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Rita Cossa

Chapter 6 Orgaization types: 1. Sole proprietorships a. One owner b. Oldest form of an organization c. More than 544,800 businesses and they generate less than 3% of revenues d. When you own your own business, you and the business are considere one = unlimited liability 2. Partnership a. Partnership agreement b. General – assumes full/shared responsibility for operating business and is the most common type c. Limited – contributes capital but isn’t active in the firm d. Video: i. The key problem is communication ii. Jonas’ behaviour indicates distraction iii. The meeting was a good start iv. Rande’s rights are to buy out Jonas 3. Corporation a. Generate almost 89% of revenue b. Company ownership is through stocks and shares c. Private corporations – shares are owned by fewer than 50 and are not available for general public sale i. Pay a lower rate of income tax than public corporations ii. Many are subsidiaries of multinational or are family-owned iii. Often ranked by revenue, the most significant financial measure they disclose d. Public corporations – shares are widely held and available for general public sale e. You cannot change to a corporation status if you are trying to avoid paying sole proprietorship or partnership debts Corporation Revenue Major Shareholder ($ millions) 1. Manufacturers Life Insurance 37.1 Manulife Financial 2. Suncor Energy Products 21.1 Suncor Energy 3. Sun Life Assurance Canada 20.0 Sun Life Financial 4. Bombardier Aerospace 17.7 The Bombardier and Beaudoin Families 5. Rio Tinto Alcan Inc. 15.2 Rio Tinto Group 6. Bell Canada 15.4 BCE Inc. Corporate governance: - Defined as the process and the policies that determine how an organization interacts with its stakeholders, both internal and external - Corporate governance is necessary because of the evolution of public oownership - In public corporations, there is a separation between ownership and management, unlike other forms of organizations - As a result, the board of directors was created to represent the best interests of stockholders Other types of corporations: - Non-resident corporations o Conducts business in Canada but its head office is outside of Canada (eg. Foreign airline) - Non-profit corporation o Profit is not the primary objective - Crown corporations (federal and provincial) o Profit is the primary objective - Professional corporations o Canadian-controlled private corporation that is governed by a professional body that allows its members to practise through a corporation as opposed to a sole proprietorship or partnership  (eg, accountant, dentist, attorney, etc) o Laws vary from province to province o Major advantages are limited liability and possible tax advantage Corporate Expansion - Acquisition – one firm purchases the property and assumes the obligations of another firm - Merger – two firms forming one company o Horizontal – same or similar industry o Vertical – different stages of related business o Conglomerate – join firms in completely unrelated industries Franchising - A franchise can be formed as a sole proprietorship, partnership, or corporation - Franchising is a method of distributing a good or service, or both, to achieve a maximum market impact with a minimum investment - Franchise agreement - Success is based on convenience and a predictable level of service Co-operative - Organization that is formed and operate by its owners to provide benefits in the form of reduced prices and/or the distribution of surpluses at year-end - There are more than 10,000 co-operatives in Canada that employ over 150,000 people - Examples include producer (eg. Fishermen) consumer (eg. Food), financial, insurance, housing Co-operative Differences - Different purpose: the primary purpose of co-ops is to meet the common needs of their members. Most investor-owned businesses have a primary purpose to maximize profit for their shareholders - Different control Structure: Co-ops use the one-member/one-vote system, not the one-vote-per-share system used by most businesses. This helps the co-op serve the common need rather than the individual need - Different Profit Allocation: Co-ops share profits among their member-owners on the basis of how much they use the co-op, not on how many shares they hold. Profits tend to be invested in improving services for the members Chapter 7 Entrepreneurship - Enterpreneurship is accepting the challenge of starting and running a business - You can imagine how the concept of entrepreneurship has a wide variety of meanings. On the one extreme, an entrepreneur is a person is a person of very high aptitude who pioneers change, possessing charatceristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for himself or herself is considered an entrepreneurship - While many people use the terms entrepreneurship and small business interchangeably, there are significant differences Entrepreneurship vs. Small Business - Entrepreneurial ventures differ from small businesses in the following four ways: o Amount of wealth creation – rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit o Speed of wealth creation – while a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation is often rapid. For example, this may occur within 5 years o Risk – the risk of an entrepreneurial venture must be high. Otherwise, with the incentive of sure profits, many people would pursue the idea of entrpreneurship , making business ventures impossibly competitive o Innovation – Entrepreneurship often involves substantial innovation beyond what a smll