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MARKETING
Chapters 1-3, 5, 8-9 on Midterm
{Chapter 1} The Art and Science of Satisfying Customers


What is Marketing?
· Organizations must create utility and customers to survive
· Activities must perform to create customers: identifying customer needs; designing products to meet those needs; communicating information


TYPE
DESCRIPTION
Form
Conversion of raw materials & components into finished goods/services
eg. Dinner at Swiss Chalet; iPod; shirt from Mark’s Warehouse
Time
Availability of good/services when consumers want them
eg. Dental appointment; digital photographs; eyeglass guarantee; Canada Post
Place
Availability of goods/services at convenient locations
eg. Soft-drink machine outside gas stations; on-site day care; banks in grocery stores
Ownership
Ability to transfer title to goods/services from marketer to buyer
eg. Retail sales (exchange for currency or credit card payment)

A Definition of Marketing
· Marketing: an organizational function & a set of processes for: creating, communicating, and delivering value to customers; managing customer relationships in ways that benefit the organization and its stakeholders

Today’s Global Marketplace
· Factors that have extended economic views: increase in international trade agreements; growth of electronic business; interdependence of the world’s economies
· Companies seek the most efficient manufacturing sites and most lucrative markets worldwide
· Companies are tailoring their marketing efforts to the needs and preferences of local markets
Five Eras in the History of Marketing
1. Production: ‘a good product will sell itself’ – prior to 1920s
2. Sales: ‘creative advertising & selling will overcome consumers resistance and persuade them to buy’ – prior to 1950s
3. Marketing: ‘the consumer rules, find a need and fil it’ – since 1950s
4. Relationship: ‘long-term with customers, & other partners lead to success’ – since 1990s
5. Social: ‘connecting to consumers via internet, social media is an effective’ – since 200s


The Production Era & Sales Era
· Production orientation: stressing efficiency in producing a quality product, with the attitude toward marketing that “a good product will sell itself”, production shortages
· Sales orientation: customers will resist purchasing nonessential items; personal selling and advertising important



Market Era & Relationship Era
· Shift to a buyer’s market creates need for consumer orientation
· Emergence of marketing concept: a companywide consumer orientation to achieve long-run success
· Relationship marketing: developing long-term, value-added relationships over time with customers & suppliers; strategic alliances and partnerships

Avoiding Marketing Myopia
COMPANY
MYOPIC DESCRIPTION
COMPANY MOTTO
Honda Canada
Automobiles, ATV’s, motorcycles
Power of dreams
MasterCard
Credit card company
Can’t buy everything, but master card is available
Target Canada
Discount retailer
Expect more, pay less
Xerox
Photocopier manufacturer
Document company

Marketing in Not-for-Profit Organizations
· Adopt marketing strategies to meet service objectives
· Market to multiple audiences
· Form alliances with for-profit firms
· Focus is to generate revenue to support cause and not on bottom line
· Service users have less control over the firm’s future






Nontraditional Marketing
TYPE
DESCRIPTION
EXAMPLES
Person marketing
Designed to cultivate the attention of a target market toward a person
Milos Raonic, Canada’s 2013 male athlete of the year Drake
Place marketing
Designed to attract visitors to an area, improve consumer images of a city or attract new business
PEI, Green Province, Nova Scotia, Land of Living Skies
Cause marketing
Identification of a social issue, cause or idea to selected target markets
“Today a reader, tomorrow a leader”
Event marketing
Sporting, cultural, charitable activities to selected target markets
Grey Cup, Rogers Cup
Organization marketing
Mutual-benefit org. service org., govern. org. – influence others to accept their goals
United Way: change starts here

Transaction-based Marketing to Relationship Marketing
· Transaction-based: buyer and seller exchanges characterized by limited communications and little or no ongoing relationships between the parties
· Relationship: gives a company new opportunity to gain a competitive edge by moving customers up a loyalty ladder

Interactive & Social Marketing / Partnerships & Alliances
· Interactive/social: mobile marketing, interactive marketing, social marketing, buzz
· Relationship marketing extends to suppliers, distributors, and customers for strategic advantage: strategic alliances
· Social marketing: use of online social media as a communications channel for marketing messages
· Buzz marketing: word-of-mouth that bridge the gap between a company and its products

Developing Partnerships & Strategic Alliances
· Relationship marketing extends to business to business relationships with suppliers, distributors, and other partners
· Strategic alliances: provide firms competitive advantage, types of alliances forms are product development partnerships; vertical alliances

