Creating Customer Value I
Creating Customer Value II
Creating Customer Value III
Marketing Process
Situation Analysis
100
The Value Proposition Matrix in marketing is used to:
A. Understand and align with customer desires, needs, and problems
B. Calculate the total life cycle cost of a product
C. Determine the pricing strategy based on competitor prices
D. Measure the brand awareness and market share
E. Assess the production costs and profit margins
A. The Value Proposition Matrix is a strategic tool used to align a company's offerings with the specific desires, needs, and challenges of their target customers.
100
An app developer launches a social networking app designed to connect people with similar hobbies. Which aspect of social value should the developer prioritize to ensure the app's success?
A. Lowering subscription fees
B. Focusing solely on advertising
C. Increasing the number of users to enhance network effects
D. Improving the app's functionality
E. Reducing data usage
C
Network effects mean that the value of the app increases as more people join, creating a virtuous cycle of growth. Prioritizing increasing the user base can exponentially magnify the app's value.
100
The razor blade industry is notorious for adding more blades to their razors in a "feature war." What might be a negative outcome of focusing too much on this feature rather than the benefits to customers?
A. Reduced manufacturing costs
B. Enhanced brand image through technological innovation
C. Increased environmental sustainability
D. Increased product complexity leading to user confusion
E. Broader distribution channels
D
Adding more blades may make the product seem more technologically advanced, but without clear communication of tangible benefits, it can lead to confusion among customers about the real advantages, potentially overshadowing the essential purpose of a closer shave.
100
A product with high market growth and high relative market share is categorized in the BCG Matrix as:
A. Star
B. Cash Cow
C. Dog
D. Dilemma
E. Question Mark
A. Star
100
A company evaluates changing demographics, culture, and technological trends to identify opportunities and threats. This evaluation is part of:
A. BCG Matrix
B. Internal Environment Analysis
C. Ansoff Matrix
D. External Environment Analysis
E. Competitive Analysis
D.
External Environment Analysis involves examining outside factors that impact the business, including demographics, culture, and technological trends, to identify potential opportunities and threats.
200
In the context of Customer Lifetime Value (CLV), what is a primary reason for a company to focus on customer satisfaction and loyalty?
a. To optimize the value derived from each customer over time
b. To reduce the inherent demand
c. To maximize the demand ceiling
d. To increase the base level of sales
e. To enhance customer acquisition
a.
CLV focuses on the long-term value derived from a customer, emphasizing the importance of customer satisfaction and loyalty to maximize this value over time.
200
If a company wants to maximize its profit while keeping the price below the EVC, what is the highest price it can charge for Product X?
A. $175
B. $500
C. $125
D. $400
E. $600
E. $600
EVC is $600.
200
Which method for building experiential value is most likely to have the most variability for consumer-based service organizations such as hotels and restaurants?
a Branding
b Design
c Customer service
d Features
e Functions
c Customer service
Customer service and the customer experience can be sources of competitive advantage to organizations. According to a Bain & Company report (2005), however, consumers perceived that only 8% of 362 organizations actually delivered superior service.
Front-line employees, who often receive the least compensation and the least amount of training in organizations, are the people most responsible for delivering superior customer experience. Lack of training and incentives results in an annual turnover rate of more than100% among these employees in many industries, such as retailing and hospitality.
Source: James Allen, Frederick F. Reichheld, Barney Hamilton, and Rob Markey, “Closing the Delivery Gap,” Bain & Company Report, 2005,
200
A company decides to sell its products at the lowest possible prices to attract a large customer base. This approach is an example of:
A. Production Concept
B. Societal Marketing Concept
C. Product Concept
D. Selling Concept
E. Marketing Concept
A.
The Production Concept focuses on high production efficiency and wide distribution to offer products at the lowest possible prices, appealing to a mass market.
200
Which of the following statements best describes the relationship among SWOT, PESTEL, Porter's Five Forces, and internal analysis?
A. SWOT and PESTEL both primarily analyze a company's internal environment.
B. Porter's Five Forces evaluates macro-environmental factors similar to the PESTEL analysis.
C. SWOT analysis uses insights from both internal analysis (strengths and weaknesses) and external analysis (PESTEL and Porter's Five Forces for opportunities and threats).
