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ADMS 2200 Lecture Notes

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Administrative Studies
ADMS 2200
Kim Snow

Lecture 1 ADMS 2200 Chapter 1 Marketing: The Art and Science of Satisfying Customers What is Marketing?  Production and marketing together create utility.  Utility – Want-satisfying power of a good or service. Four Types of Utility: 1. Form – (Production) Conversion of raw materials and components into finished goods and services. I.e. iPod, Shirt from Mark’s Work Wearhouse 2. Time – (Marketing) Availability of goods and services when consumers want them. I.e. Dental appointment, digital photographs 3. Place – (Marketing) Availability of goods and services at convenient locations. I.e. Soft-drink machines outside gas stations; on-site day care; banks/atm in grocery stores 4. Ownerships (Possessions) – (Marketing) Ability to transfer title to goods or services from marketer to buyer. I.e. Retail sales (in exchange for currency or credit-card payment) o Organizations must create utility and customers to survive. o Activities marketers perform to create customers: o Identifying customer needs o Designing products to meet those needs o Communicating information o Making the products available when and where customers want them o Pricing merchandise and services o Providing service and follow-up Marketing – An organizational function and a set of processes for: o Creating, communicating, and delivering value to customers o Managing customer relationships in ways that benefit the organization and its stakeholders Today’s Global Marketplace o Factors that have extended economic views o Increase in international trade agreements o Growth of electronic business o Interdependence of the world’s economies o Companies seek the most efficient manufacturing sites and most lucrative markets worldwide. o Companies are tailoring their marketing efforts to the needs and preferences of local markets. Four Eras in the History of Marketing  Exchange process- Activity which two or more parties give something of value to each other to satisfy perceived needs The Production Era  Production orientation – Stressing efficiency in producing a quality product, with the attitude toward marketing that “a good product will sell itself”  Characterized by production shortages and intense consumer demand The Sales Era  Sales orientation – Customers will resist purchasing nonessential items.  Task of personal selling and creative advertising is to persuade them to buy The Marketing Era and the Emergence of the Marketing Concept o Shift from a seller’s market to a buyer’s market o Strong buyer’s market created the need for consumer orientation. o Emergence of marketing concept – A companywide consumer orientation to achieve long- run success o A strong market orientation improves market success and overall performance. The Relationship Era  Relationship marketing – Developing long-term, value-added relationships over time with customers and suppliers  Strategic alliances and partnerships benefit everyone. Converting Needs to Wants o Consumers acquire goods and services on a continuing basis to fill certain needs. o To convert needs into wants, marketers: o Focus on the benefits of goods and services o Require skill o Should listen to consumer needs Avoiding Marketing Myopia o Marketing myopia – Management’s failure to recognize the scope of its business o Focusing on customer need satisfaction can overcome myopia Marketing in Not-for-Profit Organizations o Operate in both the public and private sector o Adopt marketing strategies to meet service objectives o Communicate their messages by appearing in advertisements relating to their goals o Form alliances with for-profit firms to promote each other’s causes Characteristics of Not-for-Profit Marketing o Focus is to generate revenue to support their causes and not on the bottom line o May market tangible goods and services o Markets to multiple audiences o Often possess some degree of monopoly power in a given geographic region o Service users have less control over the firm’s future  Person Marketing – Focus on marketing of fictional characters, celebrities, and political candidates o Marketing efforts designed to cultivate the attention and preference of a target market toward a person. I.e. Steve Nash, Nelly Furtado, Stephen Harper  Place Marketing - Focus on marketing places as tourist attractions, business locations o Marketing efforts designed to attract visitors to a particular are; Improve consumer images of a city, province or country; and/ or attract new business. I.e. Nova Scotia: Canada’s Ocean Playground, Saskatchewan: Land of Living Skies  Cause Marketing – Identification and marketing of a social issue, cause or idea to selected markets. I.e. “Reading is fundamental”, “Friends don’t let their friends drive drunk”, “Be a mentor” o Many profit-seeking firms link their products to social causes o Strong support among customers and employees for cause-related marketing  Event Marketing – Marketing of sporting, cultural, and charitable activities to selected target markets. I.e. Grey cup, Super bowl, 2010 Vancouver Olympics, Calgary Stampede, Toronto Caribanna  Organization Marketing - Marketing efforts of mutual-benefit organizations, service organizations, and government organizations that seek to influence others to accept their goals, receive their services, or contribute to them in some way.  Attempts to influence others: o Accept the organization’s goals o Receive its services o Contribute in some way o Used to raise funds by selling licensed merchandise From Transaction-based Marketing to Relationship Marketing o Transaction-based marketing – Buyer and seller exchanges characterized by limited communications and little or no ongoing relationships between the parties o Marketers realize that consumers are becoming more and more sophisticated. o Relationship marketing – Gives a company new opportunities to gain a competitive edge by moving customers up a loyalty ladder o It starts with determining what customers need and want, then developing high-quality products to meet those needs. Using Interactive and Social Marketing to Build Relationships  Mobile Marketing – Marketing messages transmitted via wireless technology  Interactive marketing – Buyer-seller communications in which the costumer controls the amount and type of information received from a marketer.  