Business Essentials - Chapter 12: Understanding the Canadian Business System PDF

Business Essentials Tenth Canadian Edition Chapter 12 Understanding the Canadian Business System Copyright © 2023 Pearson Canada Inc. 12 - 1 Learning...

Business Essentials Tenth Canadian Edition Chapter 12 Understanding the Canadian Business System Copyright © 2023 Pearson Canada Inc. 12 - 1 Learning Objectives (1 of 2) Explain the concept of marketing and describe the five forces that constitute the external marketing environment. Explain the purpose of a marketing plan and identify the four components of the marketing mix. Explain market segmentation and show how it is used in target marketing and positioning. Discuss the purpose of marketing research and compare marketing research methods. Describe the consumer buying process and the key factors that influence that process. Discuss the three categories of organizational markets and the characteristics of business-to-business (B2B) buying behaviour. Explain the definition of a product as a value package and classify goods and services. Describe the key considerations in the new product development process and explain the importance of branding and packaging. Copyright © 2023 Pearson Canada Inc. 12 - 2 Learning Objectives (2 of 2) Rawpixel/Shutterstock Copyright © 2023 Pearson Canada Inc. 12 - 3 What Is Marketing? (L O 12.1) (1 of 8) Marketing Concept – the whole firm is directed toward serving customers at a profit Delivering Value Value Benefits / Costs Utility: adding value – Time Utility – Place Utility Suwan Waenlor/Shutterstock – Ownership (Possession) Utility – Form Utility Copyright © 2023 Pearson Canada Inc. 12 - 4 What Is Marketing? (L O 12.1) (2 of 8) Goods, Services, and Ideas Marketing can be designed for: – consumer goods: tangible products purchased by individuals for their use – industrial goods: products purchased by companies to use directly or indirectly to produce other products – services: intangible products to serve users’ needs – ideas: thoughts or philosophies Copyright © 2023 Pearson Canada Inc. 12 - 5 What Is Marketing? (L O 12.1) (3 of 8) Relationship Marketing – building lasting relationships with customers and suppliers ▪ (Goal: customer satisfaction and retention) Customer Relationship Marketing (CR M) – organized methods used to build information connections to improve company–client relationships Fairmont Hotels actively use CR M techniques to satisfy customers in more than 60 luxury properties around the globe, including the scenic Fairmont Chateau Lake Louise. Achinthamb/Shutterstock Copyright © 2023 Pearson Canada Inc. 12 - 6 What Is Marketing? (L O 12.1) (4 of 8) The Marketing Environment Figure 12.1 The external marketing environment Copyright © 2023 Pearson Canada Inc. 12 - 7 What Is Marketing? (L O 12.1) (5 of 8) Political and Legal Environment – legislation and government programs can be favourable or not – marketing managers try to maintain favour by: ▪ gaining public support for products ▪ advertising for public awareness of important issues ▪ lobbying and contributing to political parties (within restrictions) Copyright © 2023 Pearson Canada Inc. 12 - 8 What Is Marketing? (L O 12.1) (6 of 8) Social and Cultural Environment – reflects the values, beliefs, and ideas of a society ▪ growing popularity of organic food Economic Environment – conditions affect spending patterns of businesses and individuals ▪ the Canadian dollar ▪ inflation/deflation ▪ interest rates ▪ business cycle – trends affect price strategy and the growth of markets (domestic & global) Copyright © 2023 Pearson Canada Inc. 12 - 9 What Is Marketing? (L O 12.1) (7 of 8) Technological Environment – science and technology lead to new ways of doing everyday things ▪ new goods continue to emerge ▪ trends create new Marketing strategies are strongly influenced by powerful goods and cause outside forces. For example, new technologies create new products, such as the smartphone “gas station” shown others to become here. These recharging stations enable customers to recharge their mobile devices, just as they would refuel obsolete their cars. The screens at the stations also provide marketers with a new way to display ads to waiting customers. Paul Quayle/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 12 - 10 What Is Marketing? (L O 12.1) (8 of 8) Competitive Environment Brand Competition – similar products (Coke v s. Pepsi) Substitute Products – dissimilar products that can meet the same need (juice v s. Pepsi) International Competition – marketing