Marketing Strategy Final

The behavioral perspective

- 1st movers will find less resistance among potential customers - The process by which consumers learn about brands & form preferences plays an important role in creating a 1st mover advantage - 1st movers may be able to influence how attributes are valued - Define the ideal attribute combinations and influence consumers preferences - being 1st in the market suggest a higher degree of consumer - awareness - product trial - ongoing purchase behavior to minimize risk & information costs 1st movers are assumed to: 1. offer higher quality products 2. choose correct positioning 3. pursue right competitive strategy

Typology of strategic types

- Prospectors: excel in new product & market development - Defenders: engage little or no new product & market development - Analyzers: intermediate type with fewer & slower product & market changes

Process for managing sustainable competitive advantage

1. Acquisition, Expansion, and Retention Strategy Grid 2. Key Trends: Managers should account for key environmental trends 3. Brand, Offering, & Relationship Equity Grid: Identify marketing objectives, relative advantages, and sources of sustainability

Marketing Communication Formats

1. Advertising: businesses use this to persuade customers to act, think, or recognize 2. Sales promotion: action firm takes to promote sales, usage, or recognition of its products and services 3. Public relations: strategic communication process that builds mutually beneficial relationships between organizations and their public 4. Events and experiential marketing: creating positive experiences for customers through events that support face-to-face contacts between companies and customers 5.Direct marketing: funnels information about goods and services straight to customers 6. Indirect marketing: attempts to overcome the one sided limitations of direct marketing by incorporating feedback from and decisions by a customer into what is being advertising 7. Word of mouth: The dissemination of information by individual customers to build a firm's or product's reputation and generate sales 8. Personal selling: occurs when members of the firm or agents engage with customers to advance the firm's interests

3 Kinds of Value Propositions

1. All Benefits: All benefits customers receive from market offering. Pitfall: Benefit assertion 2. Favorable Points of difference: All favorable points of difference a market offering has relative to the next best alternative. Pitfall: Value presumption: assumes points of differences are valuable for customers 3. Resonating Focus: The one or two points of difference (and perhaps a point of parity) whose improvement will deliver the greatest value to the customer for the foreseeable future. Pitfall: requires extensive customer value research

Customer centric accounting process

1. BOR equities are often the primary source of a firm's SCA 2. To make optimal decisions, a firm needs a framework that measures, track, and reports customer equities 3. Effective customer equity systems represent an SCA in their own right

6 Criteria for Ideal Target Segment

1. Based on customer needs - customer care 2. Different than other segments - little crossover competition 3. Differences match firm's competencies - firm can execute within resource constraints 4. Sustainable - can keep customers from switching to the competition 5. Customers are identifiable - can find targeted customers 6. Financially valuable - in long-term

Cumulative advantage imperatives

1. Become popular early 2. Design for habit 3. Innovation inside the brand 4. Keep communication simple

Innovation as SCA

1. Change what the firm offers 2. Change who the customer is 3. Change how you sell to customers 4. Change where to sell to customers

Segmentation Techniques

1. Cluster Analysis: refers to the primary, data-driven partitioning technique that can identify and classify a large set of heterogeneous consumers or companies into a few homogeneous segments. 2. Factor Analysis: reducing potential customer preferences into smaller sets of independent factors to remove a potential source of bias by combining similar questions The Multiple Discriminant Analysis (MDA): reducing potential customer preferences into smaller sets of independent factors to remove a potential source of bias by combining similar questions.

Relationship dimensions

1. Commitment: enduring desire to maintain a valued relationship 2. Trust: confidence in a relationship partner's reliability and integrity 3. Gratitude: prompts need for reciprocation 4. Reciprocation: generates feelings of pleasure

Relationship Management Factors that Influence Relationship Quality

1. Conflict 2. Seller Expertise 3. Communication 4. Relationship investments 5. Similarity 6. Relationship benefits 7. Dependence on Seller 8. Interaction Frequency 9. Relationship Duration

4 Mechanisms of Benefits from Relationship Equitity

1. Corporative Benefits: Complementary actions btw partners to achieve a mutual goal; cooperation increases customers' flexibility & adaptiveness to sellers' requests for changes, information, or reciprocation 2. Relational Loyalty: the likelihood that the customer provides the seller benefits in the exchange process due to their relational attitudes and ties; customers perceive less risk when dealing with partners they trust, thus increasing loyalty 3. WOM: Reflecting the likelihood that a customer comments positively about a seller to others; indicator of loyalty 4. Empathetic behaviors: Greater likelihood of being influenced by perceptions of the seller's position

