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Review midterm I.doc

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Carolyn Capretta

Review Session JHE 376 – Section 1 on October 18 5:30-6:30pm M/C 35 questions Each chapter has equal weightage. Chapter 1 • Creating value and utility – Utility is a want satisfying power of a good or service. o Definition of marketing – An organizational function and a set of processes of:  Creating, communication and delivering value to customers;  Managing customer relationships in ways that benefit the organization and its stakeholders. • Types of utility o 4 utilities:  Form utility – conversion of raw materials and components into finished goods or services. Example; with some plastic, metal and glass, Nikon creates a digital camera and Samsung creates a laptop.  Time utility – Availability of goods and services when consumers want them. Example; Cavities – today I am in pain from a cavity, and therefore I need to the goods or services today and not later to fix it.  Place utility – Availability of goods and services at convenient locations. Example; McDonalds, I am hungry and therefore I will get McDonalds because its right there when I’m hungry.  Ownership (possession) – Ability to transfer title to goods and services from marketer to buyer. Example; Luxury car, I can have any car to travel around but instead I want a Mercedes-Benz. • Globalization impacting marketing o 3 main points of globalization;  Increase in international trade agreements;  Growth of electronic business;  Interdependence of the world’s economies. o Companies seek the most efficient manufacturing sites and most lucrative markets worldwide. o Companies are tailoring their goods and services to the needs and preferences of local markets. • Four eras of marketing (transitions and years) o Prior to 1920 – Production Era Concept; if you are good at what you do, people with will come to you for your goods and services. This happened because cities were small and therefore only 2-3 producers.  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. o Prior to 1950 – Sales Era Concept; people don’t want to buy non-essential things. You need to go to the people and convince them that they should buy the product you’re trying to sell.  Sales orientation – Customers will resist purchasing non-essential items.  Task of personal selling and creative advertising is to persuade them to buy. o Since to 1950 – Marketing Era Concept; there were more producers than customers, therefore every producer was trying to convince consumers to buy from them as opposed to their competitors.  Shifting from a seller’s market to a buyer’s market (i.e., from Sales era to marketing era).  Strong buyer’s market created the need for consumer orientation.  Emergence of marketing concept – a companywide consumer orientation to achieve long-run success.  A strong market orientation improves market success and overall performance. o Since 1990 – Relationship Era Concept; trying to build strategic alliances in order to further their profits from consumers.  Relationship marketing – developing long-term, value-added relationships over time with customers and suppliers.  Strategic alliances and partnerships benefit everyone. • Needs, wants and marketing myopia o Needs – Consumers acquire goods and services on a continuing basis to fill certain needs. To convert needs into wants, marketers need to:  Focus on the benefits of goods and services;  Require skill;  Should listen to consumer needs. o Marketing myopia – when businesses don’t realize the scope of their business. More myopic when you focus on products and not consumers.  Management’s failure to recognize the scope of its business.  Focusing on customer need satisfaction can overcome myopia. • Examples: o o Company -> Myopic Description -> Company Motto (Avoiding Myopia): o Ex1. Nokia -> A cell phone manufacturing -> “Connecting People” o Ex2. Visa -> A credit card company -> “Life Takes Visa” o Ex3. Purolator -> A courier company -> “Where Business Is Going” • Non-traditional marketing o Person Marketing – Marketing efforts designed to cultivate the attention and preference of a target market toward a person. Example; Athlete Steve Nash, Political Leader Stephen Harper and Celebrity Nelly Furtado.  Focus on marketing of fictional characters, celebrities and political candidates. o Place Marketing – Marketing efforts designed to attract visitors to a particular area; improve consumer images of a city, province or country; and/or attract new business. Examples; Saskatchewan “Land of Living Skies,” Nova Scotia “Canada’s Ocean Playground,” and Manitoba “Friendly Manitoba.”  Focus on marketing places as tourist attractions, and business locations. o Cause Marketing – Identification and marketing of a social issue, cause, or idea to selected target markets. Examples; “Reading is fundamental,” “Friends don’t let friends drive drunk,” and “Be a mentor.”  