Midterm MSC PDF

**Chapter one** - Central theme of the book is that Marketing adds value - Marketing creates enduring and mutually valuable relationships - Identifies what customers value locally and globally - **Marketing:** a set of business practices designed to plan for and present an organizati...

**Chapter one** - Central theme of the book is that Marketing adds value - Marketing creates enduring and mutually valuable relationships - Identifies what customers value locally and globally - **Marketing:** a set of business practices designed to plan for and present an organizations products or services in ways that build effective customer relationships **Need:** one of the basic necessities of life. Ex. Food, clothing, shelter, or safety **Want:** the particular way in which persons chose to fulfill their needs - Shaped by their knowledge - Culture - Personality - **Demand** is demonstrated by your ability and willingness to act on those needs and wants - A company must determine the customers/market for their product/service - Companies seek out those who have interest in the product and ability to buy it - **Target Market:** the customer segment or group to whom the firm is interested in selling its products and services - Marketing is about an **exchange**- the trade of things of value between the buyer and the seller so that each is better off as a result - Marketing mix/4 P's : four interrelated decisions- **Product, Price, Place and Promotion** - The controllable set of activities that the firm uses to respond to the wants of its target markets - Fundamental purpose of marketing - Offering a variety of goods, services, ideas - Satisfy needs - **Goods:** items that you can physically touch, - fulfill some need, - what they provide - how they are marketed - **services:** intangible customer benefits that are produced by people or machines and cannot be separated from the producer - **ex.** A ticket - **Ideas:** thoughts, opinions, philosophies and intellectual concepts that also can be marketed - **Ex.** MADD - Everything has a price - Everything the buyer gives up - Price is determined depending on the potential buyer's belief about its value - How much customers are willing to pay so that they are satisfies with the purchase and the seller achieves a reasonable profit - All the activities necessary to get the product from the manufacturer to the right customer, when. The customer wants it - Retailing and distribution management - **supply chain management:** the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores and other firms involved in the transaction - without a good distribution system products aren't available where/when customers want them - P/S will go unsold if marketers cannot communicate their value to customers - Communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or get a response - B2C (business-to-consumer): The process in which businesses sell to consumers. - B2B (business-to-business): The process of selling merchandise or services from one business to another. - C2C (consumer-to-consumer): The process in which consumers sell to other consumers. - People can also market themselves(interview for job) **The four orientations of Marketing** - **Product orientation:** companies that focus on developing and distributing innovative products - Little concern for customer needs - Good product will sell itself - **Sales orientation:** companies that view marketing as a selling function - Selling us much as possible - Not focused on products customers want - New customers - **Market orientation:** start out focusing on what customers need/want - The customer is king - Anything to satisfy customer needs - Long term customers - **The triple bottom line:** people, profits and planet - **Value based orientation:** companies that provide their customers with greater value than their competitors - **Value:** reflects the relationship of benefit to cost/what you get for what you give - **value cocreation:** Customers act as collaborators with a manufacturer or retailer to create the product or service - every value based firm must implement its strategy according to what its customers value - how firms become value driven 1. gather info about customers and competitors, analyze and share 2. balance benefits and costs 3. build relationships 4. new technologies - constantly measure the benefits against the costs - **relational orientation:** A method of building a relationship with customers based on the philosophy that buyers and sellers should develop a long-term relationship. - **customer relationship management (CRM):** A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers. Review questions for end 1. Define the role of marketing and explain its core concepts 2. Describe how marketers create value for a product or service 3. Summarize the four orientations of marketing Product orientation: the manufacture of a product simply makes it and assumes people will buy It. Sales orientation: manufacture of the product simply wants to sell as many products as possible Market orientation: the producer is now focused on the consumers wants and needs and designs their product and makes decisions with that in mind Value based orientation: focuses on how to be the best/give the best customer experience. Be competitive 4. Understand the importance of marketing both withing and outside the firm It is important to integrate marketing into all aspects of a firm. You can also implement marketing outside of a firm by doing things that are good for society as a whole that do not directing affect your firm. Marketing textbook **Chapter 2** **marketing strategy:** Identifies a firm's target market(s), marketing mix (the four Ps), and how it plans to build a sustainablepl **sustainable competitive advantage:** Something the firm can persistently do better than its competitors that is not easily copied