Social marketing – The use of online social media as a communications channel for marketing messages  Buzz marketing – Word-of-mouth messages that bridge the gap between a company and its products Developing Partnerships and Strategic Alliances o Relationship marketing extends to business-to-business relationships with suppliers, distributors, and other partners. o Strategic alliances – Provide firms competitive advantage o Forms of alliances: o Product development partnerships o Vertical alliances Eight Universal Marketing Functions 1. Buying - Ensuring product offerings are available in sufficient quantities to meet customer demands 2. Selling - Using advertising, personal selling, and sales promotions to match products to customer needs. 3. Transporting – Moving products from their point of production to locations convenient for purchasers. 4. Storing – Warehousing products until needed for sale. 5. Standardizing and Grading – Ensuring product offerings meet quality and quantity controls of size, weights, and other variables. 6. Financing – Providing credit for channel members (wholesalers and retailers) and consumers. 7. Risk Taking – Dealing with uncertainty about future purchases. 8. Securing Marketing Information – Collection information about consumers, competitors, and channel members for use in making marketing decisions. Ethics and Social Responsibility: Doing Well by Doing Good o Ethics – Moral standards of behaviour expected in a society o Most businesses follow ethical practices, although there have been breaches at times. o Social responsibility – Marketing philosophies, policies, procedures, and actions whose primary objective is to enhance society o Sustainable products – Products that can be produced, used, and disposed of with minimal impact on the environment o Firms stand to gain needed credibility from their efforts to protect the environment. Lecture 2: Chapter 2 Strategic Planning in Contemporary Society Marketing Planning: The Basis for Strategy and Tactics o Planning – Anticipating future events and conditions and determining the best way to achieve organizational objectives o Continuous process; creates a blueprint for everyone in the organization o Marketing planning – Implementing planning activities devoted to achieving marketing objectives o Many planning activities take place over the Internet with virtual conferences. o An important trend in marketing planning centres on relationship marketing. Strategic Planning Vs. Tactical Planning Strategic Planning o Determining organization’s primary objectives o Adopting courses of action that will achieve these objectives o Addresses long-term actions Tactical Planning o Guides the implementation of activities specified in the strategic plan o Addresses shorter-term actions The Organization’s Mission o Mission – Essential purpose that differentiates one company from another o Microsoft Office: “Real life tools” o Sephora: “The beauty authority” o Tim Hortons: “Always Fresh. Always.” o Objectives – Guide the development of marketing objectives and plans o Generate 12 percent more profit next year. o Add 15 new outlets within the next year. o Reduce waste by 20 percent. Assessing Organizational Resources and Evaluating Environmental Risks and Opportunities o Resources o Production o Marketing o Finance o Technology o Employees o Strengths help planners: o Set objectives. o Develop plans. o Take advantage of marketing opportunities. Formulating, Implementing, and Monitoring a Marketing Strategy o Marketing strategy – Selecting and satisfying target consumers through the marketing mix elements o The final steps of the planning process: o Put the marketing strategy into action. o Monitor performance to ensure that objectives are achieved. Successful Strategies: Tools and Techniques o Porter’s Five Forces Model: o Threat of new entrants o Bargaining power of buyers o Bargaining power of suppliers o Threat of substitute products o Rivalry among competitors First Mover and Second Mover Strategies o First mover strategy – The company first to offer a product in a marketplace will be the long-term market winner. o Second mover strategy – Observing the innovations of first movers and then improving on them to gain advantage in the marketplace SWOT Analysis o Helps planners compare internal organizational strengths and weaknesses with external opportunities and threats o Insert in Appendix The Strategic Window o Limited periods when key requirements of a market and a firm’s particular competencies best fit together o Requires a thorough analysis of o Current and projected external environmental conditions o Current and projected internal company capabilities o How, whether, and when the firm can reconcile environmental conditions and company capabilities Elements of a Marketing Strategy o Target market o Marketing mix variables Target Market o The group of people toward whom the firm directs its marketing efforts and merchandise o Example: Bombardier markets most of their products to business buyers. o Diversity plays a critical role. o Example: The growing Chinese and South Asian population in Canada o Targeting consumers in specific global markets represents a challenge and an opportunity. o Example: In India, Walmart has made a successful entry into retailing with smaller shops in urban areas and low prices. Marketing Mix Variable o Marketing mix – Blending of the four strategy elements to fit the needs and preferences of a specific target market o Product o Distribution o Promotion o Pricing Product Strategy