D077 Marketing
Value equity (customer equity driver)
how the customer assesses the value of the product or service provided by the company
Product mix
Marketers can expand the current product mix by increasing product width (the number of different product lines, or series of products a company offers) or by increasing product depth (adding to the sub-products or versions in a product line)
During a meeting, a marketing department describes the sales goals for the year, the target markets selected, and the actions the department will undertake to reach these goals. Marketing strategy Tactical marketing implementation Target market identification Market share
Marketing strategy. This meeting focused on the marketing strategy. This strategy determines how a marketing mix (product, price, place, and promotion) should be used to achieve the marketing objectives.
Channel conflict
Occurs when producers disintermediate their channel partners, such as distributers, retailers, dealers, and sales representatives, by selling their products directly to consumers through general marketing or through e-commerce. To avoid a channel conflict in a click-and-mortar business, it is necessary to ensure that both traditional and online channels are fully integrated.
Competitive pricing strategy
Setting the price of a product according to competitor prices, to use price as one of the features that differentiates the product.
A company develops a new, high end product which has no direct competition that is popular with customers. The company seeks to temporarily set the price of the product high to gain as much profit as possible. What is this name of this pricing strategy? Skimming Bundling Competitive Penetration
Skimming. Since the product is a high end product with little competition, the company is seeking to skim as much profit from the new product until substitute products become available.
Focus groups
Small groups of individuals (usually 6-12) who delve deeply into topics of interest
Social listening
Monitoring conversations on social media or soliciting input from a social media community
Which data set is considered secondary research? Customer opinion survey Customer focus group Customer list Customer online product review
A company's customer list is a set of data already assembled by the company.
Personal selling
A face-to-face presentation to a prospective buyer, often based on long-term relationships.
Contractual vertical marketing system
A formal agreement between the levels (such as franchise, retail sponsored or wholesale sponsored) coordinates the distribution process. For example, many fast food chains operate as franchises.
A marketing concept
A marketing concept is defined as the use of marketing data to focus on the needs and wants of customers in order to develop marketing strategies that not only satisfy the needs of the customers, but also accomplish the goals of the organization
Question mark
A question mark is a product or business that has low market share currently, but is in a growing industry. The product or business is consuming financing and creating a low rate of return, but its direction is unclear. A question mark has the potential to become either a star or a dog, so close monitoring is needed to determine its growth potential.
Corporate vertical marketing system
A single company owns all levels of production and distribution. For example, Apple sells the products it designs and manufactures through its own retail stores.
Star
A star has high market share in a fast-growing industry. This kind of product or business is poised to bring a strong return on the funds invested. It also has the potential to become a cash cow at the end of the product life cycle, which can fund future investments.
A manager gives feedback to a team that their core customers were very satisfied. Which benefit to customer relationship management (CRM) is being used by this manager? Analytical Collaborative Communicative Operational
Analytical. Analytical benefits use data to understand who the company's core customers are, how they behave, what they are looking for, and how satisfied they are.
Traditional advertising
Any paid form of nonpersonal promotion by an identified sponsor that is delivered through traditional media channels.
What is one ethical consideration marketers should follow when collecting primary data? Be transparent about how data gathered from company reports will be applied. Ask for consent to gather the data from surveys. Avoid stereotypes when searching the internet. Require customer questionnaires to be completed before submission.
Ask for consent to gather the data from surveys. An ethical consideration marketers should use includes receiving consent to collect data.
Survey research
Asking individual consumers to provide responses on a questionnaire
What is a benefit of knowing a customer's lifetime value? Determine staffing of marketing department. Assess profitability of marketing campaigns. Forecast future sales numbers. Budget for new product development.
Assess profitability of marketing campaigns. Customer lifetime value is one measure that marketing may use to determine the profitability and effectiveness of marketing campaigns.
Bargaining power of buyers
Bargaining power of buyers: The bargaining power of customers is the ability of customers to put a company under pressure, which also affects the customer's sensitivity to price changes. If the supply greatly outstrips the demand, the buyers have more power than the suppliers.
