Buad 307 Midterm Study Guide PDF

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BUAD 307 Midterm Study Guide. Includes lecture, reading, and asynchronous material notes...

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Marketing Introduction, Overview & Strategy Textbook Reading: • Marketing as an exchange (pp. 5-7): ● Exchange--the trade of things of value between the buyer and the seller so

that each is better off as a result • Marketing stakeholders (p. 12) ● Stakeholders--supply chain partners (wholesalers, retailers, or other

intermediaries such as transportation or warehousing companies) and society at large that are affected by marketing • Value co-creation (p. 14) ● customers act as collaborators with a manufacturer or retailer to create the

product or service; when Nike allows customers to custom design their sneakers, they are co-creating • Metrics (pp. 39-43) ● Metrics--a measuring system that quantifies a trend, dynamic, or

characteristic; they are used to explain why things happened and also project the future; the firm can determine why it achieved or did not achieve its performance goals with the help of these metrics • Strategic business units (p. 43) ● Definition--a division of the firm itself that can be managed and operated

somewhat independently from other divisions and may have a different mission or objectives • Strategic planning—why is it not sequential? (pp. 45-46) ● It is not sequential because: ○ the actual planning processes can move back and forth among

these steps of defining the business mission, performing the situation analysis, identifying strategic opportunities, evaluating alternatives, setting objectives, allocating resources, developing the implementation plan, and evaluating the performance and making adjustments Topics (Discussion Section) •Types of organizations that use marketing ● Businesses ● Government Units ● Non-Profit and cause related organizations ● YOU • Scope of marketing ● Started with the evolution of the internet ● Led to the disruption of social media and mobile ● Ended at the transformation of digital marketing • Value Exchange

• What is Marketing today? ● Textbook Definition--the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large ● In practice (According to Seth Godin’s Video)--it has moved beyond the “textbook definition” into customer-centric experience landscape • Perspective shift – outside - in ● Went from Inside-Out to Outside-In ● View Everything from the consumer’s perspective • Marketing’s evolving role (letting go of marketing legacy) • Digital disruption factors ● The internet set the stage ● Mobile changed the game • New digital era marketing mix • Customer benefits and delivering value • Communicating value to customers • Relationship marketing – vs selling • Customer Experience Centered ● Shift from business looking Inside-Out to Outside-In ● Everything is seen from the perspective of the customer • Shift in Definition of Marketing • Evolving Role of the CMO Asynchronous Material to focus on: Seth Godin Modern Marketer Video

Week 2: Digital Marketing/Electronic Commerce/Social Media Textbook Reading: • Sentiment analysis (pp. 71) ● Definition: a technique that allows marketers to analyze data from social

media sites to collect consumer comments about companies and their products; marketers can use this technique to analyze content found on sites such as Facebook, Twitter, and online blogs and reviews to assess the favorableness or unfavorableness to analyze data from these sources to collect consumer comments about companies and their products. • Bounce rates (p. 73) ● Definition: the percentage of times a visitor leaves the website almost

immediately, such as after viewing only one page; this is similar to going into a store, taking a quick look, and leaving. • Click paths (p. 74) ● Definition: shows how users proceed through the information on a

website--not unlike how grocery stores try to track the way shoppers move through the aisles; firms can use this to improve the way users navigate through the site so they can quickly find what they are looking for. Topics (Discussion Section) •Internet roles ● Sales engine--E-Commerce ● A robust research engine ● Relationship builder ○ Customer service ● Culture Hub ● Essential MARCOM Channel • Digital ecosystem planning ● Digital ecosystem is needed for understanding user traffic, contents, and the flow ● Digital & Social platforms are best utilized when they are evaluated, selected, and deployed in the context of the full marketing communications landscape ● Don’t overcomplicate--simplify • Pivotal role of mobile & search ● Search is the spinal cord of digital marketing; it touches and connects everything ● 65% of all searches start on a mobile device ● Mobility is about helping not selling ● Showrooming is the idea of buying something that you see in store online instead • Consumer journeys & moments ● Millennials: 62% use mobile device at retail ● Smartphone Showrooming (Younger people) ○ Buy products online after seeing the product in-store ● Smartphone Webrooming (Older People) ○ Buy products in the store after researching it online first