D. Internal analysis provides insights into the competitive dynamics within the micro-environment of an industry, similar to Porter's Five Forces.
E. PESTEL and internal analysis both focus on evaluating a company's strengths and weaknesses.
C
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are derived from an internal analysis of the company, evaluating its resources, capabilities, and other internal factors. Opportunities and Threats, on the other hand, are derived from an external analysis of the environment in which the company operates. This external analysis can be facilitated by tools like PESTEL, which evaluates macro-environmental factors (Political, Economic, Social, Technological, Environmental, and Legal), and Porter's Five Forces, which assesses the competitive dynamics within the micro-environment of an industry.
300
Consumers concerned about buying socially and environmentally responsible products and services are NOT likely to consider which of following when making a purchase?
a A company’s carbon footprint
b A company’s raw materials sourcing
c A company’s treatment of its employees
d A company’s contributions to the communities in which it operates
e All of the answers are correct.
e
Consumers are increasingly likely to consider in their purchasing decision factors such as a company’s carbon footprint, raw-materials sourcing, treatment of employees, factory and working conditions, and contributions to the communities in which it has operations and to customers’ top causes. To appeal to them and other consumers who have the same values, companies must not only claim that they are socially and environmentally responsible in their business practices, they must prove it to consumers.
300
Disney World, a theme park in the United States, combines the familiar with the fantastic. According to Disney, the theme park’s physical layout was created to provide an immersive, 24-hour experience that enables Disney to charge a premium for the entire experience. Which aspect of experiential value does the layout of Disney World BEST represent?
a Branding
b Design
c Front-line employees
d Customer service
b
Organizations can create experiential value for customers in at least four ways: through the branding, design, customer experience and customer service, and/or emotional benefits they offer in their products or services. Design within the context of a physical or virtual space can create an immersive experience that enhances experiential value.
300
A 2006 experiment studied how social influence affected a user’s preference for music by randomly assigning participants to one of two experimental conditions: independent, where they saw only the names of the bands and songs, and social, where they also saw how many times a particular song was downloaded by previous participants. The number of previous downloads was experimentally manipulated so that different songs were shown to be more popular in different tests. The study found that “popular” songs (as manipulated by the researchers) became even more popular, regardless of which song was artificially made popular. What element of social value was explored in this study?
a Network effects
b Social relationships
c Social capital
d Preference formation
e Increasing return to scale
d
Research shows that consumers’ preferences are often constructed and heavily influenced by their peers. Complete information about the study described in the question can be found in-text and is listed as the following reference in the endnotes:
Matthew J. Salganik, Peter Sheridan Dodds, and Duncan J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science 311 (February 2006): 854–856.
300
What is the primary goal of situational analysis in the marketing planning process?
A) To determine the company's profit margins
B) To identify the target market and customer segments
C) To assess the internal and external environments affecting the business
D) To calculate the budget for the marketing plan
E) To decide on the channels of distribution
C) To assess the internal and external environments affecting the business
Situational analysis is crucial for understanding where the company stands, including its internal strengths and weaknesses, and the external opportunities and threats it faces.
300
Which of the following scenarios best illustrates a company performing a macro-environmental (PESTEL) analysis during their situation analysis?
A. A fashion brand evaluates the purchasing habits of their target market in various cities.
B. An organic food company surveys customers about their preferences for product flavors.
C. A toy manufacturer assesses the impact of recent child safety regulations on their production process.
D. A tech firm evaluates the coding skills of its software developers.
E. A beauty product company gauges the success rate of their recent advertising campaigns.
C
PESTEL analysis examines the macro-environmental factors that can influence an organization. In this case, the child safety regulations relate to "Legal" factors in the PESTEL framework, which assesses Political, Economic, Social, Technological, Environmental, and Legal influences on a business.
400
XYZ Company, a manufacturer of eco-friendly cleaning products, recently introduced a new packaging design made entirely from recycled materials. The packaging also includes a QR code that, when scanned, shows a short video of the positive environmental impact a customer makes by choosing their product. This approach is primarily an attempt to create customer value based on which principle?
