Marketing Concepts PDF

MKT100 - MARKETING VALUE = Benefits Received - Costs Incurred ↓ ↓ ↙ ↘ Eye of the everything customer PRICE + NON-FINANCIAL COSTS Customer receives by Purchasing the Offering Costs...

MKT100 - MARKETING VALUE = Benefits Received - Costs Incurred ↓ ↓ ↙ ↘ Eye of the everything customer PRICE + NON-FINANCIAL COSTS Customer receives by Purchasing the Offering Costs Incurred = PRICE + NON-FINANCIAL COSTS ↙ ↘ Time Spent Shopping + Effort into Shopping IMPLICATIONS OF THE VALUE EQUATION Benefits Received > Costs Incurred → POSITIVE VALUE } GOAL! Benefits Received < Costs Incurred → NEGATIVE VALUE (this depends because of the different customers) VALUE = Benefits Received - Costs Incurred ↓ ↓ Healthiness Price (ex.$6.99) ↓ ↓ Tastiness Time ↓ ↓ Amount Effort ↓ Quality Benefits Received → Developed by marketing Costs Incurred → set by marketing 4 FACETS OF VALUE: 1. Creating → 2. Communicating → 3. Delivering → 4. Exchanging 4 COMPONENTS OF MARKETING: *Marketing Mix: Product → Promotion → Place →Price EXCHANGE FOR AN OFFERING Monetary: Price tag put on a product or service Non-Monetary: Form of payment other than money; paying frequent flier miles to get an airline ticket Ex. Starbucks you can pay with STARS on the mobile app (collect) →Loyalty Card →Instagram, pay by being a user, agreeing to be exposed to Ads and put your info out there PROMOTION: Communicating Offerings ☑Create Consumer Awareness ☑Educate Consumers ☑Persuade Consumers ☑Interact with Consumers * ALL based on customer (new or existing) and TIME PLACE: Delivering Offerings GET PRODUCT USER → Manufacturer → Wholesaler → Retailer {SUPPLY CHAIN MANAGEMENT, LOGISTICS, TRANSPORTATION} KEY ASPECTS OF MARKETING 1. Marketing help create value 2. Marketing is about satisfying customers NEEDS ○ Necessary for survival ○ Can be satisfied by many products/services WANTS ○ Partial need ○ Satisfied by a specific product/service 3. Marketing ALWAYS entails an exchange between parties 2 PARTIES OF EXCHANGE ○ BUYER ⤼ ⤽SELLER SELLER: provides goods and services BUYER: provides money/info TRANSFERS: each party must receive something of value 4. Marketing requires marketing mix decisions (4P’s of Marketing) Performed by companies and individuals ○ C2C Market (eg. Ebay) ○ Content Creation (eg. TikTok) Occurs in MANY situations ○ For-profit and Non-profit }chartiy ○ Company and Industry Marketing helps make better choices by strategically approaching MARKETING MIX, And examining internal & external environment to make informed decisions PROVIDE VALUE BY SYSTEMATIC THINKING WHY STUDY MARKETING 1. Provide VALUE to customer 2. Provide VALUE to company (i.e. profit levels) COMMON THEMES: 1. Role of marketing in the organization 2. Everything starts with the customer (formulating mission statement) 3. The changing environment (how to keep up w/ customer) 1. MARKETING ROLE Marketing as a department → day-to-day operations handled by a department Marketing as a strategy → all departments work together to provide value to customer on a strategic level 2. STARTING WITH CUSTOMER → mission statement 1. WHO are they serving? 2. HOW? what’s the goal? 3. Write down in the Mission Statement to guide future strategy 3. CHANGING ENVIRONMENT 1. Criticisms 2. 2. Sustainability  3. Ethical responsibility 4. Service-dominant logic 5. Metrics LEARNING OBJECTIVES 1. Strategic Planning Process 2. Developing Organizational Objectives and Strategic Decisions 3. Where Strategic Decision Occurs 4. Strategic Portfolio STRATEGIC PLANNING: SWOT ANALYSIS → planning phase IMPLEMENTATION PHASE 1. segmentation , Targeting and Positioning 2. Determine 4P’s CONTROL PHASE →Target Metrics STRATEGIC PLANNING 1. Planning Phase 2. Implementation Phase 3. Control Phase CONDUCTING A SITUATIONAL ANALYSIS 1. Evaluate Internal Environment MICRO (Internal) ENVIRONMENT COMPANY ○ Resources (financial technological) ○ Capabilities (personnel, processes) CORPORATION PARTNERS ○ Distribution ○ Suppliers DEFINING COMPETITORS: Canada Day Ginger Ale ->ex QUESTION? What type of companies/products are competition → Competitor: Coca Cola Direct Competitors: produce ginger ale Indirect Competitors: reduce thirst 2. Evaluate External Environment POLITICAL/LEGAL REGULATORY ○ Ex. STRATEGIC QUESTION: Should my company expand to france? ○ RELEVANT FACTOR: french employment regulations says an employee can work up to 35 hours →Factors that impact companies operations 1. WITHIN country of origin (could act) 2. OUTSIDE country of origin (entering new market) ECONOMIC rs more th ○ Ex. STRATEGIC QUESTION: Should my company invest in luxury product line? ○ RELEVANT FACTOR: country is going economic downturn, consumers reduce spending on luxury items ○ Factors that impact consumers; disposable income Inflation, unemployment rates, interest rates Impact categories more than others SOCIO_CULTURAL ○ Trends and values that shapes consumers needs and wants ○ Social trends, demographic of a country, cultural values ○ Ex. STRATEGIC QUESTION: Should my company invest in an environmentally friendly product line? ○ RELEVANT FACTOR: cultural values in NA have begun, to prioritize caring for environment and consumers expect companies to do so TECHNOLOGICAL ○ Infrastructure that facilities better service and info ○ Self-scanners, video displays, RFID, online shopping ○ Ex. S-Q: Should my company reach people through online channels RF ○ Does country have necessary internet? Do they use it a lot? COMPETITION (how is the entire market) ○ Industry level competitiveness ○ Is there one or few big companies that own most of the market? Room fo growth? MICRO (INTERNAL) ENVIRONMENT {S & W} 1. Must be about the company 2. Within control of company 3. Comparison against competition MACRO (EXTERNAL) ENVIRONMENT {O & T} 1. External to the company 2. Not within the company 3. Exist in absence of company IMPLICATIONS FOR QUeSTIONS How do you CAPITALIZE/LEVERAGE STRENGTHS in decisions to be made How do you ADDRESS/COMPENSATE WEAKNESSES in decisions to be made How do you TAKE ADVANTAGE OF OPPORTUNITIES in decisions to be made How do you MITIGATE/MINIMIZE THREATS in decisions to be made  1. Develop Objectives 2. Formulate Strategies 3. Achieve Sustainable Advantage Objectives are S.M.A.R.T. S pecific M easurable A chievable R ealistic T imely FORMULATE STRATEGIEs 4 Primary Strategies: EXISTING PRODUCTS NEW PRODUCTS EXISTING MARKETS MARKET PRODUCT PENETRATION DEVELOPMENT NEW MARKETS MARKET DIVERSIFICATION DEVELOPMENT 1. MARKET PENETRATION GOAL: increase sales of existing products to existing customers 2. PRODUCT DEVELOPMENT GOAL: create new products to existing users 3. MARKET DEVELOPMENT GOAL: entering new market with an existing product 4. DIVERSIFICATION (Riskiest) GOAL: enter new market with a new product 1. LOCATIONAL EXCELLENCE HOW? > # of locations | internet presence WHY? > difficult to replicate WHO? > retailers and service providers 2. OPERATIONAL EXCELLENCE HOW? > supply chain management | network relationships WHY? > reduce costs, lower prices, improve delivery 3. PRODUCT EXCELLENCE HOW? > creating higher positive value WHY? > greater perceived benefits can help maximize profits WHO? > companies who focus on value maximization  4. CUSTOMER EXCELLENCE HOW? > retain loyal customers | provide excellent service WHY? > loyal customers can increase revenue in long term WHO? > companies focus on value maximization and want loyalty FORMULAS CONSUMER BEHAVIOUR 1. Understanding buyer behaviour 2. Consumer decision making process 3. Consumer involvement 4. Factors that influence consumers’ behaviours 5. Formal research process CONSUMER DECISION MAKING Needs/Wants Recognition a. Consumer Experience i. DEFINITION: becoming aware of a problem that requires solution ii. Example: realizing that you are hungry and/or wanting a burger b. Marketer Experience i. Strategies: create needs/wants  ii. Example: food ads can induce hunger Search a. Consumer Experience i. DEFINITION: finding alternatives that can solve the problem ii. Example: examining which restaurants you should consider to buy a burger from b. Marketer Experience i. Strategies: be available and within reach to ii. Provide excellent product so your always on top of mind Evaluation a. Consumer Experience i. DEFINITION: examining alternatives to find the one that fits your needs the best ii. Example: What do you care about when buying a burger? Taste? Price? Healthiness? Which alternative satisfies the best b. Marketer Experience i. Persuade the potential customer that your attributes matter the most Purchase a. Consumer Experience i. DEFINITION: purchasing