Function of Marketing
1. Buying: ensuring product offerings are available in sufficient quantities to meet customer demands
2. Selling: advertising, personal selling & sales promotion to match products to customer needs
3. Transporting: moving products from their point of production to locations convenient for purchasers
4. Storing: warehousing products until needed for sale
5. Standardization & Grading: ensuring product offerings meet quality & quantity controls of size, weight and other variables
6. Financing: providing credit for channel members (retailers/wholesalers) and consumers
7. Risk Taking: dealing with uncertainty about future customer purchases
8. Securing Marketing info: collecting info about consumers, competitors, & channel members for use in making marketing decisions

Ethics & Social Responsibility
· Ethics: moral standards of behavior expected in a society
· Social responsibility: marketing philosophies, policies, procedures, actions whose primary objective is to enhance society
· Sustainable products: products that can be produced, used, and disposed of with minimal impact on the environment


{Chapter 2} Strategic Planning in Contemporary Marketing


Marketing Planning: Basis for Strategy & Tactics
· Marketing planning: implementing planning activities devoted to achieving marketing objectives
· Strategic Planning: determines primary objectives; adopting courses of action to achieve these objectives; long-term focus
· Tactical Planning: implements activities specified in the strategic plan; shorter-term focus

Different Managerial Levels
· Strategic: top management (board of directors, chief executive officer, chief operating officer, vice president – organization-wide objectives; long-term plans; total budget
· Tactical: middle management (general sales manager, director of marketing research – quarterly & semi-annual plans; business unit budgets; divisional polices & procedures
· Operational: supervisory management (district sales manager, supervisor) – daily and weekly plans; unit budgets; department rules and procedures

Marketing Planning Process

Organization Mission & Objectives
Porter’s 5 forces model ^^^


Mission: essential purpose that differentiates one company from another – sephora: the beauty authority; tim hortons: always fresh
· Objectives: guide the development of marketing objectives and plans – add 25 new outlets within the next year; enter the Chinese market by 2015


Accessing Organizational Resources, Evaluating Environmental Risks and Opportunities
· Resources: production, marketing, finance, technology, employees
· Strengths help planners; set objectives; develop plans; take advantage of marketing opportunities

Formulating, Implementing, Monitoring a Marketing Strategy
· Marketing strategy: selecting & satisfying target consumers through the marketing mix elements
· Planning process: put the marketing strategy into action, monitor performance to ensure that objectives are achieved

First Mover & Second Mover Strategies
· First: company first to offer a product in a marketplace will be the long-term market winner
· Second: observing the innovations of first movers then improving on them again to gain advantage in the marketplace


Strategic Window
· Limited periods when key requirements of a market & firm’s competencies best fit together
· Requires a thorough analysis of: current & projected external environmental conditions; current & projected internal company capabilities; when the firm can reconcile environmental conditions and company capabilities

Elements of a Marketing Strategy
· Target market: group of people toward whom the firm directs its marketing efforts, merchandise
· Marketing mix variable: blending for 4 elements: product, distribution, promotion, pricing

Marketing Environment
1) Competitive
2) Political-legal
3) Economic
4) Technological
5) Social-cultural


Business Portfolio Analysis
· Strategic business units: key business units within diversified firms; each has its own managers, resources, objectives, and competitors; each pursues its own distinct mission & develop its own marketing plans


{Chapter 3} The Marketing Environment, Ethics, & Social Responsibility


Environmental Scanning & Environmental Management
· Scanning: collecting external marketing environment information to identify and interpret potential trends
· Management: attainment of organizational objectives by predicting and influencing the external environments
· Strategic alliance: partnership when companies combine resources to create competitive advantages

Elements of Marketing Mix within an Environmental Framework
Target Market ~ Pricing, Product, Promotion, Distribution ~ Political-Legal Environment, Competitive Environment, Social-Cultural Environment, Economic Environment, Technological Environment

Competitive Environment
· Competition: Monopoly, Oligopoly
· Distinguish between direct and indirect competition
· Time-based competition: strategy of developing & distributing goods more quickly than competitors

Political-Legal Environment
· Competition Act: comprehensive legislation administered by Industry Canada & designed to help consumers and business by promoting a healthy competitive environment
· Categorized in 3 areas: pricing, promotion, distribution