o Deciding what goods or services the firm should offer to a group of consumers o Customer service o Package design o Brand names, trademarks, patents, and warranties o Lifecycle of a product o Product positioning o New-product development Distribution Strategy o Consumers find their products in the proper quantities at the right times and places. o Involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels. o Technology has opened new channels of distribution in many industries. Promotion Strategy o Communication link between sellers and buyers o Firms may communicate messages: o Directly through salespeople. o Indirectly through advertisements and promotions. o Many companies use integrated marketing communications (IMC). Pricing Strategy o Methods of setting profitable and justifiable prices o Subject to regulation and public scrutiny o A good pricing strategy: o Creates value for customers. o Builds and strengthens customer relationships with a firm and its products. The Marketing Environment o Five external dimensions that affect the marketing mix variables: o Competitive o Political-legal o Economic o Technological o Social-cultural o Technology continually changes the marketing environment. o Rule of three – The three strongest, most efficient companies dominate 70 and 90 percent of a market o Example: Cereal manufacturers General Mills, Kellogg’s, and Post Methods for Marketing Planning o Methods to assist with marketing planning: o Business portfolio analysis o BCG analysis o Strategic growth opportunity analysis Business Portfolio Analysis o Business portfolio analysis – An evaluation of a company’s products and divisions to determine the strongest and weakest o Strategic business units – Key business units within diversified firms o Each has its own managers, resources, objectives, and competitors. o Each pursues its own distinct mission and develops its own marketing plans. o Help focus attention of company managers o May need to be redefined as market conditions dictate BCG Market Share/ Market Growth Matrix o BCG analysis – A market share/market growth matrix that plots market share against market growth potential o Developed by the Boston Consulting Group Strategic Growth Opportunity Matrix o Strategic growth opportunity analysis – An analysis of potential growth opportunities based on existing or new customers and existing or new products Lecture 3: September 19, 2012 Chapter 3: The Marketing Environment, Ethics, and Social Responsibility Environmental Scanning and Environmental Management o Environmental scanning – Collecting external marketing environment information to identify and interpret potential trends o Trends may represent significant opportunities or threats to the company. o Environmental management – Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environments o Strategic alliance – Partnership in which two or more companies combine resources and capital to create competitive advantages in a new market Comparative Environment o Interactive process that occurs in the marketplace among: o Marketers of directly competitive products o Marketers of products that can be substituted for one another o Marketers competing for the consumer’s purchasing power o Marketing decisions by individual firms influence: o Consumer responses in the marketplace o Marketing strategies of competitors o Few organizations have monopoly positions o Monopoly – Market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes o Some pharmaceutical firms have temporary monopolies provided by patents on drugs o Oligopoly – Few number of sellers in an industry with high start-up costs that keep out new competitors o Direct o Among marketers of similar products o Example: Bell, Rogers, Fido, and Telus o Indirect o Involves products that are easily substituted o Example: pizza, tacos, burgers, and wings o Competition among all firms that compete for consumers’ purchases o All firms compete for a limited number of dollars that consumers can or will spend. o Example: A customer who has a toonie and wants a treat may have to choose between a Tim Hortons coffee and a chocolate bar. Developing a Competitive Strategy o Competitive strategy – Methods through which a firm deals with its competitive environment o Should we compete? o Depends on firm’s resources, objectives, and expected profit potential o In what markets should we compete? o Allocate firm’s limited resources to the areas of greatest opportunity o How should we compete? o Includes product, promotion, distribution, and pricing decisions that maximize competitive advantage o Time-based competition – Strategy of developing and distributing goods more quickly than competitors The Political-Legal Environment o Consists of laws and their interpretations that require firms to operate under competitive conditions and to protect consumer rights o Ignorance or non-compliance can result in fines, negative publicity, and civil damage suits Government Regulation o Competition Act – Comprehensive legislation administered by Industry Canada and designed to help both consumers and businesses by promoting a healthy competitive environment o Laws roughly categorized in three marketing areas: o Pricing o Promotion o Distribution o Provincial laws generally focused on protection of buyers and sellers with respect to direct sales contracts o Commonly referred to as Consumer Protection Act or Direct Seller’s Act Government Regulatory Agencies o Canadian Radio-television and Telecommunications Commission (CRTC) – regulates and supervises all aspects of the Canadian broadcasting system o National Energy Board – regulates the construction and operation of interprovincial and international pipelines and power lines Other Regulatory Forces o Consumer interest organizations; e.g., People for the Ethical Treatment of Animals o Other groups attempt to advance the rights of minorities, senior citizens, and other causes; e.g., Mothers Against Drunk Driving o Self-regulatory groups set guidelines