business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. Innovation may be in new products, new production methods, new markets, and new forms of organizations - Entrepreneurship is not always small and small business is not always entrepreneurial. While most business start small, its whether the intent to stay small that separates them from entrepreneurship People start businesses for many reasons: - New idea, process, or product - Independence - Challenge - Family pattern - Profit pattern - Profit potential - Immigration - Unexpected structural unemployment - Inheritance that allows them to try something new - Change I health which forces a career path adjustment - Disliking a supervisor so much that being self-employed is an attractive option A small business is a business that is independently owned and operated, is not dominant in its field, and meets certain standards of size in terms of employees or annual revenues You are self-employed is you are someone who earns income directly from your own business, trade or profession rather than earn a specified salary or wage from an employer Stats Can defines the self-employed as working owners of an unincorporated or incorporated business, persons who work on their own account but do not have a business, and persons working without pay in a family business - There were 2.68 million self-employed Canadians (14.2% of working Canadians) as of sept 2012 Institutions define small businesses according to their needs: - Canadian bankers’ association classifies a loan authorization of demand) due to the development of production lines i. “sell what you make, not what you can sell” ii. Firms hired salespeople to find customers 4. The Marketing Concept Era: 1. Focus is on satisfying consumers’ needs and the organization’s goals 2. Made up of 3 parts/orientations: customer, service, and profit 5. The Customer Relationship Era 1. Customer relationship management (CRM) is the process of learning as much as possible about customers and doing everything you can to satisfy them – or even exceed their expectation – with products over time 2. Average business loses 15-35% of its customers per year 3. 68% of customer attrition is caused by poor customer service Who are our most profitable customers? Who should be? What opportunities exist for cross and up-selling? How can we maximize the lifetime value per customer? Eg. Taco bell>$16,00 What new products should we develop? 6. Customer Experience Management (CEM) Era: 1. CRM initiatives are suffering because the focus has been on getting CRM technology in place while neglecting just how to build customer relationships 2. To be effective, CRM must include a customer experience management (CEM) strategy i. CEM is managing the customers’ interactions with the organization at all levels and at all touch points (direct and indirect) so that the customer has a positive impression of the organization, is satisfied with the experience, and will remain loyal to the organization 3. Some experts suggest that it is the experience that counts, not the product orservice per se Social media is the term commonly given to websites and online tools which allow users to interact with each other is some way by sharing information, opinions, knowledge, and interests. Social media involves the building of communities or networks, encouraging participation and engagement. 7. Social Media Marketing Era: 2 Dimensions 1. Consumer-consumer-generates onling marketing efforts to promote brands and firms for which they are fans (or vice versa) 2. The use of marketers of online tools and platforms to promote their brands or organizations i. Most common are social networking sites 1. Linkedin has 200m users (7m in Canada) 2. Facebook claims>1b users 3. Twitter >500m existing accounts, but <100m are active To survive in this new social media world, organizations must understand, navigate, and adapt to this new landscape. B2B market: - The number of customers are relatively few - The size of business customers is relatively large - B2B markets tend to be geo graphically concentrated - Business buyers are usually more rational - There is more emphasis on personal selling - B2B sales tend to be direct Strategy: - Marketing segmentation o Divide market into several groups whose members have similar characteristics (unmet needs) - Levels of marketing segmentation o Mass marketing – large groups o Niche marketing – small but profitable o One to one(individual) marketing - Target marketing o Marketing directed at profitable segments  Variables to consider in making the decision about a target market include • Size and growth potential of the segment • How “reachable” is the segment • The nature of the market and the company - Develop Marketing Mix (MM) via the 4Ps Segmenting the consumer market: - Geographic o Region, climate, city/country/province size, etc. - Demographic o Age, gender, education, etc. - Psychographic o Personality attributes, motives lifestyles - Behavioural o Volume usage, brand loyalty, benefit expectations Decision-making process: - Problem recognition - Information search - Alternative evaluation - Purchase decision - Post-purchase evaluation - Cognitive dissonance The Marketing Research Process 1. Define the question and determine the present situation 2. Collect date a. Primary research b. Secondary research i. Textbook, journal articles, newspapers, databases, books, etc. 3. Analyze the research data 4. Choose the best solution and implement it Chapter 9 The Social Environment - Social change is perhaps the most difficult external variable for marketers to forecast, influence, or integrate into marketing