Lifecycle approach

1. Customer lifecycle: attempts to capture how individuals typically change as they age and reach common age-related milestones 2. Product lifecycle: captures typical user experience and industry developmental effects as the product category matures (introduction, growth, maturity, decline) 3. Industry lifecycle: early establishment, innovation stage, maturity, and decline stage Advantages to approach: easy to use

6 Steps customers pass through to be persuaded by different communication formats (think-act-feel model)

1. Customer must be exposed to the communications strategy 2. The message needs to capture customers' attention 3. The customer must understand the desired marketing message 4. The customer needs to develop favorable attitudes towards the message 5. The customer must generate intentions to act 6. The person then must actually behave in the desired way

3 Conditions for Sustainable Positioning Advantage

1. Customer must continue to perceive a consistent difference in important attributes 2. Differentiation should be the direct consequence of a capability gap (entry barriers) that separates the pioneer from later entrants 3. The durability of competitive advantage is contingent upon + attributes of the 1st mover's offering

New Customer Relationship Management Assumptions

1. Customer relationships are not independent but interact on firm & customer level 2. The cost of relationship maintenance can be significant and not all customers are profitable 3. Marriage is just one form of relationship & sometimes divorce is the better option 4. Customer relationship management is a 2-way street with strategic behavior on both sided 5. Customer relationship valuation is multifaceted, complex, & difficult to perform 6. Churn prevention might not be optimal, especially within a product portfolio

Old Customer Relationship Management Assumptions

1. Customer relationships are stand-alone investments that increase in revenue & profit over time 2. Customer relationships are like loving marriages in which both parties live happily ever after 3. Customer relationship valuation is easy & linear, accounting for acquisition, development, & retention

3 Conditions for Implementing and Integrating the 4 Principles

1. Customers must care about what the SCAA offers 2. The firm must do "it" better than competitors 3. The SCA must be hard to duplicate

Moderators of Preemption Factors in First Mover Market

1. Demand uncertainty & preemptive investment 2. Product characteristics 3. Characteristics of technological innovation 4. Technological change and discontinuities

Moderators of Economic Factors in First-Mover Market

1. Demand uncertainty and entry scale 2. Ratio of minimum efficient scale to size of market 3. Advertising intensity 4. Response time 5. Scope Economies

Steps for building equity

1. Develop an offering or offering portfolio that provides customers with the largest relative advantage among all competitors in the market 2. Offering equity requires a firm to segment, target, & position that new offering in a way that accounts for both people- & product-based diffusion factors 3. Firms need to manage the customer migrations from innovators & early adopters to early majority stages

Building Relationship Equity

1. Developing a strong relationship foundation 2. Implementing targeted relationship marketing and loyalty programs: -Social RM Programs: use social engagement like meals and sporting events to convey the customer's special status -Structural RM Programs: provide investments that customers might not make themselves; generally increase customer's efficiency, convenience, or productivity, creating a hard to quantify but substantial customer benefit -Financial RM Programs: provide economic benefits, in the form of special discounts, giveaways, free shipping, or extended payment terms that ultimately tend to offer little relative advantage because competitors can easily match them

Factors Underlying Cost and Differentiation Advantages

1. Economic factors: cost advantages - Scale & experience economies - Marketing cost asymmetries 2.Preemption factors: provide basis to achieve absolute cost advantage - Cost asymmetries in factor inputs - Spatial preemption 3. Technological factors: cost/ differentiation advantage - Product & process innovations - Organizational innovations 4. Behavioral factors: differentiation advantage - Switching costs - Prototypicality & product specific reputational advantages - Communication good effects - Information ad consumption experience asymmetries

Perspectives on First Mover Advantage

1. Economic-Analytical Perspective: Economist generally approach this phenomenon from the perspective of sequential market entry. 2. The Behavioral Perspective: The behavioral perspective explains 1st-mover advantage at the product or brand level.