for responsible business conduct; e.g., Advertising Standards Canada The Economic Environment o Gross domestic product (GDP) – Sum of all goods and services produced by a nation in a year o Economic environment – Factors that influence consumer buying power and marketing strategies o Business cycle – Pattern of stages in the level of economic activity Stages in the Business Cycle o Prosperity – Consumer spending is brisk; growth in services sector o Recession – Consumers focus on basic, fundamental products o Depression – Consumer spending sinks to its lowest level o Recovery – Consumer purchasing power increases The Global Business Crisis o Business cycles take a severe turn and affect consumers and businesses across the globe. o Marketers must re-evaluate their strategies and concentrate on their most promising products. Inflation and Deflation o Inflation – Devalues money by reducing the products it can buy through persistent price increases o Deflation can cause: o A free-fall in business profits. o Lower returns on most investments. o Widespread job layoffs. Unemployment  Unemployment – Proportion of people in the economy who are actively seeking work but who do not have jobs o Rises during recession and declines during recovery and prosperity Income o Influences consumer buying power o Marketers focus on discretionary income – the amount of money people have to spend after buying necessities Resource Availability o Shortages can result from lack of raw materials, component parts, energy, or labour o Demarketing – Reducing consumer demand for a good or service to a level that the firm can supply o Challenges facing marketers: o Allocating limited supplies o Deciding whether to spread limited supplies over all customers or limit purchases by some customers The Internationcal Economic Environment o Marketers must monitor the economic environment of other nations o Global political changes affect international marketplace The Technological Environment o Application of knowledge based on discoveries in science, inventions, and innovations to marketing o Technology leads to o New products. o Improvements in existing products. o Better customer service. o Reduced prices. The Technological Environment o Technology addresses social concerns. o Sources of technology : o Industry o Educational institutions o Not-for-profit institutions o Federal government Applying Technology o Marketers monitor new technology to gain a competitive edge and to enhance customer service. o VoIP – Voice over Internet Protocol –Alternative to traditional telecommunications services o Internet Protocol Multimedia Subsystem (IMS) will offer new opportunities to marketers. The Social-Cultural Environment o The relationship between the marketer, society, and culture o Marketers must be sensitive to demographic shifts and changing values. o Increasing importance of cultural diversity Consumerism o Consumerism – Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government o Consumer rights o The right to choose freely o The right to be informed o The right to be heard o The right to be safe Ethical Issues in Marketing o Marketing ethics – Marketers’ standards of conduct and moral values o Many companies create ethics programs to train employees to act ethically o Employees’ personal values sometimes conflict with employers’ ethical standards Lecture 4: September 27, 2012 Chapter 4: Consumer Behaviour Consumer Behaviour o Process through which buyers make decisions o Marketers borrow from psychology and sociology. Interpersonal Determinants of Consumer Behaviour o Cultural influences o Social influences o Family influences Cultural Influences Culture includes: o The values, beliefs, preferences, and tastes handed down from one generation to the next. o Cultural influences include: o Core values: o Cultural values may change, but core values do not o Microcultures : Groups within a culture that have distinct modes of behaviour o Largest groups in Canada include: o Quebecois consumers o Chinese Canadian consumers o South-Asian Consumers Quebecois Consumers o Often considered a main cultural group o Over 7 million Quebecois in Canada Chinese Canadian Consumers o Came from Hong Kong during the 1980s o Now coming from other areas such as mainland China South-Asian Canadian Consumers o Come from several cultures – Punjabi, Urdu, and Tamil o This group is expected to be the largest cultural group by 2031. More than 80 cultural groups across the country Social Influences o Social influences include: o Reference groups o Social classes o Opinion leaders o Everyone belongs to multiple social groups that influence buying decisions. o Groups establish norms of behaviour. o Differences in status and roles within the group also influence behaviour. The Asch Phenomenom o Theory of psychologist S. E. Asch that individuals conform to majority rule, even if that majority rule goes against their beliefs Reference Groups o People or institutions whose opinions are valued o Influence of reference group depends on two conditions: • Purchased product must be seen and identifiable • Purchased product must be conspicuous, something that not everybody owns Social Classes o Six classes: upper-upper, lower-upper, upper-middle, lower-middle, working class, lower class. o Income not always a primary factor. Opinion Leaders o Trendsetters who purchase new products before others in a group and then influence others in their purchases o Individuals tend to act as opinion leaders for specific goods or services based on their knowledge of and interest in those products. Family Influences Family is changing over the last century due to: o A declining birth rate o An increase in the number of childless couples o Higher divorce and separation rates o Children staying at home longer Role of Each Spouse in a Household: • Autonomic role • Husband-dominant role • Wife-dominant role • Syncratic role Children and Teenagers in Family Purchases • Children and teenagers represent a huge