and thus can be maintained over a long period of time. - Competitive advantage acts like a barrier in around the firms position in the market **Strategies to develop competitive advantages** **customer excellence:** Involves a focus on retaining loyal customers and excellent customer service. - Focuses on loyal costumers - One method of creating loyal customer base is a loyalty program - Helps firms develop a clear view of their costumer - Takes effort to instill in employees the importance of excellent costumer service **operational excellence:** Involves a focus on efficient operations and excellent supply chain management. - Sophisticated distribution and information systems - Good vender relationships - Ex. Amazon **product excellence:** Involves a focus on achieving high-quality products and effective branding and positioning. - Some companies focus on premium ingredients (organic, fair trade) - Investing in the brand **locational excellence:** Involves a focus on a good physical location and Internet presence - Is not easily duplicated - High density of stores - Multiple different access points **The Marketing plan** - A written document composed of... - an analysis of the current marketing situation, - opportunities and threats for the firm, - marketing objectives, - strategies(4ps), - action programs - projected income statements - everyone involved should understand the objectives Steps in developing a marketing plan  Step 1: mission statement - a broad description of a firms objectives and the scope of activities it plans to undertake - attempts to answer: what type of business are we? What do we need to accomplish our goals and objectives? Step 2: conduct a situation analysis - **situation analysis (SWOT):** The second step in a marketing plan; uses a SWOT analysis that assesses both the internal environment with regard to its  **s**trengths and  **w**eaknesses and the external environment in terms of its  **o**pportunities and  **t**hreats. - Allows firms to anticipate and interpret change and then allocate appropriate resources - Where is it weak and where is it strong - Threats represent the negative aspects of the company's external environment Step 3: identify and evaluate opportunities by using STP - **STP**: The processes of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits. - **Segmentation:** the process of dividing the market into distinct groups of customers where each individual group has similar needs, want and characteristics - **market segment:** A group of consumers who respond similarly to a firm's marketing efforts. - **target marketing/targeting**: The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market. - **market positioning:** Involves the process of defining the marketing mix variables so that target customers have a clear, distinct, desirable understanding of what the product does or represents in comparison with competing products. Step 4: implement marketing mix and allocate resources - each element of the four Ps must be fully integrated to achieve a coherent strategy - **product** and value creation: development of products that are valuable enough to buy - **price and value for money:** only activity that actually brings in money by generating revenues. Price based on perceived value - **Place** and value delivery: product/service must be readily accessible when and where the customer wants it - **Promotion** and value communication: firms promote their product through a wide variety of strategies Step 5: evaluate performance by using marketing metrics - **Metric:** A measuring system that quantifies a trend, dynamic, or characteristic. - Used to explain why things happen and project the future - Performance evaluations are used to pinpoint problem areas - Many different factors contribute to a firm's overall performance - **Financial performance** metrics: revenues, sales, or profits - **Social responsibility metric:** ex. Environmental impacts - **strategic business unit (SBU):** A division of the company that can be managed somewhat independently from other divisions since it markets a specific set of products to a clearly defined group of customers. - **product line:** A group of products that consumers may use together or perceive as similar in some way. **Growth strategies** - firms may use four different strategies for overall growth A diagram of products and services Description automatically generated Market penetration - **market penetration strategy**: A growth strategy that employs the existing marketing mix and focuses the firm's efforts on **existing customers.** - Usually requires greater marketing efforts Market development - **market development strategy:** A growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international or segments not currently served by the firm. - Ex. Offering your product/service in more countries Product development - **product development strategy:** A growth strategy that offers a new product or service to a firm's current target market. - Same customers, new/better product Diversification - **diversification strategy:** A growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve. - New product and new market segment - **Downsizing:** Exiting markets, reducing product portfolios, or closing certain businesses or store or plant locations. **CHAPTER 3** **Marketing analysis framework work** - Consumers at the center - Companies use to analyze their marketing environment  Microenvironmental Factors Company Capability - The firm itself - Used to categorize an opportunity as either attractive or unattractive and if it appears attractive, to assess it relative to the firm's existing competencies Competition - Greater competition may mean more choices for consumers, which influences their buying decisions - Must know your competitors Corporate partners - Few firms operate in isolation - Parties that work with the