Relationship Dynamics and Lifecycle Stages

1. Exploratory/Early stage: limited confidence in partner's ability & trustworthiness; willingness to explore relationship; determine if potential benefits exceed those available from alternative options 2. Developing stage: escalation of reciprocated transactions & increased affective attachment produce trust, commitment, & satisfaction 3. Maturity/Maintaining stage: calculative trust gets replaced by knowledge- & affective-based trust, communication, & other relational norms that reinforce common goals 4. Decline/Recovery stage: in response to specific events or passive neglect (failure investments)

7 Dangerous Misconceptions of Transient Advantage

1. First Mover trap: in most industries doesn't last 2. Superiority trap: almost any early stage technology, process, or product won ́t be as effective as something that ́s been honed & polished for years 3. Quality trap: sick with level of quality higher than customers are prepared to pay for 4. Hostage-Resources trap: sticking to the old lines of business; no incentives to shift resources to new ventures 5. White-Space Trap: opportunities don ́t fit their structure; firms often simply forgo them instead of making the effort to reorganize 6. Empire Building Trap: belief the ore assets & employees you manage, the better 7. Sporadic-Innovation Trap: many companies do not have a pipeline of new advantages

Factors that leverage RM delivery effectiveness

1. Free will: higher levels of gratitude result from RM investments when the customer perceives the investments as acts of free will rather than contractual fulfillments or duties 2. Motives: desire or need that incites action; customers experience gratitude when the favor implies benevolent intentions rather than an ulterior, marketing motive 3. Risk: higher risk generally induces higher levels of gratitude 4. Need:condition in which a person requires or desires something

Sources of Heterogeneity

1. Individual differences: a person's stable and consistent way of responding to the environment 2. Life experiences: capture event and experiences unique to their life that have a lasting impact on the value and preferences they place on products and services 3. Functional needs: An individual's personal decision weightings across functional attributes based on personal circumstances 4. Self-identity/image: Customers actively seek products that they feel will support or promote their desired self-image 4. Marketing activities: Firm's attempts to build linkages between their brands and prototypical identities or meanings

Anatomy of Transient Advantage

1. Launch: - Identifies opportunity & mobilizes resources to capitalize - Creative & innovative people who are comfortable with experimentation & iteration 2. Ramp up: - Business idea brought to scale - People needed to assemble right resources at the right time with the right quality & deliver on the promise of the idea 3. Exploitation - Company captures profit & share & forces competitors to react - period of exploitation - People who are good at M&A, analytical decision making & efficiency 4. Reconfiguration - Keep advantage fresh - Needs people who radically rethink business models or resources 5. Disengagement - Resources are extracted & reallocated to the next generation advantage - People who candid & though-minded & can make emotionally difficult decisions

Approaches to Managing Customer Dynamics

1. Lifecycle Approach 2. Dynamic Customer Segmentation (AER) 3. Customer Lifetime Value

Impacts of Omnichannel Retailing

1. Manufacturers may no longer be able to produce large volumes of the same product for different retailers 2. Boundaries btw manufacturer & retailer blur 3. The quest for distinctive products may reduce the number & importance of superstar products 4. Retailers may decide to backward integrate into manufacturing 5. Omnichannel retailing gives consumers more channels from which they can obtain information during the purchase decision process

Approaches for managing customer heterogeneity

1. Mass Marketing (undifferentiated marketing): uses mass media to appeal to an entire market with a single message, is a marketing strategy in which a firm mostly ignores customer heterogeneity, with the assumption that reaching the largest audience possible will lead to the largest sales revenue. 2. Niche Marketing: focuses marketing efforts on well-defined, narrow segments of consumers, and by specializing, this method seeks to give the firm a competitive advantage 3. tailors one or more aspects of the firm's marketing mix to the individual customer, which is an extreme form of segmentation, with a single customer in the target segment. 4. Customer-centric structure: firm consists of business units, each of which is focused on one customer segment; the business unit is further subdivided into multiple product market groups focused on a narrow customer group

Later entrant advantage

1. May achieve cost & differentiation adv. Arising from lower imitation costs, free-rider effects, scope of economies, & learning from pioneer's mistakes 2. Overall magnitude of positional adv. of the 1st mover depend on the extent to which later entrants: - Benefit from differences btw innovation& imitation costs - Free-rider on the 1st mover's pioneering costs - Capitalize on a pioneer's mistakes - Benefit from scope economies - Be able to influence & shape consumer preference

Moderator of behavioral factors

1. Nature of the good 2. Market type 3. Buyers investment in cospecialized assets 4. Market evolution

How a firm can achieve first mover status

1. Produce a new product 2. Use a new process 3. Enter a new market

Successful Strategies for Omnichannel Retailing

1. Provide attractive pricing & curated content 2. Harness the power of data & analytics (opportunity to understand customer transactions & interactions) 3. Avoid direct price comparison (distinctive features, exclusivity) 4. Learn to sell niche products 5. Emphasize product knowledge (channel integration) 6. Establish switching costs (loyalty programs) 7. Embrace competition

Repositioning Strategies

1. Red Ocean: very competitive and populated by "sharks" fighting over the same customers 2. Blue Ocean: redefine the market space, introduce unexpected features, and fundamentally change the entire value proposition.