Identification and marketing of a social issue, cause or idea to selected target markets.  Many profit seeking firms link their products to social causes.  Strong support among customers and employees for the cause- related marketing. o Event Marketing – Marketing of sporting, cultural, and charitable activities to selected target markets. Examples; Grey Cup, 2010 Vancouver Winter Olympics, and Calgary Stampede.  Marketing of sporting, cultural, and charitable activities to selected target markets. o 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. Examples; United Way “Without you, there would be no way,” Canadian Red Cross “ Anywhere. Anytime.,” Sierra Club “Explore, enjoy, and protect the planet.”  Attempts to influence others by: • Accepting the organization’s goals; • Receiving its services; • Contributing in some way.  Used to raise funds by selling licensed merchandise. • Relationship marketing o Gives a company new opportunity to gain a competitive edge by moving customers up the loyalty ladder.  It starts with determining what customers needs and want, then developing high-quality products a to meet those needs. • Advocates vs. new customers • Interactive and Mobile marketing o Mobile Marketing – Marketing messages transmitted via wireless technology. o Interactive marketing – Buyer- seller communications in which the customer controls the amount and type of information • Social and Buzz marketing o Buzz Marketing – Word-of-mouth messages that bridge the gap between a company and its products. o Social Marketing – The use of online social media as a communications channel for marketing. i.e, social media like Twitter. • Ethics and Social responsibilities o Ethics – moral standards of behaviour expected in a society.  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. • Costs and Functions of Marketing; Chapter 2 • Planning – Anticipating future events and conditions and determining the best way to achieve organizational objectives. o Continuous process; creates a blueprint and checkpoints for everyone in the organization. • 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 centers on relationship marketing. • Strategic and Tactical Planning o Strategic Planning;  Determining organization’s primary objectives.  Adopting courses of action that will achieve these objectives.  Addresses long-term actions. o Tactical Planning;  Guides the implementation of activities specified in the strategic plan.  Addresses shorter-term actions.  Swift decision-making and actions. o Third Type of Planning – Operational Planning. • Mission Statement – Essential purpose that differentiates one company from another. o Example; Microsoft Office “Real life tools” • Vision Statement – Guide the development of marketing objectives and plans. o Example; Generate 12% more profit next year. • Porters 5 Force 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. • SWOT Analysis (Vulnerability, Constraints (when you’re not able to use the opportunity you are not able because of your weakness), leverage and problems) o Helps planners compare internal organizational strengths and weaknesses with external opportunities and threats. • 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;  Current and projected external environmental;  Current and projected internal company capabilities;  How, whether, and when the firm can reconcile environmental conditions and company capabilities. • First mover and second mover strategy 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.  Which are more risker and which is profitable? First Mover Strategy. • Marketing strategy – target market mix (4P) o Target Market  The group of people toward whom the firm directs its marketing efforts and merchandise. • Example; Bombardier markets most of their products to business buyers.  Diversity plays a critical role. • Example; The growing diverse communities in Canada  Targeting consumers in specific global markets represents a challenge and an opportunity. • Example; Sears different return policy in the US, Canada o Marketing Mix  Blending of the four strategy elements to fit the needs and preferences of a specific target market. • Product – Deciding what goods or services the firm should offer to a group of consumers. • Distribution – Consumers find their products in the paper quantities at the right times and places. Involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels. • Promotion – Communication link between sellers and buyers. Firms may communicate messages (directly through salespeople, or indirectly through advertisements and promotions). Many companies use integrated marketing communications (IMC). • Pricing – Methods of setting profitable and justifiable prices. Subject to regulation and public scrutiny. A good pricing strategy (1) created value for customers, and (2) builds and strengthens customer relationships with a firm and its products. • Rule of Three – the three strongest, most efficient companies dominate 70 and 90 percent of