the alternative that fits your needs best ii. Example: consumer cares about health will most likely buy a burger that is fresh and healthy ingredients b. Marketer Experience i. Strategies: make purchase process easy and smoothly (credit card, cash, etc) Post-Purchase a. How can they come back? b. Why they will come back? c. How do I satisfy them that they will come back? d. Have customer support e. Create customer loyalty CONSUMER INVOLVEMENT Marketing Strategies | GRAB ATTENTION, BE AVAILABLE | Provide Info, Personal Selling, Post-Purchase Service FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR External Factors a. Situational b. Social Norms i. DEFINITION: expectations for behviours that arise from values of the society ii. Example: NA social norms have started to emphasize environmental consciousness c. Time i. DEFINITION: time of day/year can impact type of products consumers are interested in d. Purchase Reason i. DEFINITION: whether the purchase is routine or for a special occasion can impact decision making ii. Example: purchasing wine for home versus for a celebration can impact the attributes you care about more Personal Factors 1. Demographic 2. Lifestyle 3. Mood 4. Personality and Self-Concept a. Gender, Age, Stage of Life i. DEFINITION: demographic factors may help research reach consumers with a common need b. Lifestyle, Activities, Interests i. DEFINITION: how you spend your free time, priorities, values and opinions impact your preferences c. Mood i. DEFINITION: consumes mood (positive or negative) will temporarily impact their interests ii. Examples: feeling sad often increases consumers desire for indulgence (e.g. chocolate) d. Personality and Self-Concept i. Consumers’s disposition, Big 5 Personality characteristics 1. Openness 2. Extraversion 3. Agreeableness 4. Conscientiousness 5. Neuroticism PSYCHOLOGICAL FACTOR 1. Motivation DEFINITION: inward drive we possess to get what we need How to understand motivations? Maslow’s hierarchy of needs 2. Perception Marketing Interventions Consumer Learning -> Purchase/Repeated Purchase 3. Learning a. Incentives for product trials b. Conditional Response i. Unconditional Stimulus (e.g. Santa) ii. Neutral Stimulus (e.g. Coca Cola) iii. Pair Unconditional Stimulus with Neutral Stimulus iv. Conditional Response (e.g. positive feelings transferred to be Coca Cola) 4. Attitude a. DEFINITION: mental positions or emotions, feelings, favorable or unfavorable evaluations b. Implications: attitudes are long-lasting and difficult to change SOCIETAL FACTORS a. Culture i. DEFINITION: shared beliefs, customs, behaviour and attitudes that characterize a society ii. Implications: be aware of the customs and expectations across different markets adapt marketing mix b. Subculture i. DEFINITION: group of people that are different from main culture of the society ii. Implications: be aware of ethnic composition of a country, explore more specialized offerings for subcultures c. Social Class i. DEFINITION: people of a similar level of income, education or mindset d. Reference Groups and Opinion Leaders i. Reference Group: group of people you identify with and may want to join ii. Opinion Leaders: people with expertise in a specific area e. Family i. Relevance : family members preference impacts other members ii. Implications: children can impact spending habits of families and parents can determine what their children use METHODS TO UNDERSTAND THE CUSTOMER 7 Steps of the Marketing Research Process 1. Define the Problem (or opportunity) a. IDENTIFYING: what type of data will you gather? From whom? How and when will you collect the data 2. Design the Research a. Secondary data b. Primary data i. Qualitative ii. quantitative /Descriptive iii. Casual (experiment) 3. Design the Data Collection Forms a. IDENTIFYING: how to ensure that you can make generalized conclusions from your research? b. Common Style of Data Collection Forms i. Intro and Description of Study ii. Instructions on Questionnaire iii. Basic/easy to answer questions (warm-up) iv. More detailed, in depth questions about your research v. Demographics and Thanks 4. Specify the Sample a. IDENTIFYING: who will you ask your questions to? b. Steps of Sample Specifications i. Define population of Interest 1. Current or potential customers? 