Determinant's of customer's relationship orientation

1. Relationship proneness: basic tendency of an individual to engage in relationships 2. Exchange & product uncertainty: captures volatility, monitoring difficulty, & speed of technological changes 3. Product category involvement/dependence: importance of & customer need for a particular product category 4. Relational norms: reflect the value placed on customer-seller relationships in an industry or shopping context 5. Relationship-centric reward system: encourage strong customer-seller relationships through evaluation systems, compensation programs, & policies 6. Services: demand more customer & boundary spanner involvement 7. Business-to-business markets: require adaption and strong relational governance structures 8. Emerging markets: fewer institutional protections to business exchange make RM more effective than in developed markets

5 factors can alter the rate of product diffusion

1. Relative advantage: customer perceives higher relative adv. of product, such that it appears better than an existing offering (speeds up product's diffusion). 2. Comparability: how consistent the products are with their existing values, uses, & experiences 3. Complexity: complex products, which are difficult to understand/use suffer from low diffusion 4. Trialability: more opportunities to try an offering speed up diffusion 5. Observability: an offering's benefits are highly visible to others; it speeds up new product diffusion

Offering & Innovation Strategies

1. Stage-gate Approach: divides development process into several steps; increase the speed of their offering development & enhance their likelihood of success, while also reducing development costs; ability to cancel projects at early stages and resources are allocated at each stage 2. Incremental Innovation: often pass each stage-gate review more easily, because they involve less risk and are easier to evaluate 3. Radical Innovation: might struggle to pass through the stages, especially if they are difficult to understand 4. Jugaad: is a Hindi word referring to an innovative fix or simple work-around, so these innovation practices seek creative, quick, unconventional, and frugal solutions to problems.

Segmentation Process

1. Start with a random sample of potential customers in the market 2. Divide customers in groups according to their needs & desires in product category 3. Ensure that customer in one group have similar preferences (=homogeneous) & maximize the differences btw the segments (homogeneous within & heterogeneous btw)

New Technology-based innovation strategies

1. Sustaining Technologies: well understood and typically exploited by market leaders, and produce continuous, incremental improvements over time. 2. Disruptive Technologies: present highly different price & performance characteristics or value proposition

Conditions for Profitability Tiers of Customers

1. Tiers have different & identifiable profiles 2. Customer in different tiers view service quality differently 3. Different factors drive incidence & volume of new business across tiers 4. Profitability impact of improving service quality varies greatly in different customer tiers

4 pricing strategies

1. Use Price Structure to Clarify your Advantage: Call attention to the value your product/service delivers, ideally to the one dimension that most meaningfully differentiates it from those of competitors 2. Willfully Overprice to Stimulate Curiosity: With the higher price, the firms are trying to get the customers attention & wants them to have a closer look at the product & their different features; for every purchase decision, there is a price range above what potential customers say that they are willing to pay that will provoke them to ask, "Do I need this benefit or not?" 3. Partition Prices to Highlight Overlooked Benefits: Presenting a cost as a set of smaller mandatory charges invites closer analysis & therefore increases the likelihood that a customer will revise a routine consumption behavior; Downside: customer can get annoyed by price partitioning, since it is not always straightforward about the total cost 4. Equalize Price Points to Crystallize Personal Relevance: Asking customers to choose among several options designed to appeal to different tastes, while all variants should be priced the same; allows customers to discover option that best suits them

When to use customer pyramid

1. When service resources, including employee time, are limited 2. When customers want different services or service level 3. When customers are willing to pay for different levels of service 4. When customers define value in different ways 5. When customers can be separated from each other 6. When service differentials can lead to upgrading customers to another level 7. When they can be assessed either as a group or individually

