Business Essentials - Chapter 12

Business Essentials - Chapter 12

• Chapter 12 focuses on understanding the Canadian business system.
• Learning objectives outline key concepts in marketing, including the external marketing environment, marketing plans, market segmentation, research methods, consumer buying, organizational markets, product development, branding, and packaging.

Marketing

• Marketing concept: The entire firm is focused on profitably serving target customers.

• Delivering Value: Value = Benefits / Costs. Utility is the added value a product provides.

• Types of Utility: Time, Place, Ownership (Possession), and Form.

Goods, Services, and Ideas

• Marketing targets: Consumer goods (products individuals buy), Industrial goods (products businesses use), Services (intangible products fulfilling needs), and Ideas (thoughts/philosophies).

Relationship Marketing

• Focus: Building lasting relationships with customers and suppliers.
• Goal: Customer satisfaction and retention.
• CRM (Customer Relationship Marketing): Organized methods to build strong company-client connections.

Marketing Environment

• External factors: The competitive, economic, political-legal, sociocultural, and technological environments impact marketing strategies.

Political and Legal Environment

• Legislation and government programs can be favorable or unfavorable to marketing.
• Managers try to influence policy by gaining public support, advertising for public awareness, and lobbying political parties.

Social and Cultural Environment

• Reflects societal values, beliefs, and ideas (e.g., growing popularity of organic food).

Economic Environment

• Economic conditions affect spending patterns of businesses and individuals.
• Factors include the Canadian dollar, inflation/deflation, interest rates, and the business cycle.

Technological Environment

• Science and technology lead to new ways of doing everyday tasks, creating new products, and making older ones obsolete.

Competitive Environment

• Brand competition: Similar products competing (e.g., Coke vs. Pepsi).
• Substitute products: Dissimilar products that fulfill the same need (e.g., juice vs. Pepsi).
• International competition: Domestic products competing against foreign brands (e.g., Ford vs. Honda).

Strategy: The Marketing Mix (LO 12.2)

• Marketing Plan: A detailed strategy to gear the marketing mix towards consumer needs and wants.
• Marketing Mix Components:
  • Product: A good, service, or idea satisfying buyer needs.
  • Price: Choosing the right price to attract consumers and meet profit goals.
  • Place (Distribution): Getting the product from producer to buyer (physical transportation, warehousing, inventory).
  • Promotion: Communicating product information (e.g., advertising, personal selling, sales promotions, public relations, direct marketing).

Product Differentiation

• Creating a product with a unique image to attract consumers.
• Adapting existing products to respond to trends or improve offerings.

Target Marketing and Market Segmentation (LO 12.3)

• Target Market: A group of potential customers with similar wants and needs.
• Market Segmentation: Dividing the consumer market into categories.
• Positioning: The process of fixing, adapting, and communicating the nature of the product in the consumer's mind.
• Segmentation Variables:
  • Geographic (area of residence).
  • Geo-Demographic (combining geographic and demographic traits).
  • Demographic (age, income, family size, ethnicity, religion, education, marital status, gender, occupation, language).
  • Psychographic (lifestyles, opinions, interests, attitudes).
  • Behavioral (knowledge, use, response to products, benefits sought, usage rate, occasion for use, loyalty status, user status).

Market Research (LO 12.4)

• Focus: A systematic study of consumer needs, focusing on marketing mix elements.
• Objective: Leads to more effective marketing and accurate segmentation for effectiveness.
• Research Process Steps:
  1. Study the Current Situation
  2. Select a Research Method (e.g., focus group, survey, observation, experimentation)
  3. Collect Data (secondary and primary data)
  4. Analyze Data
  5. Prepare Report and Recommendations

Understanding Consumer Behaviour (LO 12.5)

• Studying the process of purchase and consumption.
• Influenced by: Psychological factors, personal factors, social factors, and cultural factors.
• Consumer Buying Process: Problem/need recognition, information seeking, evaluation of alternatives, purchase decision, and post-purchase evaluation.

Organizational Marketing and Buying Behaviour (LO 12.6)

• Organizational Markets: Organizations purchasing goods for use in producing other goods and services.
• Categories: Industrial Market, Reseller Market, Government and Institutional Market.

Organizational Buying Behaviour

• Buyers differ in their professional, specialist, and expert roles.
• Buyer-seller relationships emphasize personal selling by trained representatives understanding the specific needs to each customer.

What Is a Product? (LO 12.7)

• Product Features and Benefits: Consumers buy based on function and benefits, tangibles and intangibles (image/reputation).

• Value Package: A bundle of value-adding attributes, including reasonable cost.

• Consumer Products: Convenience goods and Services; Shopping goods and services; Specialty goods.

• Industrial Products: Production items, Expense Items, and Capital items.

• Product Mix: The group of products a company has for sale.

• Product Line: A group of similar products intended for similar buyers.

Developing New Products (LO 12.8)

• New Product Development: Needed for expansion and survival, expensive and risky, long-term horizon.
• Product Life Cycle: Limited profit-producing time (months, years, or decades).
• Seven-Step Development Process:
  • Product ideas
  • Screening
  • Concept testing
  • Business analysis
  • Prototype development
  • Product and market testing
  • Commercialization.
• Extending Product Life Cycle: Product extension (globally marketed), Product adaptation (modified for foreign markets), and Reintroduction (old products in new markets).

Identifying Products (LO 12.8)

• Branding: Using symbols to communicate product qualities. Brand equity adds value beyond basic functions.
• Gaining Brand Awareness:
  • Product placements, Buzz Marketing, and Viral marketing & Social Networking.
• Types of Brand Names: National, Private, Generic, and Licensed.
• Packaging: The physical container.
• Labelling: Identifies name, contents, and benefits; must align with consumer packaging and labeling laws.

Quick Check Questions (LO 12.1-12.8)

• These pages contain multiple-choice questions assessing student comprehension of the chapter's concepts. Answers are provided to these questions in the text.