plans - The environment considers how buying behaviour is impacted by the demographic characteristics of the population and its values in the environment - A person’s values – strongly held and enduring beliefs such as self-sufficiency and a work ethic – are key determinants of what is/is not important, what actions to take, and how to behave o They influence our buying habits Demographics - Demographics describes the population according to selected characteristics such as age, gender, ethnicity, culture, geographic shifts, changing family structure, education, attitudes and values, changing age structure, etc. - The Canadian population: o Aging population o Declining birth rate o Principal source of growth will be immigration - General cohorts (eg baby boomers) - Ethnic diversity - The once traditional mom, dad, and the kids now make up just a quarter of Canadian households o Families ar increasingly likely to be a same-sex couple, a common-law couple, a single parent, a stepfamily, or a household with grown kids and grandparents - There are more households with couples without kids - More Canadians are simply living alone (over one quarter) - Many young people are living with their parents into their 20’s and putting off serious relationships Culture refers to set of values, ideas, and attitudes of a homogeneous group of people that are transmitted from one generation to the next Cultural trends evident in Canada include the following - Time poverty - More women in the workforce - Greater concern for health and well-being - Value-consciousness Time poverty - Means that people will decrease the amount of time spent doing things they dislike o That means doing less homework and home maintenance, dining out more - It also means paying more attention to brand names – not in search of status, but to make buying decisions quicker and easier - Consumers on a constrained time budget will likely favour small shops over large ones, spend less time comparing prices, use technology to reduce transaction time, and patronize businesses that make life easier Changing role of families and working women - The growth of dual-income families has resulted in increased purchasing power o Nearly two-thirdsof all women between 18 and 65 are now in the workforce, and this continues to grow - As women’s earnings grow, so do their levels of expertise, experience, and authority o Eg. Women are the principal buyers for over 40% of all cars and trucks sold - In dual-career families, purchasing roles and patterns are changing Product development and the total product offer - Intense competition forces companies to constantly develop new products - The total product offer/value package is everything that the consumer evaluates when deciding to buy - This includes both tangibles and intangibles such as packaging, store appearance, delivery, past experience, brand image, name, reputation, etc. Product terms - Product line is a group of similar products or products intended for a similar market - Product mix is the combination of product lines offered by a manufacturer - Product differentiation is the attempt by the manufacturer to create a perceived difference in the minds of consumers of the superiority of one product over the others o The products are often equal o The differentiated product may be better than the others Classification of consumer products - Convenience products – purchased frequently with little effort - Shopping products – some effort on planning and making purchase; value, quality, and price are key - Specialty products – special goods the consumer will go out of the way to buy due to one or more unique characteristics - Unsought products – consumer hasn’t thought of, or needs unexpectedly Branding - Branding – the use of a name, phrase, design, symbols, or combination of these to identify an organization’s products and distinguish them from those of competitors - Brand name – any word “device” (sound, design, sound, shape, or colour), or combination of these used to distinguish a sellers goods or services o Some can be spoken while others not - Brand equity – the combination of factors – such as awareness, loyalty, and perceived quality – that people associate with a given brand name - Banks and financial institutions dominate the list of Canada’s biggest brands, but energy companies are rising through the ranks rapidly - One brand in particular – BlackBerry – has seen its value plummet. The blackberry dropped to 10 place in the rankings - The survey – which looks at a brand’s financial performance, market share, industry and customer feedback, customer loyalty and ethical practices to assign a dollare value to the brand – estimated blackberry lost 25% of its value in the last 3 years Brand name selection - Suggest product benefits and qualities - Easy to pronounce and remember - Simple and distinctive - Can be protected legally - Translate easily and in international markets o Eg. RBC financial group (formerly Royal Bank of Canada) Packaging - Packaging can change the product ( eg. Visibility, attractiveness, and usefulness) - Packaging should o Protect the goods inside during shipping and storage o Protect against tampering o Attract attention o Explain the benefits of the product o Describe the contents provide warranty info o Indicate price, use, and value Traditional S-shape product life cycle - Theoretical model with four stages 1. Introduction 2. Growth 3. Maturity 4. Decline - Not all products/product classes follow this shape as o Each one progresses through the 4 stages at different
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