focal firm (corporate partners) Macro environmental factors - **macroenvironmental factors:** Aspects of the external environment---culture, demographics, social trends, technological advances, economic situation, and political/legal environment (CDSTEP)---that affect companies. Culture - shared meaning, beliefs, morals, values and customs of a group of people - you can be a part of many different cultures - **country culture:** Easy-to-spot visible nuances that are particular to a country, such as dress, symbols, ceremonies, language, colours, and food preferences, as well as more subtle aspects, which are trickier to identify. - **Regional subcultures:** the region/province/state you live in has its own culture that effects people decision making - Demographics - Characteristics of human populations and segments, especially those used to identify consumer markets, such as age, gender, income, race, ethnicity, and education. - **Generational cohorts:** A group of people of the same generation who typically have similar purchase behaviours because they have shared experiences and are in the same stage of life. - **Gen Z, millennials, Gen X, baby boomers** - **Income:** - Canadians may be placed into groups based on their income level - Upper class: can buy whatever - Middle class: careful about spending but can afford a good life - Working class: barely sufficient for basic needs - **Education:** better education, better job, higher income - **Gender:** women and men make a different purchasing decisions - **Ethnicity:** Canada's population is extremely diverse, this is reflected in the stores, products, restaurants in cities like Toronto Technological advances - Technological changes that have contributed to the improvement of the value of both products and services in the past few decades. - Mobile devices make consumers more connected - **AI:** has become a big business and many companies are using it now - **Robotics:** are entering the marketplace and performing work that previously was the responsibility of human workers - **Internet of things:** The IoT is reflected when multiple "smart devices" with Internet-connected sensors combine the data they have collected to help both consumers and companies consume more efficiently. Economic situation - Economic changes that affect the way consumers buy merchandise and spend money - Major factors that affect the economy include inflation, foreign currency exchange - - **Inflation:** Refers to the persistent increase in the prices of goods and services. - **Foreign currency fluctuations:** Changes in the value of a country's currency relative to the currency of another country; can influence consumer spending. - **Interest rates:** Represent the cost of borrowing money. - **Recession:** A period of economic downturn when the economic growth of the country is negative for at least two consecutive quarters. Political/legal environment - Comprises political parties, government organizations, and legislation and laws that promote or inhibit trade and marketing activities. - Organizations must comply with current laws - Laws to protect consumers and firms **Social and natural trends** - Shape consumer values in Canada and around the world - Ex. Climate change, diversity, inclusion - Sustainability trends can create challenges for marketers - **Greener consumers/green marketing: i**nvolves a strategic effort by firms to supply customers with environmentally friendly merchandise. People are more conscious of greenness of their products - **Privacy concerns:** consumers worldwide have lost their privacy due to the use of the internet, social media - **Time-poor society:** less time means consumers are harder to reach - **Efficient distribution of food:** food defines social trends - **Health and wellness:** covid, health concerns are prevelant **Chapter 4 : Consumer behavior** - Consumers should be at the heart of all marketing decisions and stretegies - Consumer decision process 1. **Need recognition:** - the consumer has an unsatisfied need. - The greater the discrepancy between the needy state to desired state, the greater the need recognition - Consumer needs like these can be classified as functional, psychological or both - **Functional needs:** Pertain to the performance of a product or service - **Psychological needs:** the personal gratification consumer associate with a product and/ or a service - Most services aim to satisfy both needs 2. **Information search** - Consumer searches for various options to satisfy their needs - The length of the search depends on how important the item is/perceived risk - **Internal search for information:** buyers examine their own memory and knowledge about the product or service - **External search for information:** buyers seek information outside their personal knowledge base to help make the buying decision. Could include knowledge from friends, family, a salesperson or the internet - **Factors affecting consumers search process** - **the perceived benefits versus perceived costs of search**: is it worth my time? - **the locus of control**: people have internal or external locus of control. **Internal** means they believe they have some control over the outcomes of their actions, they engage in more search activities. **External** means they let external factors make their decisions and don't seek out information - **Actual or perceived risk:** there are 5 types 1. **Performance risk:** danger inherent in a poorly performing product or service 2. **Financial risk:** a monetary outlay and includes the initial cost of the purchase, as well as the cost of using the item or service 3. **Social risk:** fears that consumers suffer when they worry that others might not regard their purchase positively 4. **Physiological risk:** the fear of actual harm should the product not perform properly 5. **Psychological risk:** the way