Principles of Marketing Quiz 1

What is marketing?

The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

How many steps are involved in the marketing process?

The marketing process involves five steps. The first four create value for customers; the fifth step involves capturing value from customers.

First step in the marketing process:

Marketers need to understand the marketplace and customer needs and wants.

Second step in the marketing process:

Marketers design a customer-driven marketing strategy with the goal of getting, keeping, and growing target customers.

Third step in the marketing process:

Marketers construct a marketing program that actually delivers superior value.

Fourth step in the marketing process:

Building profitable relationships with customers and creating customer delight.

Final step in the marketing process:

Capturing value from customers.

Core marketplace concepts:

Needs, wants, and demands; market offerings (products, services, and experiences); value and satisfaction; exchange and relationships; and markets.

What are wants?

Needs shaped by culture and individual personality.

When do wants become demands?

When backed by buying power.

Value proposition:

A set of benefits that a company promises to consumers to satisfy their needs.

Explain the importance of understanding customers and the marketplace.

Outstanding marketing companies go to great lengths to learn about and understand their customers needs, wants, and demands. This helps them to design want-satisfying market offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer.

Market segmentation:

Dividing the market into segments of customers.

Target marketing:

Selecting which segments a company will serve.

Production concept:

Holds that management’s task is to improve production efficiency and bring down prices.

Product concept:

Holds that consumers favor products that offer the most in quality, performance, and innovative features.

Selling concept:

Holds that consumers will not buy enough of an organization’s products unless it undertakes a large-scale selling and promotion effort.

Marketing concept:

Holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

Societal marketing concept:

Holds that generating customer satisfaction and long-run societal well-being through sustainable marketing strategies is key to achieving the company’s goals and fulfilling its responsibilities.

Customer relationship management:

The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Customer equity:

The total combined customer lifetime value of all of the company’s customers.

Changes in the marketing landscape in this age of relationships:

Consumer frugality due to recession – marketers must emphasize value, digital technology, globalization, sustainability, growth of not-for-profit organizations, EMPHASIS ON RELATIONSHIPS.

Explain company-wide strategic planning and its four steps:

Strategic planning involves developing a strategy for long-run survival and growth. It consists of four steps: 1) Defining the company’s mission 2) Setting objectives and goals 3) Designing a business portfolio 4) Developing functional plans

Business portfolio:

The collection of business and products that make up the company. Companies must analyze and adjust business portfolios and develop growth and downsizing strategies for the future.

Marketing mix:

Product, price, place, promotion.

SWOT analysis:

Means by which the marketer evaluates the company’s overall strengths (S), weaknesses (W), opportunities (O), and threats (T). Strengths & weaknesses = internal. Opportunities & threats = external.

Return on marketing investment (marketing ROI):

The net return from a marketing investment divided by the costs of the marketing investment.

Growth-share matrix:

A portfolio-planning method that evaluates a company’s strategic business units (SBUs) in terms of its market growth and relative market share.

High market growth rate, high relative market share:

Star

High market growth rate, low relative market share:

Question mark

Low market growth rate, low relative market share:

Dog

Low market growth rate, high relative market share:

Cash cow

Product/market expansion grid:

A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.

Value chain:

The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.

Value delivery network:

The network made up of the company, its suppliers, its distributors, and its customers who partner with each other to improve the performance of the entire system.

Marketing management functions:

Marketing analysis, planning, implementation, and control.

Marketing control:

Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved.

Positioning:

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Differentiation:

Actually differentiating the market offering to create superior customer value.

Marketing myopia:

Paying more attention to the product than to the benefits and experiences produced.

Drucker’s Classic Questions (Defining the Corporate Mission):

What is our business? Who is our customer? What is the value to the customer? What will our business be? What should our business be?

Microenvironment:

Internal environment, marketing channel firms, competitors, publics, markets.

Five types of of customer markets:

Consumer, business, reseller, government, and international markets.

Macroenvironment:

Demographic, economic, natural, technological, political/social, and cultural forces.

Today’s demographic environment:

Changing age structure, shifting family profiles, geographic population shifts, a better-educated and more white-collar population, and increasing diversity.

Today’s economic environment:

More frugal consumers who are seeking greater value, middle class is shrinking.

Today’s natural environment:

Shortages of raw materials, higher pollution levels, and move government intervention in natural resource management.

Marketing information system (MIS):

People and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights.

Five Forces Analysis:

Bargaining power of suppliers, threat of new entrants, threat of substitute products, bargaining power of buyers all contribute to competitive rivalry.