Acquisition (CLC)
Bringing a prospective customer into a sphere of influence
What is the main function of marketing? Bringing value to customers Improving partner relationships Decreasing expenditures
Bringing value to customers through activities that create, communicate, deliver, and exchange offerings.
Bundling
Bundling means grouping two or more related products together and pricing them as a single product. Bundling the second product to the first at a slightly reduced price thus creates some sales that otherwise would not be made.
Customer lifetime value (CLV) equation
CLV = (profit margin per customer x # of years customer is active) - cost of acquiring customer
Which secondary data source deals with syndicated consumer data for purchase as well as database information on consumer purchases and behavior? Commercial marketing research companies Internet searches Government agency and nonprofit data Industry and professional associations
Commercial marketing research companies. This secondary data source deals with syndicated research of consumer data for purchase as well as database information on consumer purchases and behavior.
Which U.S. federal act establishes standards for commercial email? Telemarketing Sales Rule (TSR) Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM)
Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM). This act was passed in 2003 and gives consumers the ability to opt out of communications.
In-depth interviews
Conversations with an individual the marketer wants to understand better
Customer relationship management (CRM)
Customer relationship management (CRM) is a combination of policies, processes, and strategies implemented by a company that unify its customer interaction and provide a mechanism for tracking customer information.
Which system should be used for a business to develop a customized cosmetics tutorial guide for an individual woman based on the previous feedback? Tailored marketing Customer relationship management
Customer relationship management. Customer relationship management (CRM) is based on meeting the needs of the customer. CRM software is used to support these processes, storing information on current, past, and prospective customers.
A CMO asks an individual to make sure that business communications have a unified message and that they exhibit sensitivity to the cultural practices of the locations where the business operates. Which step of the marketing planning process is illustrated by this request? Developing marketing strategy Conducting situation analysis Identifying mission statement Defining communication objectives
Developing marketing strategy. The marketing strategy defines how the marketing mix (product, price, place, and promotion) can be best used to achieve the marketing objectives. At its center is the target customer. The target stakeholders for the marketing plan have been identified: suppliers, investors, customers, and communities. The CMO has yet to decide on the communications, a marketing objective.
Direct VS Indirect Distribution
Direct distribution is when products are sold from producers to end users and consumers. Indirect distribution involves marketing intermediaries, or organizations that assist in moving goods and services from producers to end user and consumers. These commonly include agents and brokers, industrial distributors, wholesalers, and retailers.
A company makes customized office chairs that are sold only through its website. What type of distribution channel is the company using? Direct Indirect Supply chain Agent-broker
Direct. The scenario describes the distribution of the product directly from the manufacturer to the consumer. This scenario describes a direct distribution channel.
Distribution
Distribution is efficiently managing the acquisition of raw materials by the factory and the movement of products from the producer or manufacturer to business-to-business (B2B) users and consumers. It includes many facets, such as location, hours, website presence, logistics, atmospherics, inventory management, supply-chain management, and others.
The CEO shifted Sure Start's growth focus through product development and sales of its rechargeable batteries to electric car manufacturers. Which strategic opportunity is represented by this focus? Diversification strategy Product development Market penetration Market development
Diversification strategy. Sure Start will continue to produce and sell its existing inventory of traditional car batteries, but the company is focusing on developing products to attract a new market for rechargeable batteries for use in electric cars. This represents a new product in a new market, which is diversification.
The four basic growth strategies according to the Strategic Opportunity Matrix are
Market penetration, market development, product development, and diversification.
A store has a policy that all customer-facing employees can give away one $5 flower bouquet a day to customers who they feel need a bright spot in their day. Which aspect of customer satisfaction is being demonstrated by this store policy? Overdelivering Engagement Empowerment Marketing
Empowering employees to drop what they are doing to do something special for a customer can certainly delight customers and is the type of action illustrated in the scenario.
Retention (CLC)
Engaging an existing customer to keep them
Operational benefits of CRM
Ensure customer satisfaction by integrating sales, marketing, and customer support
Penetration pricing
Enter a market and price your product lower than the perceived market price so that more people will buy it and increase your market share. Requires more extensive planning than skimming, because the company must gear up for mass production and marketing. May induce consumers to switch brands or companies. May discourage competitors from entering the market.