Marketing Practices Covered by the Competition Act
· Price Issues
o Price fixing: sellers collude to set prices higher than they would be in free market
o Bid rigging: sellers collude to set prices with respect to one bids or quotations
o Discrimination: seller charges different prices for the same quantity and quality of products to 2 customers who are in competition with each other
o Predatory pricing: sellers set prices so low they deter competition from entering a market, or with the intention to drive competition from the market
o Double ticketing: an item has been ticketed with 2 prices (lowest price must prevail although there are no limits to protect sellers)
o Resale price maintenance: manufactures or other channel members try to influence the price at which products are sold to subsequent buyer
· Promotion Issues
o Misleading advertising: representations, in print or made orally, concerning a product are false or misleading
o Referral selling: price reductions or other inducements are offered to a customer for the names of other potential customers
o Bait-&-switch selling: sellers attract customers with low prices but then offer another product at a higher price because they are unable to provide the originally promoted item
o Tied selling: seller requires a buyer to purchase another product or to refrain from purchasing a product from a specific manufacturer as a condition to getting the product they want
· Distribution Issues
o Refusal to deal: sellers refuse to sell to legitimate buyers
o Exclusive dealing: seller refuses to sell another channel member unless that customer agrees to buy only from that seller
o Pyramid selling: salespeople are paid to recruit additional salespeople, and each new salesperson pays to “invest” in the scheme, with some of that investment going to earlier participants in the scheme – not to confused with genuine multi-level marketing plans





Government Regulation
· Provincial laws generally focused on protection of buyers & sellers with respect to direct sales contracts; called Consumer Protection Act or Direct Seller’s Act
· Government Regulatory Agencies: Canadian Radio-television & telecommunications Commission; National Energy Board

Other Regulatory Forces
· Consumer interest organizations; e.g., People for the Ethical Treatment of Animals
· Other groups attempt to advance the rights of minorities, senior citizens, and other causes; e.g., Mothers Against Drunk Driving
· Self-regulatory groups set guidelines for responsible business conduct; e.g., Advertising Standards Canada
The Economic Environment
· Gross domestic product (GDP): sum of all goods, services produced by a nation in a year
· Economic environment: factors that influence consumer buying power and marketing strategies
· Business cycle: pattern of stages in the level of economic activity (Prosperity, recession, depression, recovery)
· Inflation: rising prices caused by some combination of excess consumer demand and increases in the costs of one or more factors of production
· Deflation:
· Unemployment:
· Discretionary income:
· Demarketing:

Technological Environment
· Application of knowledge based on discoveries in science, inventions, innovation to marketing
· Technology leads to new products, improvements in existing products, better customer service, reduced prices


Social-Cultural Environment
· Relationship between the marketer, society, and culture
· Marketers must be sensitive to demographic shifts and changing values
· Increasing importance of cultural diversity

Consumerism
· Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government
· Rights: right to choose freely, to be informed, to be heard, to be safe

Ethical Issues in Marketing
· Marketing ethics: marketers’ standards of conduct and moral values
· Many companies create ethics programs to train employees to act ethically
· Employees’ personal values sometimes conflict with employers’ ethical standards

10 Steps to improve Business Ethics
1. Appoint a senior-level ethics compliance officer.
2. Set up an ethics code capable of detecting & preventing misconduct.
3. Distribute a written code of ethics to employees, subsidiaries, & associated companies & require all business partners to abide by it.
4. Conduct regular ethics training programs to communicate standards & procedures.
5. Establish systems to monitor misconduct and report grievances.
6. Establish consistent punishment guidelines to enforce standards and codes.
7. Encourage an open-door policy, allowing employees to report cases of misconduct without fear of retaliation.
8. Prohibit employees with a track record of misconduct from holding positions with substantial discretionary authority.
9. Promote ethically aware and responsible managers.
10. Continually monitor effectiveness of all ethics-relation programs.