Process for Managing Customer Dynamics

1: Dynamic segmentation -Existing customers should be divided into AER stages based on how long they have been customers & other relevant data - Cluster analysis applied to existing customers 2: Migration Paths & Triggers -Segments in AER need to be linked together to model how customer migrate over time -Qualitative data can help identify triggering event - cause of the change -Learn if migration is due to a specific event, learning or experience effect, or if the customer is just bored & ready to experiment with other offerings? 3: Customer Lifetime Value of Segments & migrations -Determine the CLV of customers in each segment and estimate the change in CLV due to each customer's migration, so that it can prioritize its AER investments 4: AER positioning Statements -AER positioning statements à internally focused on existing customers, rather than outwardly focused on all customers in the market category -More concerned with meeting customers' needs than with beating competitors -Addresses "when" questions, detailing triggers & migration mechanisms 5: AER Strategies -AER positioning statements define the objectives; the AER strategies describe the process or how to reach these objectives

lost customer analysis

A powerful, after the fact diagnostic tool; 3 step process: 1. Firms set regular intervals for contacting customers to identify the cause of their transition 2. If lost customer is not the firm's main target segment: change acquisition criteria & evaluate expansion strategy to address new subsegment 3. If lost customer is in the main target segment: fix the problem & implement retention strategies to build brand and relationship loyalty

Repositioning

A process by which a firm shifts its target market

Customer dynamic-based segmentation approach (AER Model)

Acquisition stage: first contact occurs, typically before the first purchase; customer onboarding- the planned process of introducing new customers to a firm to improve their long-term satisfaction and loyalty Expansion stage: firms are trying to upsell or cross-sell to expand their sales and engagement with existing customers Retention Stage: deals with customers who migate because of a mismatch in the core offering or a life event or just because the have a basic propensity to switch in pursuit of better alternatives

Targeting

After segmenting potential customers into homogeneous groups on the basis of their purchase preferences for a specific product or service category, a marketer needs to select segments to target

Customer Lifetime Value (CLV) Approach

Attempts to capture the true contribution of each customer, by determining the discounted value of the sales and costs associated with this customer across the expected migration paths followed throughout the relationship with the firm -Accounts for customer heterogeneity (MP #1) and customer dynamics (MP #2) -Requires good insights into probable future migration paths, based on the individual customer or segment characteristics as well as extensive financial data at the customer or segment level

Social Media Governance

Autocracy: a single department centralizes & administers control of SM communication; precise regulations Anarchy: is represented by a "laissez-faire" mentality in which no such rules exist & departments/employees are free to communicate at will on SM platforms

Bass Model

Captures many of the people- & product- based factors but also integrates pricing & advertising levels to predict adoption rates - Coefficient of innovation (p): which reflects a person's propensity to adopt a product independent of the number of previous adopters - Coefficient of imitation (q): or the propensity to adopt as a function of the number of existing adopters :& the size of the market

Psychographics

Captures some truth about people's lifestyle, attitudes, self-image and aspirations -Weak in predicting what any of these people is likely to purchase in any given product category

Customer Dynamics

Changes in customer preferences that occur over time

Social Exchange theory

Commitment and trust are central to strong business relationships

MP #4

Complexities of Managing Resource Trade-off: 1. Resource slack: the usable resources a firm has; depends heavily on the economy and the firms' financial performance. 2. Changes in customer needs: can cause the firm to reallocate resources. 3. The lifecycle stage of a firm's product portfolio: try to balance its product portfolio by including various products in different lifecycle stages & target different segments. 4. Changes in the product market landscape: entry & exit of competitors; competitive actions often require resource allocations to be revised 5. The effectiveness of marketing activities: customer segments, values, and tastes changes as products age; constantly vary their allocations over different planning horizons.

Social Media Marketing Culture

Conservatism: represented by an encapsulated, traditional, mass advertising approach to SMM Modernism: which is characterized by a more permeable, open & flexible SMM culture

Bystanders

Customers not targeted by relationship management program - despise the unfair treatment they receive

Marketing strategy

Customers represent the fundamental unit of analysis 5 Key Elements: 1. Decisions and actions 2. Differential advantages over competitors 3. Sustainability 4. Ability to enhance firm performance 5. Customer perspective

Social Media Marketing Scope

Defenders: Use Social Media Marketing primarily as one-way communication tool to entertain customers or to inform stakeholders Explorers: Authentic Social Media Marketing collaboration based on reciprocal interactions. Take advantage of interactive SM technology with two-way communication that is completely open Implications