4 parts of Business cycle
Expansion: increasing employment, economic growth, and upward pressure on prices. Peak: highest point of the business cycle, economy is producing at maximum allowable output, employment is at or above full employment, and inflationary pressures on prices are evident. Contraction: economy enters into a correction which is characterized by a contraction where growth slows, employment declines (unemployment increases), and pricing pressures subside. Trough: economy has hit a bottom from which the next phase of expansion and contraction will emerge.
4 advantages of Price Skimming
First, a high initial price can be a way to find out what buyers are willing to pay. Second, if consumers find the introductory price too high, it can be lowered. Third, a high introductory price can create an image of quality and prestige. Fourth, when the price is lowered later, consumers may think they are getting a bargain. The disadvantage is that high prices attract competition.
Reach (CLC)
Getting a prospective customer's attention
Omnichannel retailing
Having a uniform customer experience across all ways a customer may engage with a company. A simple example is that the design of the website should remain consistent with the mobile app, and should also match branded physical environments.
Cash cow
High market share and is in a slow-growing industry. It is bringing in more money than is being invested in it, but it does not have much growth potential. The profits from a cash cow can be used to fund high-growth investments, but the cash cow itself warrants low investment.
What is the first question David should address when designing this market study? Which vegetables would be most profitable? Which customers shop at farmers' markets? Do customers know about the services being offered by Sprout? How many customers use grocery shopping services?
How many customers use grocery shopping services?David needs to know whether the farming community would use these services.
Brand equity (customer equity driver)
How the customer assesses the value of the brand, above its objective value
A/B test
In an A/B test, marketers develop two different versions of a marketing campaign artifact, such as a website landing page. Each version may use a slightly different call to action, image, or headline. The marketers send out each version to a set of target customers and then track the results to see which one is most effective.
Omnichannel communication
Includes channels such as physical locations, e-commerce, mobile applications, and social media. Rather than working in parallel, communication channels and their supporting resources are designed and orchestrated to cooperate.
How does a customer relationship management (CRM) system benefit a customer? Individualizes marketing and sales messages to customers Creates avenues for customers to contact vendors on the supply chain
Individualizes marketing and sales messages to customers. A CRM allows an organization to customize the marketing and sales messages that a customer is given. This information is given by the customer, based on the data collected from their experience.
Integrated marketing communications (IMC).
Integrated marketing communications (IMC). IMC involves carefully coordinating all promotional activities—traditional advertising (including direct marketing), sales promotion, personal selling, public relations, social media and e-commerce, packaging, and other marketing elements—to produce a consistent, unified, customer-focused message.
A sales manager for a small company has no budget for research but needs data to expand a marketing campaign. The manager hope to increase the rate of repeat purchases from current customers. Which form of data meets this sales manager's needs? Industry Syndicated Internal Government
Internal data are something the sales manager already has access to, so there is no cost. A company's internal data, such as sales and marketing records, customer account information, product purchasing, and usage data, are typical secondary data sources and can provide the information on customers needed by this manager.
Leader pricing
Leader pricing is pricing products below the normal markup or even below cost to attract customers to a store where they would not otherwise shop. A product priced below cost is referred to as a loss leader. Retailers hope that this type of pricing will increase their overall sales volume and thus their profit. Department stores and specialty stores also rely heavily on leader pricing.
Dog (BCG matrix)
Low market share in a mature industry is a dog. There is no room for growth, which suggests that no new funds should be invested in it.
What is considered a less tangible benefit of customer lifetime value? Increase in revenues Meeting quarterly sales goals Higher conversion rates Loyalty to the brand
Loyalty to the brand. Long-term customers are more likely to be loyal to the brand and ambassadors for the company. This loyalty may provide valuable feedback to marketing.
Administered vertical marketing system
One member of the channel system effectively controls the system out of sheer power and size. It can determine the activities of the other channel levels without an ownership stake.
The Strategic Opportunity Matrix
Organizes growth strategies in a framework. It helps companies focus on different growth strategies for markets and products by examining the following: New versus existing markets New versus existing products Sometimes referred to the Ansoff Opportunity Matrix after its creator, Igor Ansoff.