Ethics in Marketing Research
· Consumers are concerned about privacy
o Proliferation of databases
o Selling of address lists
o Ease with which consumer information can be gathered
· Several agencies offer assistance to Internet consumers
· Canada has a National Do-Not-Call List to help prevent unwanted telemarketing



Ethics & Social Responsibility
1) Economic: be profitable – the foundation upon which all others rest
2) Legal: obey the law – law is society’s codification of right and wrong; play be the rules of the game
3) Ethical: be ethical – obligation to do what is right, just, and fair; avoid harm
4) Philanthropic: be a good corporate citizen – contribute resources to the community, improve quality of life

Marketing and Ecology
· Ecology: relationship between organisms and their natural environments
· Environmental issues influence all areas of marketing decision making
· Green marketing: production, promotion, and reclamation of environmentally sensitive products



{Chapter 5} Consumer Behavior




Chapter Objectives
1. Define consumer behavior and describe the role it plays in marketing decisions
2. Describe the interpersonal determinants of consumer behavior: cultural, social, family influences
3. Explain each of the personal determinants of consumer behavior: needs and motives, perceptions, attitudes, learning, and self-concept theory.
4. Distinguish between high-involvement and low-involvement purchase decisions.
5. Outline the steps in the consumer decision process.
6. Differentiate among routinized response behavior, limited problem solving, and extended problem solving by consumers.
Consumer Behavior
· Process through which buyers make decisions

Interpersonal Determinants of Consumer Behavior
· Cultural influences
o Values, beliefs, preferences, taste handed down from one generation to the next
o Core Values
§ Cultural may change but core value does not
o Microcultures
§ Group within a culture that have distinct modes of behavior
§ Largest groups in Canada: Quebecois consumers, Chinese Canadian consumers, South-Asian consumers
¨ Quebecois Consumers
® Often considered a main cultural group
® Quebec is the largest French speaking area in North America
¨ Chinese Canadian Consumers
® Came from Hong Kong during 1980s
® Coming from other areas such as mainland
¨ South-Asian Canadian Consumers
® Come from several cultures – Punjabi, Urdu, Tamil
¨ Other cultural groups: more than 80 cultural groups across the county
· Social influences
o Everyone belongs to multiple social groups that influence buying decisions
o Groups establish norms of behavior
o Differences in status & roles within group influence behavior
¨ Asch Phenomenon
® theory of psychologist S.E. Asch that individuals conform to majority rule, even that majority rule goes against their beliefs
o Reference groups
§ People of institutions whose opinions are valued
§ Influence of reference group depends on 2 conditions – (1) purchased product must be seen and identifiable; (2) purchased product must be conspicuous, something that not everybody owns
o Social classes
§ Six classes: upper-upper, lower-upper, upper-middle, lower-middle, working class, lower class
§ Income not always a primary factor
o Opinion leaders
§ Trendsetters who purchase new products before others in a group and then influence others in their purchases
· - Family influences
o family structure is changing over the last century due to:
§ More women and seniors living alone
§ Women having fewer children

Role of Each Spouse in a Household
· Autonomic Role
· Husband-dominant Role
· Wife-dominant Role
· Syncratic Role

Children and Teenagers in Family Purchases
· Children and teenagers represent a huge market
· They influence what their parents buy, from cereal to cars
Personal Determinants of Consumer Behavior
· Needs & Motives
o Needs
§ Imbalance between consumer’s actual and desired states
o Motive
§ Inner state that directs a person toward the goal of satisfying a need
· Perception
o Meaning that a person attributes to incoming stimuli gathered through 5 sense
o Perceptual screens: the mental filtering processes through which all inputs must pass
· Attitudes
o Person’s enduring favorable or unfavorable evaluations, emotions, or action tendencies toward object or idea
o Cognitive
o Affective
o Behavioral
· Learning
o Knowledge or skill that is acquired as a result of experience, which changes consumer behavior
o Process: drive, cue, response, reinforcement
· Self-concept
o Person’s multifaceted picture of himself or herself
o 4 components that influence purchasing decisions
§ Real self
§ Self-image
§ Looking-glass self
§ Ideal self
Changing Consumer Attitudes
· Marketers have two choices for appealing to consumer attitudes:
o Attempt to produce consumer attitudes that will motivate purchase of a particular product
o Evaluate existing consumer attitudes and then make the product features appeal to them
Modifying the Components of Attitude
· Providing evidence of product benefits and correcting misconceptions
· Engaging buyers in new behaviour

Applying Learning Theory to Marketing Decisions
· Marketers use shaping, the process of applying a series of rewards and reinforcements to permit more complex behavior to evolve

Consumer Decisions
· High-involvement purchase decisions
· Low-involvement purchase decisions