• Social planning & best practices ● Build a relationship to become more trusted ● Differentiate through emotional connections-be remarkable and unmistakable ● Real time customer service platform ● Nurture loyal fans to become essential advocates Asynchronous Material (Lars Perner Videos) • L’Oréal case ● Makeup Genius app allows the user to scan face, which identifies around 60 characteristics. ● Individual recommendations are made ● Valuable data on consumers is obtained on 20 million users ● Allows the customer to imagine herself with various styles and products ● They had a collaboration with Google to identify specific search terms. • E4 Framework for Digital Marketing (“big picture”) ● Excite ● Educate ● Experience ● Engage • 7C Online marketing framework (“big picture”) ● Core Goals ● Context Elements ● Content ● Community ● Communication ● Commerce ● Connection • Wheel of Social Media Engagement (“big picture”) ● Information Effect ○ Provide info about products (i.e. reviews, description, etc.) ● Connected Effect ○ The use of the reviews, descriptions, etc. to influence your choice in making a purchase. ● Timeliness Effect ○ Information can spread quickly ● Network Effect ○ People have various interests and refer the product/service to others. ● Dynamic Effect ○ Back and forth exchanges between participants (customers) ○ People joining new online communities as their interests change over time. • App pricing models ● Ad Supported ● Freemium

○ Free app that contains in-app purchases ● Paid Apps ● Paid apps with in-app purchases • “Normal” profits in free ● Normal Profits Definition: the profit levels that you would expect for a given level of investment and risk. ● In a free market, in the long run, competition drives down profits to these normal levels. ● If firms in an industry are making “supernormal” profits--higher than the normal profits that would be expected--other firms will enter the market to take advantage of this opportunity for high prices. ● This entry will continue until profits have been driven down to normal levels. ● An example of this would be online competition in the pandemic since everyone had to work from home. • 0 markets ● • Considerations in determining suitability for products and services for sale online ● Value-to-bulk ratio ○ High value, low weight/volume items can be more readily handled and shipped. ○ Value generally refers to the market price in this context ○ Bulk involves anything making it difficult and/or costly to ship ■ Large volume, heavy object, oddly shaped, perishable, fragile, hazardous ● Absolute Margin ○ If the percentage margin of a high priced item is low, the absolute margin can cover considerable expenses ● Ability of consumers to evaluate quality and fit through online description ○ Standard branded items from a trusted source can be more easily evaluated than items that need to be examined up close ○ Lesser known brands may require more inspection, but online reviews can help reduce uncertainty ○ Example is how it’s easier to buy toilet paper from Amazon compared to something more difficult that requires more attention like buying clothing as some brands have different fitting sizes ● Convenience to the customer and willingness to pay for this convenience. ○ Some customers are willing to pay more for their products to be delivered to them rather than to just pick it up somewhere. ○ It is usually more expensive to buy groceries online than just going to the store. ○ In practice, it is difficult to get customers to pay for shipping and handling due to intense competition ● Customer sensitivity to delayed delivery

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Self-explanatory; be prepared if your customer is strict about delayed deliveries or is more laid-back Extent of customization needed ○ Highly customized items such as insurance or plane tickets will allow the customer to do much of the work to figure out what best fits their needs Geographic dispersal of consumers ○ Even if direct-to-direct consumer sales are not efficient, this may be the only cost effective way to reach customers who are widely dispersed ○ For specialty products, customers may be scattered over large areas ■ Specialty collector items ■ Big and tall clothing that is not common (Size 4XL shirts or Size 20 shoe) Extent of inventory value decline over time ○ Because of rapid innovation and resultant product obsolescence, computer products may lose 1.5% value per week Assortment of variation ○ These products are inherently expensive to make and distribute ○ Some products will require a large assortment of combinations ■ Clothing--has 5 colors and 7 size ranges