PEST
PEST (political, economic, social, and technological) analysis provides a framework for looking at the influence of uncontrollable elements in the marketing environment.
Place
Place involves some method of getting the product from the creator of the product to the customer. Place includes a myriad of important tasks: transportation, location, supply chain management (managing each entity that deals with the product in its route to the buyer), online presence, inventory, and atmospherics (how the office, store, or even the website looks).1
Porter's Five Forces model
Porter's Five Forces model is a tool for analyzing the competitiveness of a market. Determines how competitive (and how attractive or profitable) a market is for a product. Often, the Five Forces are mapped against a SWOT analysis to develop a corporate strategy.
Customer lifetime value
Predicts how much profit is associated with a customer during the course of their lifetime relationship with a company
Price
Price is something given in exchange for a product. Price may be monetary or nonmonetary (such as waiting in long lines for a restaurant or giving blood at the local blood bank).
Product life cycle
Product life cycle including an introductory stage, growth stage, maturity stage, and finally an eventual period of decline as sales falls.
Which is a benefit that a customer relationship management (CRM) can provide a company? Analyzing why a potential customer did not make a purchase Providing data to the company across the customer life cycle
Providing data to the company across the customer life cycle. A CRM is designed to help an organization follow a customer from beginning of the sales process to the end.
Psychographic research
Psychographic research requires that the researcher interviews consumers about their lifestyles and behaviors. These data are not previously collected.
A sales manager is analyzing the sales reports for the prior year in an effort to budget for the next year's marketing. What type of data is this manager reviewing? Quantitative Tertiary Primary Qualitative
Quantitative. Sales numbers represent quantitative, numerical data that can be used to budget for next year's marketing. The data are secondary because the sales department generated the data without the marketing manager's input.
What is a driver for customer equity? Retention equity Earnings equity
Retention equity. The three main drivers of customer equity are brand, retention, and value equity.
Retention equity (customer equity driver)
Retention equity—the tendency of the customer to stick with the brand, even when it is priced higher than an otherwise equal product.
Rivalry
Rivalry: For most industries, the intensity of competitive rivalry is the major factor in determining the competitiveness of the industry. This involves how many firms are in the industry and how their competitive dynamics reduce profitability. Airlines have extremely high rivalry, for example.
A restaurant owner has noticed a shift in the restaurant's customer attitudes towards locally-sourced and sustainable ingredients and is changing the menu in an effort to cater to these customers. What element of the marketing environment does this represent? Consumer confidence Socio-cultural factors
Socio-cultural factors. The restaurant owner's move from a national supplier to locally-sourced ingredients reflecting customer values is an example of socio-cultural factors.
The chief financial officer (CFO) asks the marketing managers to generate, collectively, an additional $250,000 in sales annually. What type of planning is the CFO asking managers to conduct? Strategic marketing with controllable elements Tactical marketing with controllable elements Strategic marketing with uncontrollable elements Tactical marketing with uncontrollable elements
Strategic marketing with uncontrollable elements. Strategic marketing provides goals, but does not include the specific, tactical actions to be taken to achieve the marketing strategy.
What is the purpose of customer relationship management (CRM) software? Supporting processes by storing information about customers Helping sales and marketing organize data about employees
Supporting processes by storing information about customers. CRM software is used to support these processes, storing information on current, past, and prospective customers
A marketing manager plans to expand a current marketing campaign to reach a well-documented market segment that the company does not currently attract. Which data source should the manager use to meet this goal? Government data Syndicated market research Internet searches Internal customer data
Syndicated market research would have this kind of data. "Syndicated research of consumer data for purchase as well as database information on consumer purchases and behavior" would help expand the manager's campaign.
Commercial marketing research companies
Syndicated research of consumer data for purchase as well as database information on consumer purchases and behavior.
