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MGCR 352 Final Notes.docx

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School
McGill University
Department
Management Core
Course
MGCR 352
Professor
Martin Chun Qiu
Semester
Winter

Description
MGCR 352 Final Exam Notes 1 Intro to Marketing Marketing is the process of planning and executing the conception, pricing, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. –American MarketingAssociation OR Getting the right goods and services to the right people at the right place at the right time at the right price with the right communication and promotion. – Philip Kotler The purpose of marketing is to: • Attract new customers by promising and delivering value • Building long-term relationships with customers by delivering continued customer satisfaction • Creating, building, and managing these relationships profitably over time Marketing has moved from the production era, to the sales era, to the marketing concept era, to the market orientation era, into the current customer experience management era. Product concept: If we build the best, customers will come. Sales concept: If the price is right, customers will come. Marketing concept: Focus on and satisfy customer wants and needs. Social marketing concept: Focus on customer satisfaction and long-term social wellbeing. Needs occur when a person feels physiologically deprived of basic necessities such as food, clothing, and shelter. Wants are needs shaped by culture and individual personality. Demands are wants combined with buying power. Value is the difference between total product benefits and total paid price (for the consumer). Customer satisfaction occurs when performance is higher than expectation. Amarket is a set of potential buyers who share a need or want that can be satisfied through exchange. Strategic Planning Strategic planning is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. There are 3 levels of strategy in an organization: corporate, business unit, and functional. 2 MGCR 352 Final Exam Notes Astrategic business until (SBU) is a unit of the company that has a separate mission and separate objectives and that can be planned independently form other company business (company division, product line, or single product/brand). Marketing plan structure: • Mission statement • Objectives • SWOTAnalysis • Marketing Strategy: o Target Market Strategy o Marketing Mix  Product  Distribution  Promotion  Price • Implementation • Evaluation • Control SWOTAnalysis • InternalAnalysis o Strengths: things the company does well o Weaknesses: things the company does not do well o Production costs, marketing skills, employee capabilities, financial resources, available technologies, company/brand image • ExternalAnalysis o Opportunities: Conditions in the external environment that favour strengths o Threats: Conditions in the external environment that do not relate to existing strengths or favour areas of current weakness. o Socio-cultural, demographics, economic conditions, technological advancement, political/legal constraints, competition The 4 Ps – Marketing Mix Product offers the right product, service, or experience. • Includes physical unit, package, warranty, service, brand, image, and value. • Goods, ideas, or services. Price controls perceived value and satisfaction  most flexible Place allows customers easy access to the product and support • Product availability where and when customers want it • Involves all activities from raw materials to finished products Promotion communicates the offer and the value proposition MGCR 352 Final Exam Notes 3 • Role is to bring about exchange with target markets Marketing Environments Environmental scanning is the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends. • Social: demographics, culture, values o Ageing population • Economic: economy, macroeconomic conditions, consumer income • Technological • Competitive o Competitive advantage: The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. Can be cost, differentiation, niche strategy. o Sources of sustainable competitive advantage:  Patents 4 MGCR 352 Final Exam Notes  Copyright  Trademark  Locations  Starbucks, top-of-mind awareness  Equipment  Technology  Customer Service  Promotion  Skills andAssets • Regulatory Segmentation, Targeting, and Positioning Market segment: Divide the market into groups of people with similar demands and responses. Target market: Evaluate segments and select one or more segments to enter. Position product: Create differentiation relative to competing products in minds of target consumers. Criteria for segmentation • Sustainability: Segment must be large enough to warrant a special marketing mix • Identifiability/Measurability: Segments must be identifiable and their size measurable • Accessibility: Members of targeted segments must be reachable with marketing mix • Responsiveness: Unless segment responds to marketing mix differently, no separate treatment is needed. Types of segments • Geographic • Demographic • Psychographic o Lifestyle o Personality o Motives • Behavioral o Benefit sought o Usage rate  80-20 principle: 80% of sales are from 20% of their customers Targeting strategies • Undifferentiated MGCR 352 Final Exam Notes 5 o Market as one big market with no individual segments