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What is Willingness to Pay and Consumer Surplus?
WTP: the maximum amount an individual is willing to sacrifice to procure a good or avoid something undesirable. How much will my life be better if I have this. If WTP higher than actual price, then customer will buy. Consumer surplus: The difference between WTP and the actual price he/she paid.
What is the definition of Marketing?
The activity set of institutions and processes that creates, communicates, delivers and exchanges offerings that have value for customers, clients, partners, and society at large.
Creating value through exchange, managing profitable customer relationships
What is the definition of a Product and Service? (Separate definitions).
Product: It is anything that has value and people are willing to sacrifice something for — exchange of value. Service: It is a deed, performance or effort that cannot be physically possessed.
What are the brief notions of marketing?
Maintaining profitable customer relationships, creating value through exchange. Business has 2 functions: marketing and innovation.
Creating value through exchange, managing profitable customer relationships.
What is the Marketing Mix?
4P's: Product, Place, Price, Promotion
How to assess the marketing environment?
STEPDC: Social, Technological, Economic, Political, Demographics and Competitive Changes
What is the consumer decision making process?
Need recognition 2. Information search 3. Comparing of options/evaluation of alternatives 4.Purchase 5.Post-purchase behaviour; loyalty or churn
Correlation could imply causation, but not necessarily because of _____,______, and ______.
Coincidence, Reverse Causality, Endogeniety.
What affects consumer behavior?
1) Cultural factors (power distance, individualism v Collectivism) 2) Social factors (Reference groups, eg Direct reference groups like family and friends or indirect like aspirational and non-aspirational groups)
What is path dependency?
It is the continued use of a product based on historical preference or use
What are the characteristics of a service? Describe them.
Intangibility: Cannot be seen, heard or touched until purchase is made
Heterogenity: The service rendered will differ, depending on who / when / where / how the service is rendered
Inseparability: The production and consumption of the service must be done at the same time
Perishability: Service cannot be stored for later use
Moral principles and values that generally govern the conduct of individuals. Deontology: unchanging rule, standard, or ought (DUTY). Utilitarianism: Greatest good for the greatest number.
What is the continuum of involvement in decision making?
Involvement is the time and effort put into the decision process. High involvement purchases: Usually required extensive and informative promotion to target the market. Low involvement purchases: Rule of thumb and peripheral cues (eg. low prices, celebrity endorsers)
To describe, diagnose & predict better decisions, track problems, keep customers and understand the market.
What are the definitions of Segmenting, Targeting and Positioning?
Segmenting: Dividing the market into sub-groups based on common characteristics
Targeting: Targetting a group of people for which an organisation designs, implements and maintains a marketing mix to meet the needs of that group
Positioning: Putting yourself in a place where consumers will like most
What is the Maslow's Hierarchy of Needs and give examples.
Physiological, Safety, Social, Self-esteem, self-actualization
What are the different ways to target a market?
Undifferentiated; usually for mediocre business whose products are no one’s first choice.
Pros: No need to incur more costs to segment the market
Cons: Unimaginative product line + More prone to competition
Centred; Targets niche markets
Pros: Resources are more concentrated + Allows for a strong positioning + Allows smaller brands to compete against giants
Cons: Larger competitors can target their marketing towards the niche markets too + Segments are too small and subject to changes
Multisegmented; Targets mutliple markets
Pros: Can generate a substantial amount of profit + Economies of scale
Cons: Higher costs generated + Higher risk of cannibalisation
What are the advantages and disadvantages of using celebrity endorsements?
Advantages: People who like the celebrities will like your brand more, Builds trust and credibility, Can leverage on celebrities to enter new markets
Disadvantages:They are human and can make mistakes too (get involved in scandals)
What should one consider when setting objectives?
Objectives has to be: MRTC
1. Time-specific
2. Measurable
3. Realistic
4. Compared to a benchmark
What is the different pricing strategies? Elaborate.
1) Cost plus 2) Even-Odd 3) Bundle Pricing 4) Captive Pricing 5) Perceived value
What are the different ways to segment a market, and what are the criterias to have before one can segment a market?
Geographic segmentation 2.Demographic segmentation 3.Behavioural segmentation; based on their usage rate and occasion
The market has to be substantial enough,The market has to be identifiable & measurable, Members of the target market must be reachable with the marketing mix, Target market must be more responsive to the marketing mix
What is a consumer's black box, and what are the factors that make up a consumer's black box?
Consumer's black box is the internal decisions that affects a consumer's decisions. Made up of Cultural factors, social factors, individual factors, psychological factors.
What are the types of data? Give some examples of how we can collect data.
Quantitative, Qualitative. Secondary, primary data. Eg: Focus group, depth interview, lab experiment, natural experiment, amazon recommendations, data brokers, sales invoice, exit interviews
What does a business mission consist of?
1. State one or two broad/fundamental goals.
2. Should motivate the organisation’s employees and members
3. Should be customer-oriented; promise to satisfy basic consumer needs
What are the definitions of PRICE? What is PRICE to the SELLER and to the BUYER?
Narrow definition: It is the amount charged or paid in exchange for a good or service. Broad definition: It is whatever that is given up by a customer for ownership / use of a product
Price to the seller is the revenue earned
Price to the buyer is the cost/sacrifice made
Generally, when limited information is available, price = quality