A. Functional value through product efficiency.
B. Experiential value through an augmented product experience.
C. Economic value by reducing the product's price.
D. Social value by making customers feel part of a larger cause.
E. Brand value through aggressive advertising.
D
By emphasizing the environmental benefits of choosing their product and providing a direct way for customers to see the impact they're making, XYZ Company is offering customers a sense of social value. Customers not only get a product that meets their cleaning needs but also feel they are contributing positively to the environment, fostering a connection to a larger cause or community.
400
Which of the following best describes the difference between Market-Driven Value and Market-Driving Value?
A) Market-Driven Value focuses on past consumer trends while Market-Driving Value focuses on future potential products.
B) Market-Driven Value uncovers customer needs through market research, while Market-Driving Value creates products based on a company's vision of the future.
C) Market-Driven Value pertains to the current stock price, while Market-Driving Value is about predicted stock price growth.
D) Market-Driven Value is centered on competitor analysis, while Market-Driving Value disregards competition entirely.
E) Market-Driven Value is a B2B approach, whereas Market-Driving Value is B2C-focused.
B) Market-Driven Value uncovers customer needs through market research, while Market-Driving Value creates products based on a company's vision of the future.
Market-Driven Value refers to strategies and actions that are guided by current market trends, customer needs, and preferences, which are identified through market research. Companies adopting this approach focus on understanding what the customers want or need and then developing products or services to meet those needs. It's about reacting to the existing market conditions and customer demands.
Market-Driving Value, on the other hand, involves companies taking a more proactive approach to influence the market and create new demands by introducing innovative products or services. This strategy is not just about responding to the current needs but about anticipating or creating new needs through innovation. Companies with a market-driving approach aim to change or shape customer preferences and behaviors based on their vision of what the market could be, rather than what it currently is.
400
A local bookstore wants to enhance the value they provide to customers. Which of the following strategies best demonstrates the bookstore's commitment to increasing experiential value for its patrons?
A) Offering competitive prices on bestsellers to match online retailers.
B) Introducing a loyalty program that provides discounts after a certain number of purchases.
C) Expanding the selection of genres available in the store.
D) Hosting monthly author readings and discussions to create a sense of community.
E) Providing free shipping for orders over a certain amount.
D
Experiential value is derived from the experience and emotional connection customers have with a brand or product. By hosting author readings and discussions, the bookstore is offering an experience that goes beyond a simple transaction, fostering a deeper connection with its patrons and creating a unique shopping environment.
400
What does the BCG Matrix help a company to analyze?
A) Product quality
B) Employee performance
C) Market share and market growth of product portfolios
D) Customer satisfaction levels
E) The effectiveness of marketing communications
C) Market share and market growth of product portfolios
The BCG Matrix is a strategic tool used for analyzing a company's product offerings in terms of their market share and the market growth rate, helping to make strategic decisions about product management.
400
A new startup is planning to enter the electric vehicle (EV) market. They utilize the SWOT analysis framework to gauge their position. Which statement best describes how they should approach their SWOT analysis in relation to PESTEL, Porter's Five Forces, and internal analysis?
A. The startup should analyze their production capabilities using PESTEL to identify their strengths and weaknesses.
B. By using Porter's Five Forces, the startup can understand their SWOT's opportunities based on industry competitors' strengths.
C. The startup should derive their opportunities and threats from PESTEL and Porter's Five Forces, while strengths and weaknesses come from their internal analysis.
D. The startup's internal weaknesses can be assessed through Porter's Five Forces, while strengths are highlighted through PESTEL.
E. Porter's Five Forces should guide the startup in understanding macro-environmental factors, while PESTEL will highlight industry competition for the SWOT.
C.
Imagine the startup, ElectroDrive. ElectroDrive's internal analysis revealed a strength in innovative battery technology, but a weakness in supply chain logistics. Through PESTEL, they noted an opportunity in the political environment with government incentives promoting green technology (opportunity) but identified a threat from potential changes in international trade laws affecting battery components. Utilizing Porter's Five Forces, ElectroDrive recognized the competitive rivalry in the EV market and saw a threat in strong, established players like Tesla and Nissan. The barrier to entry was high due to huge investments needed, but they saw an opportunity in collaborating with established automakers lacking EV technology. Combining these insights, ElectroDrive's SWOT analysis effectively incorporates both internal and external factors.
