MKTG 428 Exam 1
BCG Product-Portfolio Matrix, Assumptions, & Implications
1) classification -high market share, high market growth: stars -low market share, high market growth: question marks -high market share, low market growth: cash cows -low market share, low market growth: dogs Underlying theory: economies of scale 2) Action dogs -some dogs divested -invest to turn into question mark/star question mark -build into star cash cow -harvest into a dog to free up cash flows -invest to turn into a question mark/star star -hold onto star status
5 C's: Collaborators Vertical vs. horizontal collaborators
Collaborators are entities that work with a company to design, communicate, and deliver value to target customers
Relationship between competitive advantage and CPV; competitive parity
Competitive parity: the shared benefits between 2 companies competitive advantage = Customer Value[company] - Customer Value[competition] = change in functional value + change in monetary value + change in psychological value
Customer loyalty: What is it? What isn't it?
A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
•Marketing plan: What is it? What are the strategic and tactical levels? Who is the audience?
A marketing plan is the central instrument for directing and coordinating the marketing effort, provides recommendations. Strategic levels: -Analysis of marketing opportunities -Segmentation -Target marketing decisions -Positioning and branding -Value proposition Tactical levels: -Product -Service -Promotion -Pricing Channels Audience: -Employees -Collaborators -Stakeholders
Customer perceived value (CPV): Definition & components/sources
Customer perceived value is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering. customer perceived benefit - customer perceived cost = CPV Components: 1) functional value: Benefits and costs related to the offering's performance (e.g., operation, safety, aesthetic, convenience, time, energy) 2) monetary value: Monetary benefits and costs associated with the offering (e.g., retail price, fees, maintenance costs) 3) psychological value: Psychological benefits and costs associated with the offering (e.g., emotional, social, self-expressional attributes)
Outline/sections of a marketing plan.
Executive summary situation analysis (5 C's) marketing objectives marketing strategy marketing mix (4 P's) financials implementation plan, evaluation, and controls references appendix
T or F Evaluating the summary satisfaction statistics (e.g., mean or median satisfaction score) from a sample of consumers is more informative than looking at the distribution of satisfaction scores.
False
T or F Most effective way to analyze data from customer satisfaction surveys is to compare highly satisfied customers and highly dissatisfied customers on performance indicators and leave out data from moderately satisfied customers
False
T or F University of Idaho is a private, nonprofit organization
False
What does Net Promoter Score mean? What's the underlying motivation? •How is it measured/calculated?
How likely is it that you would recommend this company to a friend or colleague? NPS = % of promoters - % of detractors
T or F Buying power determines consumers' willingness to spend (i.e., high buying power means people will be willing to spend a lot).
True
T or F Fees associated with the use of a product/service would be incorporated into consumers' perceived psychological value of the offering.
True
5 C's: Context
Types: legal natural economic technological sociocultural Key Questions to Ask About Context: -What is the current status on major external factors? -Are there any trends? Any prominent sources of change? -How do these factors and trends affect my organization? -How do these factors and trends affect my customers and constituents? -How do these factors and trends affect my competitors and collaborators?
What is an SBU?