and thus requires a single marketing mix o Advantages: potential savings on production and marketing costs o Disadvantages: not marketing oriented, more susceptible to competition • Concentrated o Astrategy used to select one segment of a market for targeting marketing efforts o Advantages: concentration of resources, small firms can compete, strong positioning o Disadvantages: segments too small/could decline, large competitors may enter if segments grow • Multi-segment o Chooses two or more well-defined market segments and develops a distinct marketing mix for each o Advantages: Greater financial success, economies of scale o Disadvantages: High marketing costs, cannibalization o Canon Targeting via the product • Introduce new products • Offer different versions of product via product lines (iTouch vs. iPhone) • Use different brand names (Kirkland diapers are made by Huggies) • Packaging (Small pack vs. big pack) Targeting via price • Direct price discrimination (senior discount, early bird) • Two-part tariff (entry fee + unit price, heavy users pay less on average) • Customized pricing (service industry) Targeting via promotions • Last day sales • Boxing day/black Friday sales Targeting via distribution • Malls vs. outlets vs. online Positioning is developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general • To distinguish its offerings form those of competitors • Clear image • Usually via marketing communications (closely related to brand and advertising) • Adapt to trends and changes (re-positioning) 6 MGCR 352 Final Exam Notes Positioning map of two factors May need to reposition if: • Consumer tastes change • Maturity of target segment is reached • Product appeals to more consumer segments • Avoiding competitor alignment Order of steps: 1. Market segmentation a. Group buyers into segments b. Develop profiles of resulting segments 2. Market targeting a. Develop measures of segment attractiveness b. Select the target segment(s) 3. Market positioning a. Develop positioning for target segment b. Develop marketing mix for each target segment QuantitativeAnalysis CaseAnalysis Consumer Decision Making Consumer decision-making process: 1. Marketing and other stimuli a. Marketing: 4 Ps b. Other: Economic/technological/political/cultural 2. Buyer’s black box a. Buyer characteristics b. Buyer decision process 3. Buyer response Uncovering the buyer’s black box • Cultural, social situational and psychological factors affect all steps o Need recognition: Result of an imbalance between actual and desired state o Information search: Recall information in memory, seek information in outside environment o Evaluation of alternatives: Analyze product attributes, use cutoff criteria, rank attributes by importance o Purchase decision o Post-purchase behaviour o ** Low involvement skips information search and alternative evaluation MGCR 352 Final Exam Notes 7 • E.g.  Mattress breaks, talks to friends about mattress, goes to store and looks at mattresses, chooses one for features and price, looks back and wonders if correct choice was made • Social factors: o Reference groups o Opinion leaders o Family o Roles and status • Psychological factors: o Perception o Motivation o Beliefs and attitudes o Learning Products and Services Aproduct is anything that can be offered to a market for attention, acquisition, use, or consumption that may satisfy a need or want. Aservice is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership of anything. Aproduct can be a good, a service, or an idea. • Tangible/intangible • Durable/non-durable • Hedonic/utilitarian • Core benefit  actual product  augmented product Abusiness as a product type comes with material and parts, capital items, supplies and services Consumer product types: • Convenience: Frequent purchase, easy buy, highly available, mass promotion • Shopping: less frequent, brand comparison, selective distribution and promotion • Specialty: Strong brand preference, special effort, low price sensitivity, exclusive distribution, targeted promotion • Unsought: Low awareness, negative interest, use personal selling An individual product is a specific version of a product designated as a distinct offering among an organization’s products. Aproduct line is a group of closely related product items. Aproduct mix is all of the products that an organization sells. 8 MGCR 352 Final Exam Notes Individual product decisions often depend on: • Quality o Lined to customer value and satisfaction o The whole company needs to be involved (TQM) • Features o Competitive tool for differentiating product o Should be valued by the customer as determined through market research • Style, design, and packaging o Good design contributes to products usefulness as well as looks Multi-product decisions depend on: • Lines vs. bundles • Bundle decisions o Service/product bundle o Complimentary • Product line decisions o Direction of the product line o Length of product line o Line stretching vs. line filling vs. line contraction Avertical product line is a series of similar products with different attributes and functionalities with a clear preference ranking among consumers (i.e. line of different kindles) Ahorizontal product line is a series of similar products with different attributes and functionalities and no clear preference