Problem or Opportunity Recognition
· Consumer becomes aware of a significant discrepancy between the existing situation and a desired situation
Search
· Consumer gathers information about the attainment of a desired state of affairs
· Evoked set
Evaluation of Alternatives
· Consumer evaluates the evoked set of options, and as the search progresses, consumer accepts, distorts, or rejects information as it is received
· Evaluative criteria
Purchase Decisions and Purchase Act
· After evaluating each alternative in the evoked set, the consumer decides where or from whom to make the purchase
Post – Purchase Evaluation
· Buyer feels either satisfaction at the removal of the discrepancy between the existing and desired states or dissatisfaction with the purchase
· Cognitive dissonance
Classifying Consumer Problem-solving Processes
· Marketers recognize 3 categories of problem solving
o Routinized response behavior
o Limited problem solving
o Extended problem solving




{Chapter 8} Marketing Research, Decision Support Systems, Sales Forecasting

Marketing Research
· Process of collecting and using information for marketing decision making

Types of Research Firms
· Syndicated services
· Full-service research suppliers
· Limited-service research suppliers
Marketing Research Process
1. Defining the problem
2. Conducting the Exploratory Research
3. Formulating a Hypothesis
4. Creating a Research Design
5. Collecting Data
a. Secondary Data: previously published information
b. Primary Data: information collected specifically for the investigation at hand
c. Primary costs more to gather but can be much more valuable
6. Interpreting and Presenting the Research Information

Sampling Techniques
· Sampling: process of selecting survey respondents or research participants
· Probability sample: sample that gives every member of the population a chance of being selected
· Nonprobability sample: sample that involves personal judgment somewhere in the process
Primary Research Methods
· Observation Method: researchers view the overt actions of subjects being studied
· Survey & Interview Methods: researchers must ask questions to get information on attitudes, motives, and opinions
· Experimental Method: least used method; controlled experiment; and test marketing


Conducting International Marketing Research
· Follow same basic steps as for domestic marketing research
· Researchers must be aware of cultural and legal environments
· May have to adapt research methods to local conditions

Computer Technology in Marketing Research
· Marketing Information System (MIS)
· Marketing Decision Support Systems (MDSS)


Data Mining
· Process of searching through computerized data files to detect patterns
· Focuses on identifying relationships that are not obvious to marketers
Business Intelligence
· Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations

Competitive Intelligence
· Form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and supplies in the industry, and other sources












{Chapter 9} Marketing Segmentation, Targeting, and Positioning

Introduction
· Market: group of people with enough purchasing power, authority, and willingness to buy
· Target market: group of people to whom firm decides to direct its marketing efforts and ultimately its goods and services

Types of Markets
· Consumer products: products bought by ultimate consumers for personal use
· Business products: goods and services purchased for use either directly or indirectly in the production of other goods and services for resale

Role of Market Segmentation
· Division of the total market into smaller; relatively homogenous groups

Criteria for Effective Segmentation
· The segment must have measurable size and purchasing power
· Marketers must find a way to effectively promote and serve the market segment
· Segment must be sufficiently large to offer good profit potential
· Firm must aim for segments that match its marketing capabilities

Segmenting Consumer Markets
· Geographic: division of an overall market into homogeneous groups based on their locations
· Demographic: division of an overall market into homogeneous groups based on variables such as gender, age, income, occupation, education, sexual orientation, household size, and stage in the family life cycle ~ socioeconomic segmentation
· Psychographic: division of a population into groups that have similar attitudes, values, and lifestyles
· Product-related: division of a population into homogeneous groups based on their relationships to the product



Market Segmentation Process

1) Develop a relevant profile for segment
2) Forecast market potential
3) Forecast probable market share
4) Select specific market segments


Strategies for Reaching Target Markets

Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Micromarketing


Selecting & Executing a Strategy

Company resources
Product homogeneity
Stage in the product lifestyle
Competitors’ strategies


Positioning
· Placing a product at a certain point or location within a market in the minds of prospective buyers



SEGMENT SHARES -
1998 - 49.5, 50.5
Top divided by bottom
Small widgets
42.3/85.5 = 49.47 = 49.5
Big widgets
43.3/85.5 = 50.5



GROWTH RATES

1998 - 1999
N/A, because you don't know the previous year
Durable weezils: 3337 - 3775 = -438/3337 = -0.131 = 13.1
Attractive weezils: 6185 - 5580 = 605/6185 = 0.0978 = -9.8
Cheap weezils: 5787 - 5685 = 102/5787 = 0.0176 = -1.8

1999 - 2000
Durable weezils: 3775 - 3951 = -176/3775 = -0.0466 = 4.7

This is a satirical website. Don't take it Seriously. It's a joke.