a strategic business unit -It is a single business or collection of related businesses -It has its own set of competitors -It has a leader responsible for strategic planning and profitability
Which of the following represents the point where a market is fully tapped, and marketing expenditures do not have a positive impact on demand anymore? a. Market forecast b. Market potential c. Market minimum d. Market share
b. Market potential
Total satisfaction is explained and measured by the interplay between the following: a. value proposition and perceived value b. expected performance and perceived quality c. perceived costs and perceived benefits d. promoters and detractors
b. expected performance and perceived quality
Which of the following outcomes is to be expected if the demand for a product increases while everything else stays the same? a. Market share decreases. b. Product/brand penetration increases. c. Product price increases. d.Marketing expenditures decrease
b. product/brand penetration increases
5 C's: Company Analysis SWOT & Implications
company analysis: look at strategic assets and core competencies Core competencies ensure that various business tasks will be performed efficiently and effectively. -Business management (e.g., Amazon.com) -operations management (e.g., Walmart) -technology development (e.g., Google), etc. SWOT Intuitive approach to evaluate a company's overall business condition implications: Convert weakness to strength Convert threat to opportunity Match opportunity and strength
Competitive advantage, core competency, sustainable competitive advantage
competitive advantage: -combo of core competencies and market opportunities -The strategic advantage one business has over its rivals within its competitive industry. core competency: -The essence of a business that can be leveraged widely to many products & markets and is difficult to imitate. sustainable competitive advantage: -CC + CA = SCA -Prolonged benefit of implementing some unique value-creating strategy not simultaneously being implemented by any current/potential competitors along with the inability to duplicate the benefits of this strategy. -Not all CAs are sustainable
Value-Satisfaction-Loyalty process
customer perceived value > customer satisfaction > customer loyalty > customer life time value
Marketing management framework
market assessment and design value -> provide, deliver, capture, and communicate value. market assessment and design value -5 C's/Situation Analysis: context, customers, competitors, company, collaborators -Marketing Strategy/STP: segmentation, targeting, positioning/branding/value proposition provide, deliver, capture, and communicate value -Marketing Mix/4 P's: product or service, place/distribution, pricing, promotions or IMC
What is/isn't marketing?
marketing is how companies communicate value to consumers regarding products and services with the intention of persuading individuals to purchase. it is also about attracting and creating relationships with consumers. marketing is not just sales or promotional activities.
Mission vs. vision statements
mission: "Why do we exist?" Characteristics: 1. Identify the company's primary reason for existence/purpose. 2. Focus on a limited number of values & responsibilities. 3. Identify the business(es) in which the company will (or will not) operate. 4. Identify how the vision will be achieved. 5. Are clear, concise, informative, and meaningful. vision: "Where do we aim to be in [the future]?" Characteristics: 1. Are forward looking. 2. Align with purpose and values of the organization. 3. Identify what the organization wants to achieve and when. 4. Are as memorable, challenging, and inspiring. 5. Are realistic.
What makes an organization nonprofit? How are nonprofits different from for-profits?
nonprofits: -constituency: clients, funders/donors, volunteers -objectives: cause/solution driven -offering: services -metrics: complicated for-profits: -constituency: consumers, shareholders -objectives: generating customer value at a profit -offering: goods, services, ideas, etc. -metrics: performance measures, customer metrics, etc.
Customer satisfaction: Expectancy-Disconfirmation model; metrics and assessment; how to interpret data from satisfaction surveys
expected performance and perceived performance are compared. if perceived > expected, then -> positive disconfirmation: delight if p = e, then -> confirmation: satisfaction if p < e, then -> negative disconfirmation: dissatisfaction measure satisfaction using surveys -SERVQUAL looks at reliability, assurance, tangible, empathy, responsiveness -ACSI provides index scores on satisfaction. measure satisfaction through customer loss rate, contacting those who stopped buying, hiring mystery shoppers, tallying complaints
5 C's: Customers Customer analysis: Potential/available/target market, primary/secondary demand, market forecast, market minimum, market potential, market share, penetration
-Potential market: Set of consumers who possess some interest in a product or to whom the product is potentially relevant. -Available market: Set of consumers who have an interest in, income for, and market access to a particular product. -Target market: Part of the available market the company decides to pursue with marketing activities. -Market demand: Total volume that would be bought by a particular customer group, in a particular time period, in a particular marketing environment, under a particular marketing program. -Primary demand measures total volume demanded by customers for a product category. -Secondary demand measures total volume demanded by customers for a specific brand or product -Market forecast: The market demand corresponding to a certain level of marketing expenditures. E.g., If we spend $10M on marketing, we expect to sell 1M units. -Market minimum: Demand that occurs without marketing spending -Market potential: Marketing expenditures will reach a point of ineffectiveness when we have tapped out the market
What are the principles and characteristics of a successful marketing plan?
1.Always remember you are selling a recommendation. 2.Tell a story. 3.Keep it simple.
Evolution of marketing philosophy: Production >> Sales >> Marketing. What do they represent? Where do we find these orientations/concepts today?