market. • They influence what their parents buy, from cereal to cars. Personal Determinants of Consumer Behaviour o Includes: o Needs and motives o Perception o Attitudes o Learning o Self-Concept Needs and Motives Need o Imbalance between a consumer’s actual and desired states. Motive o Inner state that directs a person toward the goal of satisfying a need. Perceptions Meaning that a person attributes to incoming stimuli gathered through the five senses. Perceptual Screens o Perceptual screens — the mental filtering processes through which all inputs must pass Attitudes o Person’s enduring favourable or unfavourable evaluations, emotions, or action tendencies toward some object or idea. Attitude Components o Cognitive o Affective o Behavioural Changing Consumer Attitudes o Marketers have two choices for appealing to consumer attitudes: • Attempt to produce consumer attitudes that will motivate purchase of a particular product. • Evaluate existing consumer attitudes and then make the product features appeal to them. Modifying the Components of Attitude o Providing evidence of product benefits and correcting misconceptions. o Engaging buyers in new Learning o Knowledge or skill that is acquired as a result of experience, which changes consumer behaviour o Learning process: • Drive • Cue • Response • Reinforcement Applying Learning Theory to Marketing Decisions o Marketers use shaping, the process of applying a series of rewards and reinforcements, to permit more complex behaviour to evolve. Self-Concept Theory o Person’s multifaceted picture of himself or herself. o Four components that influence purchasing decisions: • Real self • Self-image • Looking-glass self • Ideal self Consumer Decisions o High-involvement purchase decisions o Low-involvement purchase decisions Problem or Opportunity Recognition o Consumer becomes aware of a significant discrepancy between the existing situation and a desired situation Search o Consumer gathers information about the attainment of a desired state of affairs o Evoked set Evaluation of Alternative o Consumer evaluates the evoked set of options, and as the search progresses, consumer accepts, distorts, or rejects information as it is received o Evaluative criteria Purchase Decision and Purchase Act o After evaluating each alternative in the evoked set, the consumer decides where or from whom to make the purchase. Post-Purchase Evaluation o Buyer feels either satisfaction at the removal of the discrepancy between the existing and desired states or dissatisfaction with the purchase. o Cognitive dissonance Classifying Consumer Problem-Solving Processes o Marketers recognize three categories of problem-solving behaviour: • Routinized response behaviour • Limited problem solving • Extended problem solving Chapter 8: Marketing Segmentation, Targeting, and Positioning Market — Group of people with sufficient purchasing power, authority, and willingness to buy Target market — Group of people to whom a firm decides to direct its marketing efforts and ultimately its goods and services Types of Markets  Consumer products — Products bought by ultimate consumers for personal use  Business products — Goods and services purchased for use either directly or indirectly in the production of other goods and services for resale The Role of Market Segmentation Market segmentation — Division of the total market into smaller, relatively homogenous groups Criteria for Effective Segmentation o The segment must have measurable size and purchasing power. o Marketers must find a way to effectively promote and serve the market segment. o Segment must be sufficiently large to offer good profit potential. o Firm must aim for segments that match its marketing capabilities. Segmenting Consumer Markets o Four common bases for segmenting consumer markets: o Geographic segmentation o Demographic segmentation o Psychographic segmentation o Product-related segmentation Geographic Segmentation o Division of an overall market into homogenous groups based on their locations. Government Classification o Census metropolitan area (CMA) o Census agglomeration (CA) Using Geographic Segmentation o Marketers focus on core regions, those from which they draw 40 to 80 percent of sales. Geographic Information System (GIS)  Computer systems that assemble, store, manipulate, and display data by location Segmenting by Age o Distinctions among age groups blur as consumers’ roles and needs change and as age distribution shifts. Demographic Segmentation o Division of an overall market into homogenous groups based on variables such as gender, age, income, occupation, education, sexual orientation, household size, and stage in the family life cycle; also called socioeconomic segmentation Segmenting by Age o School-aged children o Teens and tweens o Generation X o Baby boomers o Seniors The Cohort Effect o Tendency of members of a generation to be influenced and bound together by significant events in their formative year, ages 17 to 22 Segmenting by Family Life Cycle Stages o Family life cycle — The process of family formation and dissolution o Life stage, not age, is primary concern of marketer Segmenting by Household Type o Households vary by life cycle stage and the presence or absence of children. Segmenting by Income and Expenditure Patterns o Engel’s Laws o Helps marketers target consumers at all income levels Demographic Segmentation Abroad o Demographic data abroad can be more difficult to get than in Canada. o Government census data may include different information than Canadian census. Psychographic Segmentation o What is psychographic segmentation? o Division of a population into groups that have similar attitudes, values, and lifestyles. VALS o A psychographic segmentation system developed 25 years ago and today owned and managed by SRI Consulting Business Intelligence (SRIC-BI) o Based on concepts of resources and motivation Psychographic Segmentation of Global Markets o Six psychographic consumer segments that exist in 35 