Chapter 13 Study Notes PDF

Chapter 13 study notes - **Marketing\'s Main Goal:** Maximize profitability in the long term. - **The Importance of Marketing:** Defines customer needs and wants and directs resources to meet them. - **The Marketing Concept:** A set of four guiding principles: - **Profit orientat...

Chapter 13 study notes - **Marketing\'s Main Goal:** Maximize profitability in the long term. - **The Importance of Marketing:** Defines customer needs and wants and directs resources to meet them. - **The Marketing Concept:** A set of four guiding principles: - **Profit orientation**: Focus on customer satisfaction to make a profit. - **Consumer orientation:** See the customer as \'king\' and satisfy their needs. - **Social Responsibility:** Act responsibly toward society, contribute to its wellbeing. - **Organizational integration**: All functions work together to meet customer needs. - **The Evolution of Marketing:** - **Production Era**: Focused on producing goods. Ignored consumer needs. - **Sales Era:** Focused on selling. Ignored consumer needs. - **Marketing Era:** Recognises the importance of the consumer and aims to satisfy their needs. - **Consumer Behaviour Explained:** - **Individual** **Factors**: Motivation, attitudes, perceptions, learning ability, personality, lifestyle. - **Group Factors**: Family, reference groups, opinion leaders, cultural groups, social class. - **The Consumer Decision-Making Process:** - **Awareness of an unsatisfied need or problem:** The process by which consumers buy goods and services begins with the recognition of an unsatisfied needs. - **Gathering information on how to solve it**: When consumers become aware that they need something, they collect information to help with the buying decision. - **Evaluating possible solutions:** the consumer compares and evaluates the information regarding the different available products. - **Deciding on a course of action:** the consumer must decide whether to buy or not. If the consumer decides to buy, he or she also decides on what to buy. - **Post-purchase evaluation**: the consumer evaluates his or her decision and uses this evaluation for future decision making. - **The marketing research process:** - **Defining the problem** - **Developing hypotheses** - **Collecting data:** - **Determination of secondary data need:** Secondary data involves information that already exists and has been collected by other people. Primary data is information that is collected through original research for a specific purpose. - **Selection of primary data collection instrument** are observations (recording of behaviour); experimentation (usually conducted in a laboratory or field setting); surveys. - **Sample selection:** the researchers must select the respondents who will be interviewed. - **Training of field workers** - **Processing, analysing and interpreting information** - **Compiling a research report and making recommendations** - **Market Segmentation, Target Marketing, and Product Positioning:** - **Market Segmentation:** Dividing the total market into smaller, similar groups. - The market aggregate approach (total market approach) to market segmentation entails treating all consumers as relatively homogeneous, which means that segmentation is not actually occurring. - The single-segment approach, the marketer identifies one single group and directs the product offering only to that segment. - The multi-segment approach, the same product is aimed at different market segments. - Using variables to describe the market structure. When developing a segmentation strategy, the important step is to select the correct basis such as demographic (age, gender, education and race ), geographic (provinces, towns and cities) , psychographic (lifestyle, personality and social class) and behavioural( usage rate, brand loyalty, price sensitivity). - **Target Marketing**: Choosing which segment(s) to serve. - **Product Positioning**: Creating an image of your product in consumers\' minds. - **The Product Decision:** Defining a product by five aspects: - **Core Product**: Basic benefit/function it fulfils - **Generic Product:** Technical/physical features - **Expected Product**: Additional attributes consumers expect - **Augmented Product**: Added symbolic value through marketing - **Potential Product**: Future modifications/changes - **Product Classification:** Differentiating products based on: - Tangible vs. Intangible (cannot be touched such as legal advice, medical consultations.) - Durable (Shopping products such as microwaves, cars and furniture, can be used by the consumer over a longer period) vs. non-durable (convenience products such as fruit, bread and milk, have a relatively short lifespan). - **Consumer Buying Habits:** Convenience, shopping, specialty (these are unique products where a special purchasing effort is required), or unsought goods (these are products that the customer does not think about). - **Brand Decisions:** - **Brand**: A mark that is unique to the product and its manufacturer/marketer. - **Types of Brands**: Manufacturer brand (manufacturers give unmarked products their own brands), generic brand (no-name products), individual brand (just one product of one brand) and family brand (a variety of one brand). - **Brand Loyalty**: Consumers repeatedly buy from the brand; recognition (which is consumers recognising the brand and knowing what it stands for) , preference(which is consumers preferring the brand to other competing brands), insistence(which is the consumer insisting on the specific brand and refusing to accept a substitute). - **Packaging Decisions:** Focuses on protecting, storing, transporting, identifying, and marketing the product. - **Product Strategies:** Concerns an organization\'s long-term strategy for its product line. - **Product Differentiation**: Setting your product apart from similar competing products. - **Product Obsolescence:** Planned obsolescence or natural obsolescence. - **Product Portfolio:** The width, length, and depth of your product line. - **New Product Development**: A process for introducing new products. 1. Development of the product idea 2. Screening of product ideas according to the criteria for likely success. 3. Removal of product ideas that do not appear to be viable. 4. Development of the physical product by the manufacturing division, during which time a prototype (single original one) is manufactured. 5. Development of the marketing strategy, which entails the following: positioning the product in the market branding the product deciding on the packaging design developing the marketing communication message determining the price to be charged selecting the distribution channel and specific outlets to be used. 6. Marketing in a small segment of the market. 7. Commercialisation of the product (introduction into the market as a whole). - **The Product Life Cycle:** The four stages a product goes through: introduction(, growth (the marketing communication is now aimed at 13.8 informing and reminding the consumer), maturity(the focus is more on selling to the existing customer base, reminding the customers about the product and surviving the price competition) , decline(products that do not meet requirements or are no longer profitable can be withdrawn). - **Distribution Decisions:** The process of making the product available to consumers. - **Direct Distribution**: Manufacturer to consumer. - **Indirect Distribution**: Involves wholesalers or retailers. - **Factors influencing the choice of channels**: type of product, market, manufacturer, existing channels. - **Market Coverage:** How widely a product is distributed: - Intensive: Wide distribution through all possible channels. - Selective: Limited distribution through chosen channels. - Exclusive: Exclusive rights to sell in a specific geographic area. - **Logistics:** The management of the movement and storage of goods, services, and related information. - **Integrated Logistics:** Managing everything in the supply chain as a single entity. - **Reverse Logistics:** Activities related to taking back products from consumers for recycling, recapturing value, or proper disposal. - **Global Logistics:** Internationalization of the supply chain, considering factors like cultural diversity, on-time delivery, and infrastructure. - **Pricing Decisions:** The process of setting the right price: - **Cost Price**: The price based on manufacturing and marketing costs. - **Market Price:** The price that competitors are currently charging. - **Target Price**: The price needed to achieve a desired rate of return. - **Final Price:** The price at which a product is offered to consumers. - **Price Adaptations:** Strategies for adjusting the final price: - **Skimming:** High price for new, unique products. - **Market Penetration:** Low, initial price to attract customers. - **Market Price**: Staying competitive with the market price. - **Perceived Value Pricing**: Based on what customers are willing to pay. - **Leader Pricing**: Special offers at a lower price to draw customers. - **Odd Pricing**: Using odd numbers to make prices seem lower. - **Bait Prices**: Low prices to lure customers, but then encouraging them to buy a more expensive item. - **Marketing Communications:** The mix of activities used to inform, persuade, and remind consumers. - Advertising (**Above-the-line advertising (ATL**) is used when a product or brand has mass appeal to various target markets. **Below-the-line advertising (BTL)** occurs when the product or brand does not have mass appeal and works with a smaller target market and audience group, using small amounts of money on activities such as internet marketing, social media marketing and email advertising. The advertising message ) - Direct Marketing - Personal Selling - Sales Promotion - Public Relations, Publicity, and Sponsorships - **Public Relations:** Building positive relations with all stakeholders.