• Relative costs in selling online, in retail settings, and combined mode ● • Profitability of online firms where costs of selling online are lower ● • Collaborative filtering (recommendation systems) • Basic Internet economics ● Filtering system that takes a look at your current purchases, past purchases, and purchase history to compare them with overlapping purchases that you have made. ● The results are then used to look at items that are bought by a large percentage of similar customers to provide you with recommendations. ● Some examples of collaborative filtering are to look at it from the level of the individual customer or from the level of the item. • Reality of online economics and competition ● Intense competition for large market products ● Use of large demand products as loss leaders ● Competition will force reduced costs--if any--to be passed on to customers ● Competition makes charging for shipping and handling difficult. This is due to: ○ Lesser economies of scale ○ Lower likelihood that the customer will be home to take delivery the first time around ● Less competition of special products translates to greater margins • “Bricks-and-clicks” potential ● Traditional retail chains and online presence tend to have synergy ○ Online access to store info--hours, locations, directions

○ Checking on “in stock” status on local stores ○ Online orders with store pickup ○ Online orders with delivery; store return option ● Brand Equity ● Volume purchasing power ● Inventory assortment warranted by combined store and online sales • Micro-payments—problems, opportunities, and applications ● Considerable online content and services could be made profitably available for a small charge. ● This is usually only viable for electronic content, NOT for tangible goods ● However, collecting small amounts of money can be: ○ Costly--credit card firms or debit processing firms may charge a significant per transaction fee ○ Inconvenient--the customer may not be willing to enter much information ● Mobile technology--with active login--may be helpful for the higher end micro-payments due to established billing relationships ● Micro-Payments are generally NOT: ○ For tangible goods. Shipping is too expensive for a small amount (low absolute margin) ○ For paying over-time. The cost of cutting a payment into very small payments is too high given credit card transaction fees • Cryptocurrencies ● Electronic currencies such as Bitcoin that allow for anonymous online transactions ● Can be used to circumvent oppressive governments ● They do have their problems: ○ Facilitation of illegal activities (ransomware, illegal drug sales, human trafficking) ○ Tool for circumventing taxation ○ Used by terrorist groups ○ High fluctuation in value (exchange rates to ordinary currencies) ○ Relies heavily on computing power; high energy costs • Internet of Things ● The idea how there is an increasing number of devices and appliances that can be connected to the internet through wifi, cellular connections, bluetooths, and other “patch-ins” ● Some examples are printers, Amazon Alexa, Google Home, TVs, and lights ● The benefits of the Internet of Things are the following: ○ Remote control ■ Stolen car driven by a criminal can be disabled ○ Limiting control to authorized persons ■ Temperature or lighting at a location can be done only through a device with proper validation ○ Communication between devices and service providers

■ Diagnostics to run repair needs Device as menu system ■ Functions in small appliances like light bulbs where you control it from your phone Some issues of the internet of things are the following: ○ Use of bandwidth ○ Massive amounts of data can be generated by a single appliance or device. ○ Privacy ■ Substantive (release of audio, video, or personal records) ■ Theoretical (use of data for analysis with no personal attribution) ○ Security ■ Hacking potential ○ Dependence/impact of loss of connection ○ Cost savings ■ Energy ■ Maintenance ○

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Week 4: Conscious Marketing/Corporate Social Responsibility/Purpose Textbook Reading: • “Triple Bottom Line” (p. 85) ● Definition--a means to measure performance according to economic,

environmental, and societal criteria Topics (Discussion Section): • Purpose driven brand marketing ● Brand’s ethos/values made accessible through actions and/or supported causes helping consumers bond and connect more fully with the “total” brand ● Not one size fits all ● Harness positive emotions ● True to the brand ● Reflective of company culture--live it on the inside