Relationship orientation

Desire to engage in a strong relationship

Social Media Marketing Structure

Hierarchy: stand for centralized approach with a clearly defined SMM assignee Network: represent an organizational structure in which all employees are responsible for SMM

7 Blocks common to all form of social media

Identity, conversation, sharing, presence, relationship, reputation, & groups

Sources of customer dynamics

Individual Level: 1. Discrete life events: small events in customer's life 2. Typical lifecycle or maturation: as people age, they become more focused on risk reduction, less willing to change, and more focused on comfort and health 3. Product learning effects: customers might learn, after using a product for a time, that there are certain specialized or high-tech features that they would like Product Market Level: 4. Product lifecycle: During early stages, consumers may purchase more new features, in later periods, they may get more price sensitive Environmental Level: As the culture around "healthy food" changes, consumer preferences in response to dietary concerns also change

Targeting Considerations

Market Attractiveness: captures external market characteristics that make a given segment strategically and financially valuable to serve, such as size, growth rate, and price sensitivity. Competitive Strength: captures the relative strength of a firm, versus competitors, at securing and maintaining market share in a given segment.

Optimal RM Effectiveness

Matching RM activities to customer's relationship orientation

Turning gold into platinum

Most important requirement-need to fully understand them & their individual needs: 1. Become a full-service provider 2. Provide outsourcing 3. Increase brand impact by line extensions 4. Create structural bonds 5. Offer service guarantees

Getting the lead out

Moving lead customers to a higher tier is not an easy task & not always recommended; firms can attempt to make these customers more profitable; it can be accomplished in 2 ways: 1. Raise prices 2. Reduce costs of serving the lead

Social Media Marketing Objectives & Outcomes

Proactive objectives: stimulating sales, increasing brand awareness, improving brand image, generating traffic to online traffic, stimulating users to post & share content Reactive way: monitor & analyze conversations & understand how consumers view a firm or its action

Customer Equity Perspective

Recommends regarding customers as financial assets, such that they can be measured, managed, & maximized, similar to any other firm asset

New Definition of SMM

Social media marketing is an interdisciplinary & cross-functional concept that uses SM to achieve organizational goals by creating value for stakeholders.

Economic-analytical perspective

The 1st mover can benefit in 2 ways: 1. When there is no competition, the 1st mover is by definition a monopolist, & may use this position to gain higher profits than would be possible in a competitive marketplace/increase the size of the total market 2. After the entry of competitors, the 1st mover has established market position & learning curve economies, which may allow them to retain a dominant market share & higher margins than imitators

Integrated Interactions

The consistency of interactions across channels; manifested through 2 subdimensions: 1. Content consistency: the consistency of content provided by retailers across channels. Content consistency allows customers to receive similar responses to an enquiry posted in either online or physical channels. 2. Process consistency: the degree of consistency of relevant & comparable process attributes across channels, such as the feel, image, & delivery speed of services.

Gravity of Decisions

What the segmentation should try to find out for: Shallowest decisions: buying and usage behavior, willingness to pay a small premium for higher quality, degree of brand loyalty Middle-of-the-spectrum decisions: whether the consumers being studies are do-it-yourself or do-it-for-me types, consumer needs, their social status, self-image, and lifestyle Deepest decisions: core values and beliefs related to the buying decision

Customer-Centric Approach

a company-wide philosophy that places customers' needs at the center of an organization's strategic process & uses the insights to make decisions: • Aligns each business entity with specific customer group - increases knowledge & commitment to each customer group • Helps to identify unmet needs & enables to adapt quickly & effectively to trends • Promotes internal alignment after STP approach has established external alignment

Barrier to entry

a cost of producing which must be borne by a firm which seeks to enter an industry but is not born by firms already in the industry: • Scale effects • Experience effects • Asymmetric information about product quality & risk averse buyers • Reputational effects • Differences in marginal effects of advertising btw 1st & late entrants • Uncertain imitability • Communication good effect

GE Matrix

analysis tool designed to help managers visualize & select target segments.

Sustainable Competitive Advantage

being able to generate more customer value than competitive firms in the same industry for the same set of products/services so that the competitors are unable to duplicate the firms' effective strategy; meets 3 criteria: 1. Customer care about what the SCA offers 2. The firm does it better than competitors 3. The SCA must be hard to duplicate or substitute

Relationship as SCA

building and maintaining barriers, or sustainable competitive advantages (SCAs), to competitive attacks, based on the premise that competitors react continually to a firm's success.

