political/Social 6. Cultural
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Explain how changes in the demographic and economic environments affect marketing decisions.
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*Demographic*: show changes in age structure, family structure, family profiles, geographic population shifts, increasing diversity... (Movement to places where housing is affordable) *Economic*: factors that affect consumer buying power and spending patterns (Unemployment, cost of housing, etc.) *Applies to both*- Distribution of income: rich getting richer, shrunk middle class, poor remained poor
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Identify the major trends in the firm's natural and technological environments.
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*Natural*: natural resources that are needed as inputs by marketing or that are affect by marketing activities 3 major trends: 1. Shortages of certain raw materials 2. Higher pollution levels 3. Gov. intervention in natural resource management *Technological*: Forces that create new technologies, creating new product and market opportunities. -This environment becomes a challenge when companies fail to keep up with tech change (will miss out on new product/ marketing opportunities)
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Explain the key changes in the political and cultural environment.
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*Political*: Laws, agencies, and groups that influence or limit marketing actions -Increasing legislation regulating business -Strong government agency enforcement -Greater emphasis on ethics and social responsibility *Cultural*: institutions and forces that affect a society's values, perceptions, preferences, and behaviours. -Trends towards new technology-enabled communication -Lessening trust of institution -Increasing patriotism -Greater appreciation for nature -Changing spiritualism, the search for meaningful/enduring values
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Discuss how companies can react to the marketing environment.
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Companies could: -Passively accept the marketing environment as an uncontrollable element, taking a reactive stance (adapt, avoid threats, take advantage as they arise) -or preferably take a proactive stance (working to change the environment)
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*Sony Case*
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Battling the Marketing Environment's "Perfect Storm"
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*Chapter 4- Managing Marketing Information to Gain Customer Insights*
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Explain the importance of information in gaining insights about the marketplace and customers
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- Give companies a *complete understanding of the marketplace and consumer needs and wants*. (the beginning of a marketing process) - These consumer information turnt customer insights *produce superior value for its customer*. - Info collected from the marketplace (competitors, resellers, etc.) makes market research not only an input for making *better decisions*, but also an important *strategic asset/ marketing tool*.
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Define the *marketing information system (MIS)* and discuss its parts
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People and procedures dedicated to: 1. Assessing information need 2. Developing the needed information (from *internal databases* and *Marketing intelligence activities -; Market research*) 3. Helping decision makers to use the information to generate and validate actionable customer and market insights
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Outline the steps in the *marketing research process*
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1. *Defining the problem and setting the research objectives:* exploratory, descriptive or casual research 2. *Developing a research plan:* for collecting data from primary/secondary sources 3. *Implementing the marketing research plan:* gathering, processing and analysing the info 4. *Interpreting and reporting the findings:* apply the info and provides statistical models to develop more rigorous findings
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Explain how companies analyze and use marketing information
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Companies acquired or developed special software and analysis technique called... *Customer relationship management (CRM)*: integrate, analyse and apply the mountains of individual customer and market place data contained in their databases.
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Discuss the special issues some marketing researchers face including public policy and ethics issues
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Not-for-profit and international organizations need to *act responsibly concerning major public policy and ethical issues* surround marketing research: -Issues of intrusion on consumer privacy -Misuse of research findings
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*Chapter 5- Consumer Markets and Buyer Behavior*
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Define the *consumer market*
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Consists of all individuals and households that buy or acquire goods and services for personal consumption
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Construct a simple *model of consumer buyer behaviour*
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*Stimulus-response model* 1. *Marketing stimuli* and other major forces (the four Ps; economic, technological, political...) 2. Enter the consumer's *"Black Box"*, these inputs... 3. Produce *buyer responses* such as... observable buyer responses: -brand choice -purchase location and timing -brand engagement -relationship behaviour
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Name the four major factors that influence *consumer buyer behaviour*
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1. *Cultural*: Age, Ethnicity, Subculture etc. 2. *Social*: Reference groups, professional association 3. *Personal*: Lifestyle 4. *Psychological*: motivation, perception, learning, beliefs and attitudes Many cannot be influenced but useful in identifying target market.
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List and define the major types of *buying decision behaviour*
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*Dissonance-reducing behaviour*: Consumer highly involved, see little difference among brands *Habitual buying behaviour*: low involvement, little significant brand difference *Variety-seeking buying behaviour*: low involvement, significant brand difference
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The stages in the *buyer decision process*
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1. *Need recognition*: recognises a problem or need that could be satisfied by a product 2. *Information search*: aroused to seek more information 3. *Evaluation of alternative*: information is used to evaluate brands in the choice set 4. *Purchase decision* 5. *Post-purchase behaviour*: takes action based on satisfaction or dissatisfaction
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Describe the *adoption and diffusion process* for new products
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1. Awareness 2. Interest 3. Evaluation 4. Trial 5. Adoption Consumer respond at different rates... Innovators, Early adopters, Early mainstream, Late mainstream, Lagging adopters ...requiring different marketing approach.
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Characteristics that influence the rate of adoption
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1. Relative advantage 2. Compatibility 3. Complexity 4. Divisibility 5. Communicability
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*Chapter 7- Customer-Driven Marketing Strategy: Creating Value for Target Customers*
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Define the major steps in designing a *customer-driven marketing strategy*
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4 steps of a Customer-Driven Marketing Plan 1. *Market segmentation*: divide big market into actionable segments 2. *Targeting*: evaluate attractiveness of segments; pursue/ enter best 3. *Differentiation*: give market offering superior customer value 4. *Positioning*: create clear, distinctive memorable place in minds of target customers
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List and discuss the major bases for segmenting consumer and business markets
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*Geographic*: Nations regions, states, cities, neighbourhoods, etc. *Demographic*: Age, gender, religion, income, ethnicity, occupation, lifecycle stage *Psychographic*: Social class, lifestyle, personality, characteristics *Behavioral*: Uses and responses to a product - consumer knowledge, attitude, loyalty status, usage rates (frequency)... - occasion (when people tend to buy) - benefit (depends on what consumers seek from a product)
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Explain how companies identify attractive market segments...
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Evaluates each segment's: - Size and growth characteristics - Structural attractiveness - Compatibility with company's objectives and resources ...as it must be... - Measurable - Accessible - Substantial - Differentiable - Actionable ...to be effective.
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and choose a *market-targeting strategy*
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*Mass*: Broad, undifferentiated marketing (All customers get same info) *Differentiated*: Different offers for different segments. *Concentrated/ Niche*: Serve one or a few segments deeply. *Micromarketing*: Specific to individuals and locations. One-to-one; regional, etc.
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Discuss how companies differentiate and position their products for maximum competitive advantage
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1. Identifying a set of possible differentiations that create competitive advantage 2. Choosing advantages on which to build a position 3. Selecting an overall positioning strategy The brand's full positioning is called the *value proposition*- the full mix of benefits on which the brand is positioned.
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*Marketing Ethics*: Unrealistic Bodies
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*Dove Case*
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Building Customer Relationships Everywhere, One Gender at a Time
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*Chapter 8- Product, Services, and Brands: Building Customer Value*
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Through key terms only
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*Target Case*
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Where Store Brands Offer More Than Low Prices