2. A specific segment? ii. Put together a Sampling Frame 1. Where are you finding your participants iii. Determine Sample Size 1. Large samples are more reliable but costly to get 5. Collect the Data 6. Analyze the Data a. How do you clean the data, organize, explore to answer your research question? 7. Write the Research Report and Present its Findings a. How do you synthesize all of your findings and communicate it in concise terms b. Common Writing Style for Research Reports i. Title page ii. Table of contents iii. Executive summary: the most critical part of the report! iv. Methodology and Limitations v. Findings vi. Recommendations BUSINESS BUYING BEHAVIOUR 1. Characteristics of Business to Business Markets 2. Types of B2B Buyers 3. Stages in the B2B Buying Process 4. Factors Affecting the Buying Process 5. Network and Relationships Difference between B2B and B2C Markets 1. MARKET B2C Market B2B Market # of Customers HIGH LOW Geographic Concentration LOW (Diffuse) HIGH (Concentrated) Size of order (per purchase) SMALL LARGE 2. PRODUCT B2C Market B2B Market Level of Technicalness LOW HIGH Type Finished product Raw material or semi-finished good Importance of Post-Purchase Services LOW HIGH 3. BUYING PROCESS B2C Market B2B Market Complexity LOW HIGH Formaless LOW HIGH Specificity of Criteria LOW HIGH # of Decision Makers LOW (1-2 people) HIGh (Committees) 4. MARKETING MIX B2C Market B2B Market Place Use Intermediaries Use Direct Selling Promotion Less technical ads Highly technical ads Price Pre-determined Negotiated Product Standardized Customized TYPES OF B2B BUYERS PRODUCERS: Reason of Purchase: transform purchased goods into other products/services ○ Example: Mcdonald’s purchase raw materials (unprocessed food) turns into new product (burgers) to sell it to customers RESELLERS: Reason of Purchase: Sell purchased goods to customers without changing them ○ Example: Walmart will purchase already processed item (notebook, toys, etc) and resell to consumers for a percentage of profit GOVERNMENT: Reason of Purchase: being the end customer (using purchased goods) ○ Example: government will purchase products that span from paper and copier to weapons, buildings, toilets from manufacturers and use them INSTITUTIONS: Reason of Purchase: being the end customer (using purchased goods) ○ Examples: universities hospitals, charitable organizations purchase many products in high quantities and use them (cost is an important factor) Need Recognition The organization has a need that can be solved by purchasing a product or service Who? Users and or department heads Product Specification Putting parameters around what needs to be purchased (features, customization) Who? Buying centre or group of people responsible from purchase decision Supplier Search Info about products or vendors Who? Buying centre or group of people responsible from purchase decision Sources Online search, industry trade shows, phone email, trade magazines, expert blogs Proposal Analysis Review and selection of final candidate Who? Buying centre or group of people responsible from purchase decision pre-requisites Agreement on criteria for evaluation (based on objectives) creation on scorecard  Order specification Final order put together Who? Buying centre or group of people responsible from purchase decision What? Agreed upon price, quantities, time of delivery, return policy, warranty and more Performance Assessment Evaluating satisfaction with goods/sservices who? Users (surveyed by buyer group_ criteria Based on criteria of evaluation set during hiring process (performance, Quality) FACTORS THAT AFFECT THE BUYING PROCESS 3 Factors that affect the buying process 1. BUYING CENTRE 2. BUYING SITUATION  1. Need Recognition 2. Product Specification 3. Supplier Search 4. Proposal Analysis 5. Order Specification 6. Performance Assessment 3. ORGANIZATIONAL CULTURE 4. PERSONAL & INTERPERSONAL FACTORS Personal Factors | mental shortcuts Interpersonal Factors | power dynamics, influencers Implications | importance of image, strong branding NETWORK & RELATIONSHIPS (maintain relationships) Relationships: 1. Commitment 2. Trust Interactions: 1. Long-term 2. Transactions, negotiations, discussions, customization Networks: 1. Cooperation 2. Achieving optimal results for all parties