1800-1920 Production orientation. -Industrial Revolution => Mass production via assembly line -How to maximize production capacity utilization -Improve products & produce efficiently -customers should come to us 1920-1960 Sales orientation -Post-WWI => Greater production capacity; increasing competition in the marketplace; pressure from financial markets for greater sales & profits -How do we push products into the hands of customers? -Marketing = High-pressure, aggressive selling 1960-now Marketing orientation -Post-WWII => Growing demand for consumer goods & services; focus on family; production capacity; market research capabilities -How to achieve long-run profits through organization-wide customer-orientation -Customer-centeredness: "SENSE & RESPOND" => an organization-wide commitment to researching and responding to customer needs over the long term.
Contextual factors & related concepts: buying power, willingness to spend, business cycle,...
Economic context: Buying power: # of goods/services that can be purchased with a unit of currency. Factors affecting: -Resources, such as money, goods, and services, that can be traded in an exchange -Income *Disposable income *Discretionary income -Wealth Willingness to spend: An inclination to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces Expectations influencing the willingness to spend: -Future employment -Income levels -Prices -Family size -General economic conditions (e.g., rising prices) -Business cycle 4 stages: prosperity: low unemployment and high total income create high buying power recession: rising unemployment reduces total buying power. consumer and business spending decline depression: unemployment extremely high, wages and total disposable income are very low, and there is a lack of consumer confidence recovery: economy is moving out of recession or depression and towards prosperity Technological Context: Technology: The application of knowledge and tools to solve problems and perform tasks more efficiently -Adoption rate -Innovativeness & opportunities -R&D budgets -Technological trends Social/Cultural/Demographic Context: -The influences in a society and its culture(s) that change people's attitudes, beliefs, norms, customs, lifestyles, and purchase habits -Demographic/social/cultural characteristics and trends Natural Context: -Geographical location -Raw material availability/shortages -Climate and weather -Waste disposal laws - Energy consumption regulations -Energy costs - Market's attitude towards the environment -Health conditions/Epidemics Political/Legal Context: -Laws, regulations, government agencies, and pressure groups, political environment to the extent that they influence organizations and individuals in an industry.
5 C's: Competitors Competitor analysis (2 stages) •Who are the competitors? What is the strategic group? •Competitive intensity: Porter's 5 forces; Pricing game and zero-sum competition
Involves two stages: 1.Identify and analyze key competitors 2.Evaluate the competitive intensity of the market (Porter's 5 Forces) stage 1: -identify competitors -Strategic group: Competitors that target the same markets and follow similar strategies. -Competition is more intense among companies within the same strategic group -want to know strategies, benchmarking, objectives, strengths & weaknesses stage 2: -Porters 5 forces -for competitors: suppliers, substitutes, buyers, new entrants -rivalry among competitors most intense if: Competitors are numerous and are roughly equal in size and power; Industry growth is slow; Exit barriers are high; Firms cannot read each other's signals well new entrants: Threat is least intense when there are barriers to entry: -Economies of scale -Product differentiation -Capital requirements -Incumbency advantages (regardless of size) -Access to distribution channels -Expected retaliation substitutes: Threat is highest when cross-elasticity of demand is high: -there is an attractive price-performance trade-off, and -buyer's switching costs are low. -CED: % change in one offering's sales due to a % change in a marketing variable of another offering (e.g., price) suppliers: Threat is high when they have bargaining power. That is, when suppliers: -are more concentrated (fewer) than the industry they sell to, -do not depend heavily on the industry for their revenues, -offer products that are differentiated, -provide products with no substitutes and hence switching costs are high, -pose a credible threat for forward integration. buyers: Threat is high when they have bargaining power. That is, when a buyer: -has concentrated, large volume purchases, -purchases a product that is undifferentiated and there are no switching costs to the buyer, -purchases a product that is not crucial, and -poses a credible threat for backward integration.
CLV: What is it? What goes into it? How is it used?
It is the net present value of all current and future profits generated over the life of the customer with the firm -Customer profitability: Function of revenues from and profit margin for a given customer -Customer tenure: How long will customers stay with us? annual customer revenue * # of loyal years * company profit margin = CLV Used to see how much money the customer will bring in the future. Past behavior and profitability is an indication, but not CLV.