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Respectful and Responsive to consumer needs and desires Sustained commitment--not cause of the moment An example of a company with a powerful purpose is Dawn Dish Soap Follow this formula: ○ Sincere Mission Statement ○ Brand Value Proposition ○ Brand Values articulation ○ Purpose content platform(s) identified ○ Proof ○ Actions ○ Sustain • Beyond company mission - Values & Ideals ● Values: inward create your culture. Outward define your brand ● Today’s fastest growing brands are value based ● You can’t fake values ● They must be sincere and lived every day ● The ideal is the business/brand’s inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world • Company culture is marketing ● Company culture is an asset that permeates and enhances all aspects of a brand’s marketing mix ● Culture serves as a business currency • The path to powerful purpose ● Consumers have always adopted brands based on their value (price/benefit ratios) and values (shared emotional connections) ● Today is a more specific and sincere linkage (Brand values/consumer values) is essential to success ● Purpose-driven marketing content is a strategic element of a communication platform • Best practices, cautions ● Embrace brand purpose as a sincere AWAKEning versus an opportunistic AWOKEning ● Do vs. Say ● Some Cautions: ○ Bypassing the path and arbitrarily adopting an “available” cause or reversing the order and adopting brand purpose content based on what is currently en vogue to capture attention and buzz. (Don’t jump on the bandwagon of things) ○ Retrofitting/force fitting elements to relate back to brand values • Unilever – Best Practice Company (videos) • Brand/Company Hits and Misses Asynchronous Material (Lars Perner Videos): •Model for identifying ethical concerns

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Apply the flowchart to specific firm issues and decisions Steps in the flowchart: ○ Deception and Manipulation--It does not have to involve outright lies. True statements can be misleading ○ Preying and Personal insecurities--advertisements may cause consumers to focus on bodily imperfections and other perceived personal limitations, causing the consumer to buy the products that he or she may not otherwise have bought ○ Product Dangers--products that can potentially cause consumers harm tend to be problematic. In some cases, there may be some danger in using a product that is unavoidable. ■ An example is how it is not possible to design a car that can guarantee no risk of injury. • General ethical concerns: Misleading communication, potentially harmful products, taking advantage of ignorance ● Misleading advertisements and marketing in general ● Taking advantage of consumer ignorance ● Marketing of harmful products ○ Physically dangerous ○ Over-consumption; marketing to people living above their means ● Marketing of products banned or not marketed in the U.S. to other countries • “Win-win” opportunities for firms and non-profit organizations ● By pooling resources, different organizations may each get more than what they put in. ○ Firms may be able to contribute not only cash but also relevant expertise ○ Favorable publicity may be worth than the same amount spent on advertising ○ Charitable groups may provide access to potential customers ● A large retail chain might sponsor a concert series by paying all expenses in return for considerable publicity ● Triple “win-win-win” deal: ○ The charity receives the proceeds without having to pay costs ○ The sponsor receives publicity. Tickets are bought in the store or on its website ○ An aging artist--whose fans are now in their prime earning years--gets an opportunity to revive a career or promote a new venture (e.g., movie role)

Week 5: Understanding Consumer Behavior/Consumer Centricity Asynchronous Material (Lars Perner): Consumer behavior involves the psychological processes that consumers go through in recognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand and where), interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product).

• Consumer uncertainty: - no quick answers on internet, many information and sources, hard to find - no yes or no answer, and most information is opinions. • Associative network of knowledge : -myth, misconception, Ex: false information of spinach is full of iron which is not true but parents still apply that idea to kids • Consumer problems: Within the context of psychology and consumer behavior, the term problem has a specific meaning: A discrepancy between the actual and the ideal situation. This can be a very minor problem, or it could be a major one. These discrepancies may motivate the consumer to take action, possibly involving a product or service, and products and services can be positioned as potential solutions to problems. -some problems are not recognized. Ex: alcoholic but in denial -solutions to deal with problem in different ways: could be stress reduction such as vacation, movies, hot bath..etc • information search: -internal: with your head, memory thinking -External: use information to search on internet, ask friends, visit stores (high involvement) • Consumer decision stages: -psychological factor: motives, attitude, perceptions, learning and lifestyle -situational factor: purchase situation, sensory situation, temporal state -marketing mix: product, price, promotion, place -social factor: family, reference group, culture • Approaches to alternative identification (solution search) -internal search: occurs when buyers examine his/her own memory and knowledge about the product/service, gathering through past experience. -external se...