rank among consumers (i.e. different colours, tastes) Product mix decisions/product assortment: • Consists of all the product lines and items that a particular seller offers o Width: # of different product lines or categories o Length/depth: # of products/versions in lines o Consistency: how closely related the product lines are • Deep and narrow vs. broad and shallow The service industry • 68% of Canadian GDP, 75% of employment, 90% of new jobs • Include business organizations, government, and private not-for-profit organizations Service characteristics: • Intangibility: Cannot be seen, tasted, felt, heard, or smelled before purchase • Inseparability: Cannot be separated from their providers MGCR 352 Final Exam Notes 9 • Variability: Quality depends on who provides them and when/where/how • Perishability: Cannot be stored for later sale or use Service marketing mix • 4 Ps + • People • Process • Physical evidence New Product Development and PLC New product development is the development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts New product development is very risky. 44% of all new products fail, 30% for industrial products. Newness can be from the company’s perspective with line extensions, significant innovation/improvement, true innovation (i.e. Gillette razor lines) Newness can be from the consumer’s perspective – degree of learning is required (i.e. different windows OS) New products do not have to be innovative: • Entertainment products, new variant horizontal differentiations, lower-end products of vertical differentiations • Redesign or repackaging, artistic improvement Innovations are not necessarily new products • Lack of commercialization efforts • Shelved/done • For concept development only • I.e. electric cars? 10 MGCR 352 Final Exam Notes Why develop new products? • Adapt to changing market demands • Keep up with new technology • Refresh and evolve existing products • Diversify product offering to reduce risk • Me-too to remain competitive Why do new products fail? • Insignificant point of difference • Poor execution of the marketing mix • Poor product quality • Bad timing • The idea is good, but the market size is overestimated • Wrong push from high-level executives Stages of new product development: 1. Idea generation a. Internal (employees, R&D), External (Customers, suppliers, competition) b. E.g. post-it  tried to develop strong adhesive, ended up with a weak one and found purpose for it later 2. Idea screening a. Identify good ideas and drop poor ones to avoid spending money on developing them b. Criteria: usefulness to consumers, fit with company objectives and strategies, have the resources, add value 3. Concept development and testing a. Recruit consumers/hold focus groups b. Get feedback prior to building prototype c. Acquire information of consumer valuation to help determine the price point MGCR 352 Final Exam Notes 11 4. Marketing strategy a. STP?? and 4 Ps 5. Business analysis a. Review of the sales, costs, and profit projections for a new product to determine if they will satisfy company objectives 6. Product development a. Develop the product concept into a physical product to ensure that it can be done b. Quantify in greater detail of production c. Disclose information to competitors d. Sort out the supply chain management 7. Test marketing a. To determine the target market profile b. Assess consumer acceptability, trial, repeat purchase rate c. Evaluate trade reception and distribution penetration d. Design effective media plans 8. Commercialization a. Large investment required b. Need to decide on introduction timing and scale of event c. Market rollout or full-scale introduction Product life cycle stages 12 MGCR 352 Final Exam Notes Characteristics Introduction Growth Maturity Decline Low Rapidly rising Peak Declining Sales Costs High per customer Average per Low per customer Low per customer customer Negative Rising High Declining Profits Customers Innovators Early adopters Middle majority Laggards Few Growing number Stable number Declining number Competitors beginning to decline Marketing Create product Maximize market Maximize profit Reduce awareness and trialshare while defending expenditures and Objectives market share milk the brand Strategies Introduction Growth Maturity Decline Offer basic product Offer product Diversify brand andPhase out weak items Product extensions, service,models warranty Price Use cost-plus Price to penetrate Price to match or bCut price market competitors Build selective Build intensive Build more intensivGo selective, phase out Distribution unprofitable outlets Advertising Build product Build awareness and Stress brand Reduce to level needed awareness among earlinterest in the massdifferences and to retain hard-core adopters and dealersmarket benefits loyals Use heavy sales Reduce to take Increase to encouraReduce to minimal Sales promotion to entice advantage of heavy brand switching level Promotion trial consumer demand Managing product life cycles: • Standard practice: STP, create enough buzz, establish the brand • Modify the product: New variants, line extensions • Sift the target market: Find new market or users • Adjust marketing variables: Lower price to change value, reposition product • Exit with
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