people will feel if the product or service does not convey the right image 3. **Alternative Evaluation** - Consumers must sift through the different choices available and evaluate alternatives - **Attribute sets: retrieval sets:** those brands or stores that can be readily brought forth from memory. **Evoked sets:** include only the brands or stores considered when making a purchase. - **Evaluate criteria:** a set of important attributes about a particular product that are used to compare alternative products - **Determinant attributes:** products or service features that are important to the buyer and on which competing brands or stores are perceived. What makes one product different from another - **Consumer decisions rules:** the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives - **Compensatory decision rule:** assumes that the consumer trades off one characteristic against another, good compensate for bad - **Noncompensatory decision rule:** they chose a product or service on the basis of a subset of its characteristics regardless of the values of its other attributes - **Decision Heuristics:** mental shortcuts that help them narrow down their choices some exmaples include - **Price:** consumers choose the more expensive for quality, somewhere in the middle, or cheapest to save on cost - **Brand:** some brands make consumers feel safe in their choice and may make them think it is of higher quality - **Product presentation:** the manner in which a product is presented 4. **Purchase Decision** - Costumers don't always purchase from the brand/location they intended - Stores want to offer the most options possible to increase the likelihood customers will purchase 5. **Post purchase** - Marketers hope to create satisfied customers who become loyal, purchase again and spread positive word of mouth - There are three possible outcomes 1. **Customer satisfaction:** marketers can achieve this buy building realistic expectations, demonstrating use, guarantees, customer feedback, thank customers for support 2. **Post purchase dissonance:** also known as buyers remorse, a feeling of remorse or guilt after making a purchase 3. **Customer loyalty:** multiple repeat purchases 4. **Undesirable consumer behavior:** example: negative word of mouth **Factors influencing consumer buying decisions** **Psychological factors:** affect the way people receive marketers messages - **Motives:** a need or a want that is strong enough to cause the person to seek satisfaction - people have several types of motives, ex. Maslow's hierarchy of needs - **Phycological needs:** the basic biological necessities of life - **Safety needs:** pertain to protection and physical well being - **Love (social) needs:** relate to our interactions with others - **Esteem needs:** satisfy their inner desires - **Self-actualization:** when you feel completely satisfied with your life and how you live - **Attitude:** a person's enduring evaluation of their feelings about behavioural tendencies toward an object or idea. Learned and long-lasting. - **An attitude consists of three components:** 1. **Cognitive component:** what we believe to be true 2. **Affective component:** what we feel about the issue at hand-our like or dislike of something 3. **Behavioural component:** comprises the action we take based on what we know and feel - **Perception:** the process by which we select, organize, and interpret information to form a meaningful picture of the world. Uses the five senses - **Four components of perception** 1. **Selective exposure** 2. **Selective attention** 3. **Selective comprehension** 4. **Selective retention** - **Learning:** a change in a persons thought process or behavior that arises from experience and takes place throughout the consumer decision process. Affects both attitudes and perceptions - **Lifestyle:** the way consumers spend their time and money to live. **Social Factors:** the consumer decision process is also influenced by the external, social environment, which consists of the customer's family, reference groups, and culture - **Family:** firms must consider how families make purchase decisions and understand how various family members might influence these decisions - Children and adolescences play a important role in family buying decisions - **Reference groups**: one or more persons an individual uses as a basis for comparison regarding beliefs, feelings and behaviors. Might have various reference groups. Might affect buying decisions by offering information, providing rewards for behavior, and enhancing a consumer's self image - **Culture**: the culture/cultural groups you are a part of affect your buying decisions **Situational factors**: factors specific to the situation, override psychological and social issues - **Purchase situation**: psyc or social factors may change based on purchase situations ex. A sale - **Sensory situation**: store atmosphere, salespeople, crowding, in store demonstrations, promotions, packaging - **Temporal state**: our state of mind can impact out purchasing decisions **Involvement and consumer buying decisions** - Two types of buying process/decisions depending on their level of involvement: extended problem solving expensive/risky purchases and limited problem solving, impulse buying and habitual purchases - **Involvement:** The consumer's degree of interest in or concern about the product or service. **Extended problem solving:** A purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives; often occurs when the consumer perceives that the purchase decision entails a great deal of risk. **Limited problem solving:** Occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. - **impulse buying:** A buying decision made by customers on the spot when they see the merchandise. - **habitual decision making:** A purchase decision process in which consumers engage with little conscious effort.