500
After researching several brands, Ashok decided that refrigerators at a similar price point offered the same basic functions. During a recent visit to a store, Ashok bought a Whirlpool refrigerator simply because he thought the look (style and color) was more visually appealing than the other models. Based on the information in this scenario, which of the following statements is most likely TRUE?
a Ashok purchased a Whirlpool based on its economic value compared to the competitors.
b Ashok purchased a Whirlpool because it offered superior functional value.
c Ashok purchased a Whirlpool based on experiential value created through its design.
d Ashok should not have made a purchase without more research.
e Ashok should have delayed his purchase until he identified a product with superior total customer value.
c
Economic value refers to the tangible monetary savings either at the time of purchase or over the long-term use of a product. Functional value refers to the performance and features of the product. Experiential value refers to the intangible psychological and emotional value that can be derived.
In the scenario, Ashok does not appear to differentiate options in terms of economic or functional value. However, his preference for Whirlpool’s design indicates a preference for the experiential value offered.
It is also important to note that consumer choice may not always seek to optimize total customer value. Instead, consumers may select among alternatives based on one or more of the types of customer value.
500
Explain the three main characteristics of EVC (Economic Value to the Customer).
EVC is the maximum price that a customer should be willing to pay for a product
EVC is calculated as the total life cycle cost or cost of ownership over the entire life of a product
EVC for a product is estimated compared with an existing product used by the customer
500
A coffeemaker manufacturing company is planning a new coffeemaker that features 12 cup sizes, five brew strengths, three auto-timer settings, an espresso option, and a latte option. Concept testing suggests that the number of functions that the coffeemaker can perform is causing many customers to complain about the usability of the product. It is likely that the complaints are a result of _______.
a the functional value
b the function-benefit ratio
c feature fatigue
d experiential value
e capability capacity
c
Rust, Thompson, and Hamilton (2006) suggest that as more features are added to a product, perceived capabilities increase yet perceived usability decreases. Before using a product, consumers stay that capability matters more. By comparison, usability becomes more important after use. This is referred to as feature fatigue.
Source: Rust, Roland T, Debora Viana Thompson, and Rebecca W. Hamilton (2006, February). Defeating Feature Fatigue. Harvard Business Review 84, 98-107.
500
A company decides to sell its products at the lowest possible prices to attract a large customer base. This approach is an example of:
A) Production Concept
B) Product Concept
C) Selling Concept
D) Marketing Concept
E) Societal Marketing Concept
A) Production Concept
The Production Concept focuses on high production efficiency and wide distribution to offer products at the lowest possible prices, appealing to a mass market.
500
SolarTech, a company specializing in producing solar panels, is strategizing its market expansion using PESTEL, Porter's Five Forces, and an internal analysis. Match the insights derived from these analyses to the relevant sections of a SWOT table:
Findings:
- Growing environmental concerns leading to government subsidies for renewable energy.
- The presence of multiple suppliers for raw materials, leading to competitive pricing.
- SolarTech has a patented technology that increases the efficiency of their solar panels by 15%.
- An increasing number of competitors entering the solar panel market.
- SolarTech's production facility is outdated, leading to slower production rates.
Options:
A. PESTEL - Growing environmental concerns
B. Porter's Five Forces - Presence of multiple suppliers
C. Internal Analysis - Patented technology
D. Porter's Five Forces - Increasing number of competitors
E. Internal Analysis - Outdated production facility
- Strengths: _____
- Weaknesses: _____
- Opportunities: _____
- Threats: _____
- Strengths: C
- Weaknesses: E
- Opportunities: A, B
- Threats: D
SolarTech's internal analysis highlighted their unique strength in the market with their patented technology. Yet, the same internal scrutiny exposed a key weakness: their outdated production facility. The PESTEL analysis, by evaluating the political and environmental sectors, revealed a significant external opportunity due to the government's incentives and growing environmental awareness. Porter's Five Forces brought to light the increasing competition in the industry, presenting a clear threat. Also, the presence of multiple suppliers could be viewed as an opportunity to reduce production costs.