countries: o Strivers o Devouts o Altruists o Intimates o Fun seekers o Creatives Using Psychographic Segmentation o Help marketers quantify aspects of consumers’ personalities and lifestyles to create goods and services for a target market Product-Related Segmentation o Division of a population into homogeneous groups based on their relationships to the product. Segmenting by Benefits Sought o Focuses on the benefits people expect from using the product. Segmenting by Usage Rates o 80/20 principle (Praedo’s law) — large percentage of revenue comes from a small, loyal percentage of customers o Marketers may target heavy, moderate, and light users or nonusers. Segmenting by Brand Loyalty o Grouping customers according to the strength of their product loyalty. Using Multiple Segmentation Bases o Flexibility helps marketers increase their accuracy in reaching the right markets. o Goal is getting to know potential customers better and satisfying their needs with appropriate goods and services The Market Segmentation Process 1. Develop a relevant profile for each segment. 2. Forecast market potential. 3. Forecast probable market share. 4. Select specific market segments. Strategies for Reaching Target Markets o Undifferentiated marketing o Differentiated marketing o Concentrated marketing o Micromarketing Selecting and Executing a Strategy o Basic determinants of marketing strategy: o Company resources o Product homogeneity o Stage in the product lifestyle o Competitors’ strategies Positioning  Placing a product at a certain point or location within a market in the minds of prospective buyers. Lecture 5: October 4, 2012 Chapter 7 Marketing Research, Decision Support Systems, and Sales Forecasting Marketing Research The process of collecting and using information for marketing decision making The Marketing Research Function Research is central to understanding effective customer satisfaction and customer relationship programs. Development of the Marketing Research Function o First organized marketing research conducted in 1879 o Research methods grew more sophisticated in the 1930s. o Computer technology has significantly advanced market research. Who Conducts Marketing Research? o Size and form of research often tied to corporate structure o Many firms outsource research needs. Types of Research Firms o Syndicated services o Full-service research suppliers o Limited-service research suppliers Customer Satisfaction Measurement Programs o Firms often focus on tracking satisfaction levels of current customers. o Also analyze partial or complete dissatisfaction to identify problem areas that need attention Marketing Research Process Perceived Information Need v 1. Defining the Problem  Well-defined problems are half-solved.  Avoid confusing symptoms with the problem itself. 2. Conducting Exploratory Research  Process of discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources 3. Formulating a Hypothesis  Sales analysis – by customer type, sales method, and others  Accounting data provides information about financial issues.  Marketing cost analysis evaluates expenses for a variety of costs.  A tentative explanation for some specific event  Sets the stage for more in-depth research 4. Creating a Research Design  A master plan or model for conducting research  Must ensure it will measure what researchers intend to measure 5. Collecting Data: a) Primary Date - Previously published information b) Secondary Date - Information collected specifically for the investigation at hand  Government data  Private data  Online sources of secondary data  Primary costs more to gather but can be much more valuable. 6. Interpreting and Presenting the Research Information  Present in a format that allows managers to make effective judgments  Researchers and end users must collaborate to ensure effectiveness of research.  Reports must be clear and concise. Marketing Decision Based on Information Collected v Feedback on Research and Marketing Decision Effectiveness ^ Sampling Techniques o Sampling – Process of selecting survey respondents or research participants o Probability sample – Sample that gives every member of the population a chance of being selected o Nonprobability sample – Sample that involves personal judgment somewhere in the process Observation Method o Researchers view the overt actions of subjects being studied. Interpretative Research: Ethnographic Studies o Observational research method developed by social anthropologists in which customers are observed in their natural setting and their behaviour is interpreted based on an understanding of social and cultural characteristics; also known as ethnography, or “going native” Survey Method o Researchers must ask questions to get information on attitudes, motives, and opinions. Types of Survey Methods o Telephone interviews o Personal interviews o Focus groups o Mail surveys o Online surveys and other Internet-based methods Experimental Method o Least used method o Controlled experiment o Test marketing Conducting International Marketing Research o Follow same basic steps as for domestic marketing research o Researchers must be aware of cultural and legal environments. o May have to adapt research methods to local conditions Computer Technology In Marketing Research o Marketing Information System (MIS) o Marketing Decision Support System (MDSS) Marketing Information System (MIS) o A planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility Marketing Decision Support System (MDSS) o Marketing information system component that links a decision maker with relevant databases and analysis tools Data Mining o The process of searching through computerized data files to detect patterns o Focuses on identifying relationships that are not obvious to marketers Business Intelligence o Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations. Competitive Intelligence o A form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, and other sources Sale Forecasting o Estimate of a firm’s