Choice model

can benefit the lost customer analysis and inform analysis across all AER stages; predict likelihood of observed customer choices/responses using data about characteristics and past behavior and firm's marketing interventions

Positioning Statement

capture the key marketing decisions to appeal to customers in the firm's target segment. 3 questions should be addressed by it: • Who are the customers? • What is the set of needs that the product or service fulfills? • Why is this product/service the best option to satisfy customer needs?

Omnichannel retailing

characterized by an operation with continuous info exchange, joint operations, logistics, & inventories across channels, enabling a conflation of the order fulfillment process.

Value and Lifestyle Survey (VALS)

commercial research service, retained by scores of consumer products and advertising agencies -Psychographics are effective at brand reinforcement & positioning but are not drivers of commercial activity

Perceptual Map

depict customer segments, competitors, & a firm's own position in a multidimensional space, defined by the purchase attributes identified during the segmentation process.

Network theory

describe the effects of the structure of an interaction among multiple entities in a network.

Relationship composition

diversity; attractiveness of contacts; confirm information across different perspectives & gain access to critical decision makers.

Interactional Orientation

emphasizes multifaceted relationships based on sharing within and between digitally enables communities

Value Word Equation

enable supplier to show points of difference & points of contention relative to the next alternative, so that customer managers can easily grasp them & find them persuasive.

Positioning

entails changing both the actual offering (innovating products or reducing manufacturing costs) & the perceived offering (building a new brand image) -Nearly every marketing mix decision, including product, price, place (channel), & product activities (often termed the 4Ps), that managers make affects the positioning of the firm's offering in customers' minds.

Relational Orientation

focuses on one to one communication

Social Exchange Theory (SET)

focuses on the principles of equity and reciprocity, represents an ideal theoretical framework for studying customer engagement.

Customer equity

for a firm refers to the total of the discounted lifetime values of all its customers.

BOR (Brand, offerings, and relationships) Equities

generate a return on assets, can be built through investments, & depreciate over time if not maintained.

Relationship Marketing (RM)

identify, develop, maintain, & terminate relational exchanges to improve performance. It can produce relationship equity. In combination with brand & offerings, this equity can lead to sustainable competitive advantage. -Customer equity = Relationship equity + Brand equity + Value equity

Marketing Principle Approach

involves grouping or aligning key marketing decisions with the four assumptions, in such a way that managers can understand & account for their interdependencies & temporal ordering when making decisions.

Customer alchemy

is the art of turning less profitable customers into more profitable customers

Transient Advantage

learning to launch new strategic initiatives, again & again, & creating a portfolio of advantages that can be built quickly & abandoned just as rapidly.

Strategic Windows

limited period of time during which the "fit" between key market requirements and the particular competencies of a firm competing in the market is optimal

Heuristic based process

make resource trade-offs when they lack hard data about the attractiveness of each resource option

Attribution based process

making resource trade-off decisions; especially as modern managers capitalize on their improved computing power & advances in statistics & data management.

Customer relationship management

managerially relevant, organization-wide, customer-focused application of RM, using IT to achieve performance objectives.

Crossing the chasm

many new offerings fail to survive the jump from the early adopter to the early majority groups.

Conjoint Analysis

marketers can design & develop new products by thinking of products as bundles of attributes, then determining which combination of attributes is best suited to meet the preferences of customers.

Relationship breadth

measures number of relationship bonds with exchange partner.

Turning Iron into Gold

need to find out what is important to the Iron customers, not assuming that it is the same thing that is important to gold customers: 1. Reduce the customer's nonmonetary Costs of doing business 2. Add meaningful brand names 3. Become a customer expert through technology 4. Become a customer expert by leveraging intermediaries 5. Develop frequency programs 6. Create strong service recovery programs

Relationship theory

needs to encompass elements of interfirm relationships, involve groups of employees on both sides of business exchange.

5 big personality traits

openness, conscientiousness, extraversion, agreeableness, neuroticism

latent customer heterogeneity

potential differences in desires that are unobserved and have not become manifest in customer purchase preferences or behaviors yet, may stem from legal, economic, technological, or innovative constraints

Segmenting

process of dividing the overall market into groups, such that potential customers in each group have similar needs & desires for a particular product/service category; the differences across groups are maximal.