a market. Examples; telecommunication companies such as Rogers, Bell and Telus. • BCG Analysis – A market share/market growth matrix that plots market share against market growth potential. Developed by the Boston Consulting Group. o Stars – Generate considerable income (strategy is to invest more funds for future growth). o Question Marks – Have potential to become stars or cash cows (strategy is to invest into more funds or consider disinvesting). o Cash Cows – Generate strong cash flow (strategy is to milk profits to finance growth of stars and question marks). o Dogs – Generate little profits (strategy is to consider withdrawing). • Market Penetration – Is a strategy that company uses when it attempts to build market share by selling existing products to existing customers. Example; When Tim Horton’s promotes its Roll up the Rim contest; it is following a market penetration strategy. • Market Development – Occurs when a company tries to attract new customers for its existing products, sometimes by geographic expansion, but often by simply targeting new segments of customers. Example; When McCain Foods entered the African market to sell its frozen French fries; it was following a market development strategy. • Product Development – Occurs when a company develops new products that it hopes to sell to existing customers. Example; When KFC Canada introduced the Double Down, it was following a product development strategy. • Diversification – Is the most risky of growth strategies as companies that follow this strategy attempt to sell new products to new markets – that is they have little experience with either. Example; When Zippo Manufacturing introduced a new cologne; it was following a diversification strategy. Chapter 3 • Environmental scanning – Collecting external marketing environment information to identify and interpret potential trends. Trends may represent significant opportunities or threats to the company. o Technological Environment – Application of knowledge based on discoveries in science, inventions and innovations to marketing. Technology leads to (1) new products, (2) improvements in existing products, (3) better customer service and (4) reduced prices.  Technology addresses social concerns. Sources of technology include; (1) industry, (2) educational institutions, (3) not-for-profit institutions and (4) federal government.  VoIP – Voice over Internet Protocol is the alternative to traditional telecommunications services.  IMS – Internet Protocol Multimedia Subsystem will offer new opportunities to marketers. o Political-Legal Environment – Consists of laws and their interpretation that require firms to operate under competitive conditions and to protect consumer rights.  Government Regulation – • Competition Act – comprehensive legislation administered by Industry Canada and designed to help both consumers and businesses by promoting a healthy competitive environment. Laws roughly categorized in three marketing areas: o Pricing o Promotion o Distribution • Consumer Protection Act (Cooling off Act) or Direct Seller Act – Provincial laws generally focused on protection of buyers and sellers with respect to direct sales contacts. • Canadian Radio-Television and Telecommunications Commission (CRTC) – regulates and supervises all aspects of the Canadian broadcasting system. • National Energy Board (NEB) – regulates the construction and operation of interprovincial and international pipelines and power lines. • People for the Ethical Treatment of Animal (PETA) • ASC – Advertising Standards Canada • MADD – Mothers Against Drunk Driving o Competitive Environment – interactive process that occurs in the marketplace among (1) marketers of directly competitive products, (2) Marketers of products that can be substituted for one another, and (3) Marketers competing for the consumer’s purchasing power.  Marketing decisions by individual firms influence (1) Consumer responses in the marketplace and (2) marketing strategies of competitors. o Social-Cultural Environment – The relationship between the marketer, society and culture. Marketers must be sensitive to demographic shifts and changing values. o Economic Environment – Factors that influence consumer buying power and marketing strategies.  Gross Domestic Product – Sum of all goods and services produced by a nation in a year.  Business Cycle – Pattern of stages in the level of economic activity. • 1. Prosperity – Consumer spending is brisk; growth in services sector. • 2. Recession – Consumers focus on fundamental products. • 3. Depression – Consumer spending sinks to its lowest level. • 4. Recovery – Consumer purchasing power increases. • Inflation – Devaluates money by reducing the products it can buy through persistent price increases. • Deflation – Can cause (1) a free-fall in business profits, (2) lower returns on most investments, and (3) widespread job layoffs. • Unemployment – Proportion
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