Class 1 Flashcards Preview

Marketing Management > Class 1 > Flashcards

Flashcards in Class 1 Deck (12)
Loading flashcards...
1
Q

Definition of Marketing

A
  • Marketing is about creating value focusing on benefits and not on the product.
  • Related to the reading “marketing myopia”
  • Companies should focus on the benefits and not on the product (consumers buy drills and not holes)
  • Keeping costumers is more profitable than attracting new ones (Cost of attracting a new customer can be up to 5 times the cost of keeping a current one)
2
Q

Customer Value

A
  • Basic segment attractiveness (big, growing, stable: without volatility due to seasonality)
  • Customer attractiveness (high volume users with willingness to pay a lot)
  • Cost (low acquisition costs: how easy to reach them, conversation rate)
3
Q

3C’s - Marketing Analysis

A
  • Customer needs (who, what, how)
  • Company’s strength & weaknesses (mission, image, profitability)
  • Competitors position (current & future)
4
Q

4P’s - Marketing Mix

A
  • Product (line, design, branding)
  • Price (setting, communication, skimming vs. penetration)
  • Promotion (advertising, sales)
  • Place (distribution channels)
5
Q

Word-of-mouth

A
  • Word-of-mouth = a very effective way to attract new customers
  • Friends know us better than companies -> Trust: people are much better persuaded by their friends than by a commercial
  • Negative word of mouth is spread much broader (five times more when something negative, two if something positive happens)
  • It is 10 times more effective than traditional advertising
6
Q

Prospect Theory

A
  • People are risk averse towards gains and risk seeking towards losses
  • Pain of losing is about twice as powerful as pleasure of gaining (e.g. it is better to not lose 5€ than to find 5€)
-	Explains bad decisions in the stock market: sell good stocks because of being risk averse towards gains and not the bad stocks because of being risk seeking
towards losses (Disposition Effect)
7
Q

Unconscious decisions

A
  • Consumers often make choices that are sometimes not consistent with their own previous choices or with what they say they would buy (irrational choices)
  • This is because consumers are influenced by the context in which choices are made (buy
    French wine when French music is played)
  • Consumers are also influenced by a concept that is highly accessible when making a decision (buy the tennis shoes of PUMA after seeing many pictures of dogs)
  • Consumers often make better choices when basing their decisions on their immediate emotional reaction
  • Unconscious decision: go to bed, sleep over it
8
Q

Normative influence

A
  • Brand-choice congruency = Likelihood that consumers will buy what others in their group buy
  • Conformity = Individual is likely to behave as group behaves
9
Q

Decision-making

A
  • Consumers want to simplify their choices and get tired when having to make too many choices and when a choice is very difficult to make
  • They are focused on immediate gratification such that
    they say they would prefer to eat a fruit in the future, but they prefer a candy for now
  • When selecting several products for future consumption, consumers tend to seek variety
10
Q

Difference between market driven and market driving strategies

A
  • Market driven is focused on satisfying current customers
  • Market driving is about creating new customers (by focusing on innovation and considering
    competition broadly)
  • That’s why it is so important to understand consumers
    needs (be externally oriented) and to try to connect the brand with consumers’ goals
11
Q

Prospect Theory

Sunk-Cost Effect, Status Quo Bias, Anchoring Effect, Segregation of gains, combination of losses, endownment effect

A
  • Making choices in a way that justifies past, faulty choices (Sunk-Cost Effect)
  • Favoring Alternatives that perpetuate (nicht verändern) existing situation (Status Quo Bias)
  • Giving disproportionate weight to first information you receive (Anchoring Effect)
  • Prefering several smaller gains over loosing more often (Segregation of gains, combination of losses)
  • Explains why people overvalue the things they own (endownment effect).
12
Q

Decision-making

Attribute substitution, Choice aversion, Decoy effect

A
  • Choices are justified by comparing alternatives in a set and so an alternative is considered as being more attractive if presented together with a clearly worse alternative (attribute substitution)
  • Consumers are averse to making a difficult choice and so if presented with two similar options and one different option they will choose the different one to avoid the difficult choice (choice aversion)
  • Consumer will tend to have a specific change in preference between two options when also presented with third option that is asymmetrically dominated (Decoy Effect)