revenue for a specified time period o Firms can use: o Qualitative Forecasting Techniques o Quantitative Forecasting Techniques Qualitative Forecasting Techniques o Jury of executive opinion o Delphi technique o Sales force composite o Survey of buyer intentions Quantitative Forecasting Techniques o Test markets o Trend analysis o Exponential smoothing Chapter 6 Serving Global Markets Global Trade Importing and Exporting Service Exports Tourism Benefits of Going Global o Additional revenue o New insights into customer behaviour o Alternative distribution strategies o Advance notice of new products o Exposure to new marketing techniques The International Marketing Environment o International economic environment o International social-cultural environment o International technological environment o International political-legal environment International Economic Environment o National factors o Infrastructure o Exchange rate International Social-Cultural Environment o Before entering a market, firms need to study all aspects of a nation’s culture, including language, education, religious attitudes, and social values. o Language plays an important role in international marketing. International Technological Environment o Internet technologies connect large and small firms to world markets. o Technology presents some challenges for global marketers International Political-Legal Environment o Laws o Trade barriers o Tariffs o Other trade barriers o Dumping Laws o International law o Canadian law o Legal requirements of host nation Trade Barriers o Tariffs o Revenue and protective tariffs o Other trade barriers o Import quotas, embargo, subsidy, exchange control o Dumping Multinational Economic Integration o Free trade area o Customs union o Common market GATT and the World Trade Organization o General Agreement on Tariffs and Trade (GATT) o International trade accord that has helped reduce world tariffs. o World Trade Organization (WTO) replaced GATT. It oversees GATT agreements, mediates disputes, and works to further reduce trade barriers. NAFTA North American Free Trade Agreement (NAFTA) o Accord removing trade barriers between Canada, Mexico, and the United States o All three member nations have seen GDP increases. The Free Trade Area of the Americas (FTAA) o Proposed free trade area through the Western Hemisphere The European Union (EU) o Customs union that is moving in the direction of an economic union by adopting a common currency, removing trade restrictions, and permitting free flow of goods and workers throughout the member nations. o Includes 491 million people in 27 countries Going Global o Reasons for going global o globalization of customers and competitors o new customers in emerging markets o reduced trade barriers o advances in technology o enhanced customer responsiveness Importing and Exporting Importing o bring in foreign goods to sell domestically or use as component parts Exporting o marketing products to customers in other countries, alternatives: o Export-trading companies o Export-management companies o Offset agreement Contractual Agreements o Franchising o Foreign licensing o Subcontracting International Direct Investment o Forms of direct investment: o Acquisition of an existing firm in target country o Setting up of an independent division o Formation of joint ventures From Multinational Corporation to Global Marketer o Multinational corporation - has significant operations and marketing activities outside its home country Developing an International Marketing Strategy Global marketing strategy o Standard marketing mix with minimal modification in all foreign markets Multi-domestic marketing strategy o Customization of marketing strategies to effectively reach individual markets International Distribution Strategy o Set up proper channels and anticipate potential problems. o Decide on the methods of entering a foreign market. Pricing Strategy o Competitive, economic, political, and legal factors can limit pricing decisions. o Adaptation to local markets. Countertrade o Form of exporting whereby goods and services are bartered rather than sold for cash o Way to control balance-of-trade problems Canada as Target for International Marketers o Foreign marketers regard Canada as an inviting target. o High level of discretionary income o Relative political and economic stability o Favourable attitude toward foreign investment October 18, 2012 Chapter 9 Product and Service Strategies What Is a Product? o Bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs o People buy want satisfaction, not objects. What are Goods and Services? o Services — Intangible tasks that satisfy the needs of consumer and business users o Goods — Tangible products that customers can see, hear, smell, taste, or touch Service Characteristics o Services are intangible o Services are inseparable from the service providers. o Services are perishable. o Companies cannot easily standardize services. o Buyers often play a role in the creation and distribution of services. o Service standards show wide variations. Importance of the Service Sector o The service sector makes up more than 70 percent of the Canadian economy. Service Characteristics o Consumer (B2C) product — Product destined for use by ultimate consumers o Business (B2B) product — Product that contributes directly or indirectly to the output of other products for resale Unsought Products o Products marketed to consumers who may not yet recognize any need for them o Wouldn’t go out of our way to purchase (funeral services, health care) Convenience Products o Goods and services that consumers want to purchase frequently, immediately, and with minimal effort o Impulse products o Staples o Emergency products (umbrellas, Snow shovels) Shopping Products o Products purchased only after the consumer compares competing offerings on such characteristics as price, quality, style, and colour o Homogenous shopping products: Airplane flights, computers o Heterogeneous shopping products: Child care, furniture, yoga Specialty Products o Products that offer unique characteristics that cause buyers to prize those particular brands Classifying Consumer Services o Nature of the service o Relationship of the service organization with its customers o Flexibility for customization and judgment on the part of the service provider o Demand and supply fluctuation o How the service is delivered Applying the Consumer Products Classification System o Buying behaviour patterns and marketing mix choices differ for different product types. Classification of Business Products o Categories emphasize product use rather than consumer buying behaviour.  