The chief financial officer (CFO) asks marketing managers to buy advertising in all trade magazines in their respective geographic areas for one year. Tactical marketing with controllable elements Strategic marketing with uncontrollable elements
Tactical marketing with controllable elements. Tactical marketing includes specific actions, such as advertising, to execute a marketing strategy. In this scenario, the CFO asks marketing managers to buy advertising in all trade magazines in their respective geographic areas for one year. The managers will coordinate the advertising, which means they control the type of advertising and frequency.
Experiments
Testing the effect of varying a factor or a set of factors in a marketing artifact
When should the BCG matrix be used? When a company has many products When the product industry is in decline When the product industry is a monopoly When a company has one product
When a company has many products. When a company has many different products or even many different lines of business, strategy becomes more complex. The company not only needs to complete a situation analysis for each business, but also needs to determine which businesses warrant focus and investment.
Predatory pricing (undercutting)
When a company prices a product or service extremely low to drive out competition
A manager is seeking to use the BCG matrix to design strategies for the company's products. The manager knows the market shares for the products. What other information about the company's products does this manager need to know to use this technique? The consumer price index The value proposition The market growth potential The SWOT analysis
The market growth potential. Market share and market growth potential are the two different aspects considered in the BCG matrix.
Steps in the marketing planning process
The steps in the marketing planning process include identifying a mission statement, conducting a situational analysis, defining objectives, developing a marketing strategy, and implementing processes for monitoring and control.
Prestige pricing
The strategy of raising the price of a product so consumers will perceive it as being of higher quality, status, or value
Market penetration
This growth strategy uses current products and current markets with the goal to increase market share.
Market development
This growth strategy uses existing products to capture new markets.
Product development
This growth strategy uses new products in the existing market.
Diversification
This strategy creates completely new opportunities for the company by creating new products and new markets.
Threat of new entrants (or barriers to entry)
Threat of new entrants (or barriers to entry): Profitable markets that yield high returns will attract new companies. This results in many new competitors and eventually decreases profitability for all firms in the industry. Unless the entry of new firms can be blocked by those already in the market, the profit rate will trend towards zero, also known as perfect competition. From the perspective of new entrants, high barriers to entry mean that the investment of getting into the industry makes it difficult to compete with current players in the market.
Threat of substitute products or services
Threat of substitute products or services: The existence of different products that fulfill the same need increases the likelihood that customers will switch to alternatives. This should not be confused with competitors' similar products. For example, with transportation, General Motors (GM) would view city subways as a substitute to someone buying a new car.
What does customer equity measure? Customer assessment of the value of the brand Total combined customer lifetime values
Total combined customer lifetime values. Customer equity refers to the total combined customer lifetime values for all the purchases the customers make for that product over their total buying experience.
Loyalty and Advocacy (CLC)
Turning a customer into an advocate for the company
Conversion (CLC)
Turning a prospect into a paying customer
Analytical benefits of CRM
Use data to understand who the company's core customers are, how they behave, what they are looking for, and how satisfied they are
Observation
Watching customers and noncustomers engage with a product
BCG (Boston Consulting Group) Matrix
What is the current market share? What is the market's growth potential? The intent of the matrix is to help companies make good portfolio management decisions. Marketers should focus investment in the areas that are likely to provide returns and fund future growth.
Bait and switch
When a company advertises a product for a low price and "switches" a customer to a higher-priced product
Price discrimination
When a company charges different prices to buyers of the same product in order to maximize profit
Price gouging
When a company has a monopoly on the market and prices products or services overly high to drive profit
Which action accurately reflects when permission marketing should be used by a manager? When offering marketing messages to buyers Before asking about a buyer's experience
When offering marketing messages to buyers. Permission marketing suggests that if customers give permission, they are open to receive the message. It is used during this type of customer interaction.
Bargaining power of suppliers
When there are few substitutes, suppliers of raw materials, components, labor, and services (such as expertise) to an organization can be a source of power over the organization. Suppliers can refuse to work with the company or charge excessively high prices for unique resources. Similar to power of buyers, this bargaining power relies on scarcity and basic economics of supply and demand.
Price fixing (collusion)
When two or more competing companies agree (or collude) on how much to charge for a product or service
Collaborative benefits of CRM
Work across teams and departments more effectively, including with suppliers and vendors