domestic products against foreign products (Ford v s. Honda) Copyright © 2023 Pearson Canada Inc. 12 - 11 Strategy: The Marketing Mix (L O 12.2) (1 of 4) Marketing Plan – a detailed, focused strategy for gearing the marketing mix to meet consumer needs and wants Marketing Mix Product Price Place Promotion Copyright © 2023 Pearson Canada Inc. 12 - 12 Strategy: The Marketing Mix (L O 12.2) (2 of 4) Product – offering a good, service, or idea that satisfies buyers’ needs Product Differentiation – creating a product that has a different image than existing products to attract consumers – changing existing products by responding to trends or improving current offerings Copyright © 2023 Pearson Canada Inc. 12 - 13 Strategy: The Marketing Mix (L O 12.2) (3 of 4) Price – choosing the right price to attract consumers & meet profit goals ▪ may be a low-price strategy or high-price strategy ▪ price must consider all costs pio3/Shutterstock Place (Distribution) – getting the product from producer to buyer ▪ physical transportation, warehousing, inventory ▪ choice of sales outlets Copyright © 2023 Pearson Canada Inc. 12 - 14 Strategy: The Marketing Mix (L O 12.2) (4 of 4) Promotion – choosing the right method of communicating information about the product ▪ advertising ▪ personal selling ▪ sales promotions ▪ public relations ▪ Direct or Interactive Marketing Copyright © 2023 Pearson Canada Inc. 12 - 15 Target Marketing and Market Segmentation (L O 12.3) (1 of 7) Target market – a group of potential customers who have similar wants and needs Segmentation – dividing a consumer market into categories – selecting specific market segment(s) to pursue positioning Swoop is WestJet’s new sub-brand aimed at the ultra- low-cost no-frills segment. Tara Walton/C P Images; Copyright © 2023 Pearson Canada Inc. 12 - 16 Target Marketing and Market Segmentation (L O 12.3) (2 of 7) Market Segmentation – search for common traits between consumers – focus on traits that affect product need or purchase behaviour ▪ Geographics ▪ Demographics ▪ Geo-Demographic ▪ Behavioural Variables ▪ Psychographics Copyright © 2023 Pearson Canada Inc. 12 - 17 Target Marketing and Market Segmentation (L O 12.3) (3 of 7) Geographic Variables – area of residence affects product consumption Rainfall – Umbrellas Snowfall – Snowmobiles – Snow blowers Hot Summers – Backyard pools Geo-Demographic Variables – a combination of geographic and demographic traits ▪ Young Urban Professionals—well educated, 25- to 34-year-olds with high-paying jobs living in the “downtown” core of major cities. Copyright © 2023 Pearson Canada Inc. 12 - 18 Target Marketing and Market Segmentation (L O 12.3) (4 of 7) Demographic Variables Age Income Family Size Ethnicity Religion Education Marital Status Gender Occupation Wellwise is a retail brand launched by Language Shoppers Drug Mart aimed squarely at the needs of aging baby boomers. Copyright © 2023 Pearson Canada Inc. 12 - 19 Target Marketing and Market Segmentation (L O 12.3) (5 of 7) Psychographic Variables – consumer characteristics that may be considered in developing a segmentation strategy ▪ lifestyles ▪ opinions ▪ interests ▪ attitudes Megan Duhamel promotes Copper Branch; she is a Plant-Powered Olympic Figure Skater. Alexander Hassenstein/Getty Images Sport/Getty Images Copyright © 2023 Pearson Canada Inc. 12 - 20 Target Marketing and Market Segmentation (L O 12.3) (6 of 7) Behavioural segmentation – dividing a market into groups based on consumer knowledge, use, or response to a product Behavioural Variables – benefits sought – usage rate – occasion for use – loyalty status – user status Copyright © 2023 Pearson Canada Inc. 12 - 21 Target Marketing and Market Segmentation (L O 12.3) (7 of 7) Positioning the process of fixing, adapting, and communicating the nature of the product itself the place a product occupies in a consumer’s mind Copyright © 2023 Pearson Canada Inc. 12 - 22 Market Research (L O 12.4) (1 of 2) Market Research – systematic study of consumer needs – focuses on the marketing-mix elements – leads to more effective marketing; increases the accuracy and effectiveness of segmentation Rawpixel/Shutterstock Copyright © 2023 Pearson Canada Inc. 12 - 23 Market Research (L O 12.4) (2 of 2) The Research Process 1. Study the Current Situation 3. Collect Data 2. Select a Research Method – use secondary data – focus group – use primary data – survey 4. Analyze Data – observation 5. Prepare Report – experimentation – make recommendations Copyright © 2023 Pearson Canada Inc. 12 - 24 Understanding