Installations.  Airplane, office tower  Business Services.  Pil rig services, trucking  MRO.  Staples, Scotch tape, copy paper  Raw Materials.  Sugar, Crude Oil, Milk  Accessory Equipment  Electric grinders, smartphone  Components.  Fabric, computer chips, Diesel Worldwide Quality Programs  ISO 9001:2000 standards o The National Quality Institute o Malcolm Baldrige National Quality Award Benchmarking Involves three main activities: o Identifying processes that need improvement o Comparing processes to those of industry leaders o Implementing changes for quality improvement Quality of Services Determined by five variables: o Tangibles o Reliability o Responsiveness o Assurances o Empathy Development of Product Lines o Product line — Series of related products offered by one company o Marketing entire product lines can help company grow, economize company resources, and exploit product life cycles Reasons to Develop Product Lines o Desire to grow o Enhancing company’s position in the market o Optimal use of company resources The Product Mix o Assortment of product lines and individual product offerings that the company sells o Product mix width — Number of product lines a firm offers o Product mix length — Number of different products a firm sells o Product mix depth — Variations in each product that the firm markets in its mix Product Mix Decisions o Firms evaluate the effectiveness of the width, length, and depth to make decisions about adding or eliminating products from their offerings. o Line extension The Product Life Cycle o Progression of a product through introduction, growth, maturity, and decline stages The Product Life Cycle o Introductory stage: Technical problems and financial losses are common. o Growth stage: Sales volume rises rapidly o Maturity stage: Sales of a product eventually reach a plateau o Decline stage: Absolute decline in industry sales. Expending the Product Life Cycle o Increasing frequency of use o Increasing the number of users o Finding new uses o Changing package sizes, labels, or product quality Product Deletion Decisions o Marketers prune product lines and eliminate marginal products to preserve limited resources. Chapter 10 Pricing Concepts and Strategies Managing Brands for Competitive Advantage o Brand — Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s Brand Loyalty Measured in three stages: o Brand recognition o Brand preference o Brand insistence Types of Brands o Generic products o Manufacturer’s brand o Private brands o Captive brands o Family brands o Individual brands Manufacturers’ Brands versus Private Brands o Manufacturer’s brand — Brand name owned by a manufacturer or other producer o Private brands — Brands offered by wholesalers and retailers Captive Brands o National products that are sold exclusively by a retail chain Family and Individual Brands o Family brand — Single brand name that identifies several related products o Individual brand — uniquely identifies the item itself. Brand Equity o Added value that a respected, well-known brand name gives to a product in the marketplace The Role of Category and Brand Management o Brand management — Traditionally, companies have assigned the task of managing a brand’s marketing strategies to a brand manager. o Category management — Product management system in which a category manager — with profit and loss responsibility — oversees a product line Product Identification o Brand names o Category marks Trademarks o Trademark — Brand for which the owner claims exclusive legal protection Protecting trademarks Trade dress Developing Global Brand Names and Trademarks o Can be difficult due to cultural and language variation o Names and symbols may not translate well in other cultures. May use a single brand name worldwide or use altered versions to adapt to cultures and languages of individual nations Packaging o Protection against damage, spoilage, and pilferage o Assistance in marketing the product o Cost-effective packaging Labelling o Labels are both promotional and informational. o Universal Product Code (UPC) o Radio-frequency identification (RFID) tags Brand Extensions o Strategy of attaching a popular brand name to a new product in an unrelated product category Brand Licensing o Authorizing other companies to use a firm’s brand name New-Product Planning: Product Development Strategies o Product positioning — Consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages relative to competing brands o Cannibalization — Introducing a new product that adversely affects sales of existing products Consumer Adoption Process o Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again Stages in the Consumer Adoption Process o Awareness o Interest o Evaluation o Trial o Adoption/Rejection Adopter Categories o Consumer innovators — People who purchase new products almost as soon as the products reach the market o Diffusion process — Process by which new goods or services are accepted in the marketplace Identifying Early Adopters o Tend to be younger, are better educated, and enjoy higher incomes than other consumers Rate of Adoption Determinants o Relative advantage o Compatibility o Complexity o Possibility of trial use o Observability Organizing for New-Product Development o New-product committees o New-product departments
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