Market segmentation

properly applied, it would guide companies in tailoring their product and service offerings to the groups most likely to purchase them - the undeserved, the dissatisfied and first-time purchasers

Experiments

provide strong tests of causality, by randomly assigning customers to multiple groups.

Natural Experiments

purposefully apply a marketing treatment to 1 group, then compares the effects of different marketing strategies.

commoditizing

referring to the diminishing differences among offerings; The constant price undercutting can damage brand equity & erode profit margins, meanwhile customer become disengaged

Channel integration quality

refers to a firm's ability to provide customers with a seamless purchasing experience across channels.

Relationship equity

refers to the aggregation of relational assets and liabilities, associated with the firm's boundary-spanning employees and social networks linked to the offering or experience, that add to or subtract from the value provided by the firm's offering.

Offering Equity

refers to the core value that the performance of the product or service offers the customer, absent any brand or relationship equity effects.

Customer engagement

refers to the level of a customer's or prospective customer's interactions & connections with a brand's or firm's offerings and/or activities.

Integrated Marketing Communications

refers to the process of designing & delivering marketing message to customers while ensuring that they are relevant & consistent over time & channels.

STP Approach

segmenting, targeting, positioning

Relationship quality

the 4 facets that compose Relationship quality are Commitment, Trust, Gratitude, & Reciprocation

Channel Service Configuration

the available combination of service components and their associated delivery channels; manifesting through 2 subdimensions: 1. Breadth of channel-service choice: the degree to which customers can choose alternative channels for a given service or can accomplish preferred tasks through an individual channel. 2. Transparency of channel-service configuration: The degree to which customers are aware of the available channels & services as well as the differences btw such service attributes across channels.

First principles of marketing

the fundamental concepts or assumptions of which a theory, system, or method is based. MP#1: All customers differ - Managing customer heterogeneity MP#2: All customers change - Managing customer dynamics MP#3: All competitors react - Managing sustainable competitive advantage MP#4: All resources are limited - Managing resource trade-offs

Cumulative Advantage

the layer that a company builds on its initial competitive advantage by making its product or service an ever more instinctively comfortable choice for the customer - the subconscious mind is dominant in decision making - performance is not sustained by offering the perfect choice, but by offering the easy choice

Market Orientation

the organization-wide generation of market intelligence, dissemination of the intelligence across departments & organization-wide responsiveness to it. 3 dimensions: 1. Intelligence generation 2. Intelligence dissemination: high level of communication among employees about customers 3. Responsiveness

Intuition

thoughts, opinion, & preferences that come to mind quickly & without reflection but are strong enough to act on. Intuitive judgements are heavily are heavily influenced by the speed & ease of the filling-in process.

Complement Choice

to extend the initial competitive advantage, the company must invest in turning its proposition into a habit rather than a choice. People must have a reason to buy a product in the first place.

Simplified Version of CLV

uses 3 readily available customer behavior (RFM): o Recency - time elapsed since last purchase o Frequency of purchase o Monetary - purchases in last period

Customer/BOR equity stack

when summed across all the firm's customers, it represents the firm's overall customer equity.

Assumptions of the Bass Model

• 1st-time purchases, without accounting for multiple purchases of a product • Features only a binary diffusion process (innovators vs imitators) • Does not include other marketing mix variables • It imposes the restriction that each innovation is independent, without any competitive effects

Factors that lead market leaders to fail to anticipate the threats or opportunities emerging

• Appear to appeal only to small, niche customer segments • Markets are hard to evaluate • Status quo bias • Firms may believe that disruptive technologies, that offer less on some dimensions will be insufficiently viable • Firms fail to appreciate the steep performance trajectory of new technologies

The Customer Pyramid

• Platinum = most profitable; committed to the firm; willing to invest in & try new offerings; not overly price sensitive • Gold = not as profitable as Platinum; price discounts that limit margin; not as loyal; min. risk by going to multiple vendors • Iron = provide volume needed to utilize the firm's capacity; but spending levels, loyalty, & profitability are not substantial enough for special treatment • Lead = costing the company money; demand more attention than they are profitability

When to use Conjoint Analysis

• To identify product attribute trade-offs that customers are willing to make for a new product • To predict the market share & impact of a proposed new product (bundle of attributes) • To determine the amount that customers are willing to pay for a new product