Consumer Behaviour (L O 12.5) (1 of 2) The study of the process by which customers come to purchase and consume a product or service Influenced by: – psychological factors – personal factors – social factors – cultural factors Copyright © 2023 Pearson Canada Inc. 12 - 25 Understanding Consumer Behaviour (L O 12.5) (2 of 2) The Consumer Buying Process Problem/need recognition Information seeking Evaluation of alternatives Purchase decision Post-purchase evaluation Copyright © 2023 Pearson Canada Inc. 12 - 26 Organizational Marketing and Buying Behaviour (L O 12.6) (1 of 2) Organizational Markets – organizations purchase goods and services to be used in the production of other goods and services ▪ industrial market ▪ reseller market ▪ government and institutional market Copyright © 2023 Pearson Canada Inc. 12 - 27 Organizational Marketing and Buying Behaviour (L O 12.6) (2 of 2) Organizational Buying Behaviour – differences in buyers ▪ professionals ▪ specialists ▪ experts Differences in the buyer–seller relationship – emphasize personal selling by trained representatives who understand the needs of each customer Copyright © 2023 Pearson Canada Inc. 12 - 28 What Is a Product? (L O 12.7) (1 of 3) Product Features and Benefits – consumers purchase a product for its function and benefit to them ▪ features include tangibles and intangibles (like image and reputation) ▪ benefits are the results of the features ▪ value package: a bundle of value-adding attributes, including reasonable cost Copyright © 2023 Pearson Canada Inc. 12 - 29 What Is a Product? (L O 12.7) (2 of 3) Consumer Products Convenience goods and services Shopping goods and services Specialty goods Industrial Products Production items Expense items Capital items Copyright © 2023 Pearson Canada Inc. 12 - 30 What Is a Product? (L O 12.7) (3 of 3) Product mix – the group of products a company has for sale Product line – a group of similar products intended for a similar group of buyers Black + Decker has a wide range of product categories, but one recent addition has proven quite successful. The company now sells branded toy replicas to kids so that they can catch the do-it- yourself bug at a young age. Richard Pipes/Albuquerque Journal/ZUM A Press Inc/Alamy Stock Photo Copyright © 2023 Pearson Canada Inc. 12 - 31 Developing New Products (L O 12.8) (1 of 4) New Product Development – needed to expand, and survive – expensive, risky, and long time horizons – product mortality; only 1 in 50 new ideas reaches Helen Sessions/Alamy Stock Photo. the market – speed to market ▪ must introduce products quickly to respond to changes Mykola Davydenko/123R F Copyright © 2023 Pearson Canada Inc. 12 - 32 Developing New Products (L O 12.8) (2 of 4) Step #1: Product ideas Step #2: Screening Step #3: Concept testing Step #4: Business analysis Step #5: Prototype development Step #6: Product and market testing Step #7: Commercialization Copyright © 2023 Pearson Canada Inc. 12 - 33 Developing New Products (L O 12.8) (3 of 4) Product Life Cycle Figure 12. 4 Products in the – products have a limited life cycle: (a) phases and (b) profit-producing life profit (or loss) cycle – may be months, years, or decades Copyright © 2023 Pearson Canada Inc. 12 - 34 Developing New Products (L O 12.8) (4 of 4) Extending Product Life: An Alternative to New Products Product Extension – product marketed globally Product Adaptation – product modified to appeal to foreign markets Reintroduction – reviving old products for new markets Copyright © 2023 Pearson Canada Inc. 12 - 35 Identifying Products (L O 12.8) (1 of 4) Branding – use of symbols to communicate the qualities of a product made by a producer Brand Equity – added value a brand provides to a product The Coca-Cola brand has been consistently at or near the top of brand rankings. It is instantly beyond its basic recognizable worldwide. functional benefits Michael Kemp/Alamy stock photo Copyright © 2023 Pearson Canada Inc. 12 - 36 Identifying Products (L O 12.8) (2 of 4) Gaining Brand Awareness – Product Placements – Buzz Marketing – Viral Marketing & Social Networking Stephanie Harvey (known as missharvey in gaming circles) is a Canadian Twitch streamer who first started sharing her love of gaming in the early days of the platform. Jeff Vinnick/Getty images Copyright © 2023 Pearson Canada Inc. 12 - 37 Identifying Products (L O 12.8) (3 of 4) Types of Brand Names – National ▪ distributed by, and carrying the name of the manufacturer – (e.g., Kellogg’s) – Private ▪ brands carrying the name of the retailer or wholesaler – (e.g., President’s Choice) – Generic ▪ house-brand sold under the category name rather than a specific company name Copyright © 2023 Pearson Canada Inc. 12 - 38 Identifying Products (L O 12.8) (4 of 4) Types of Brand Names – Licensed ▪ selling the right to use the firm’s name on another company’s product ▪ e.g., Harley-Davidson, Disney characters Packaging – the physical container Labelling – identifies the name, contents, and possibly benefits – must conform to Consumer Packaging and Labelling Act Copyright © 2023 Pearson Canada Inc. 12 - 39 Quick-Check Questions (1 of 5) 1) In setting marketing strategy, for consumer goods, organizations must look at internal as well as external factors. Which of the following represents one of the important external factors in the marketing environment? A) Branding environment B) Technological environment C) Geo-Demographic environment D) B2B environment Copyright © 2023 Pearson Canada Inc. 12 - 40 Quick-Check Answer (1 of 5) 1) In setting marketing strategy, for consumer goods, organizations must look at internal as well as external factors. Which of the following represents one of the important external factors in the marketing environment? A) Branding environment B) Technological environment C) Geo-Demographic environment D) B2B environment Copyright © 2023 Pearson Canada Inc. 12 - 41 Quick-Check Questions (2 of 5) 2) Automobile companies like Hyundai and Kia are winning entry-level customers with high quality vehicles, comprehensive warranties and reasonable financing options. They have targeted their marketing efforts specifically to young drivers. They have effectively segmented the market based on: A) geographic variables B) product-use variables C) psychographic variables D) demographic variables Copyright © 2023 Pearson Canada Inc. 12 - 42 Quick-Check Answer (2 of 5) 2) Automobile companies like Hyundai and Kia are winning entry-level customers with high quality vehicles, comprehensive warranties and reasonable financing options. They have targeted their marketing efforts specifically to young drivers. They have effectively segmented the market based on: A) geographic variables B) product-use variables C) psychographic variables D) demographic variables Copyright © 2023 Pearson Canada Inc. 12 - 43 Quick-Check Questions (3 of 5) 3) When Simone was in the process of buying a new car she visited a Honda dealership as well as a Toyota and G M dealership to test drive her top three options. Simone was in the _________ stage of the buying decision process. A) evaluation of alternatives B) purchase decision C) information seeking D) post-purchase evaluation Copyright © 2023 Pearson Canada Inc. 12 - 44 Quick-Check Answer (3 of 5) 3) When Simone was in the process of buying a new car she visited a Honda dealership as well as a Toyota and G M dealership to test drive her top three options. Simone was in the _________ stage of the buying decision process. A) evaluation of alternatives B) purchase decision C) information seeking D) post-purchase evaluation Copyright © 2023 Pearson Canada Inc. 12 - 45 Quick-Check Questions (4 of 5) 4) Rolex and Timex watches both do a good job of telling the time, but Rolex marketers understand that their customers will pay high prices for the status and reputation that accompanies a Rolex watch. This illustrates _________. A) specialty goods criteria B) the value package C) expense items factor D) licensed brand criteria Copyright © 2023 Pearson Canada Inc. 12 - 46 Quick-Check Answer (4 of 5) 4) Rolex and Timex watches both do a good job of telling the time, but Rolex marketers understand that their customers will pay high prices for the status and reputation that accompanies a Rolex watch. This illustrates _________. A) specialty goods criteria B) the value package C) expense items factor D) licensed brand criteria Copyright © 2023 Pearson Canada Inc. 12 - 47 Quick-Check Questions (5 of 5) 5) You have determined that an idea for a new product has profit potential. Using the Seven-Step Development Process, what should you do next? A) Develop a prototype B) Sell the product in a test market C) Conduct focus groups D) Analyze the product’s life cycle Copyright © 2023 Pearson Canada Inc. 12 - 48 Quick-Check Answer (5 of 5) 5) You have determined that an idea for a new product has profit potential. Using the Seven-Step Development Process, what should you do next? A) Develop a prototype B) Sell the product in a test market C) Conduct focus groups D) Analyze the product’s life cycle Copyright © 2023 Pearson Canada Inc. 12 - 49