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COMM 131 Final Exam Review Notes (PreMidterm Week)

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Department
Commerce
Course
COMM 131
Professor
Jacob Brower
Semester
Winter

Description
COMM 131 Final Exam Review Notes Session 1 Marketing: Creating and Capturing Customer Value What is marketing?  Marketing is managing profitable customer relationships.  A social and managerial process, allowing parties to satisfy wants and needs through creating and exchanging value. Fundamentally, marketing includes two core activities: 1. Attract new customers by offering superior value than competitors. Value = Perceived Benefit – Perceived Costs 2. Keep and grow current customers by delivering satisfaction and building long-term relationships with customers. Marketing Strategy (Who to sell to) The process whereby a company determines who to serve, and how to serve them best STP – Segmentation, targeting, positioning Five steps involved in the marketing process: o Understand the market’s wants and needs o Design a customer-driven marketing strategy o Construct an integrated marketing program that delivers superior value o Build profitable relationships and increase customer delight o End result: capturing value for customers, create profits, build customer equity Marketing Tactics (How to sell) Collection of marketing activities that together accomplish the larger goal of satisfying customer needs and building customer relationships 4 P’s – Product, Price, Place (Distribution), Promotion Market – Set of actual and potential buyers of a product or service. Need – State of felt deprivation including physical, social and individual needs. Wants – Specific form of a need that is shaped by culture and personality. The choices we make to fulfill our needs. Demand – A ‘Want’ backed by buying power. Market Offerings – Some combination of products, services, information or experiences, etc. offered to a market to satisfy a need or want. Marketing Myopia Phenomenon where businesses can forget what ‘business’ they are in. o Businesses must always keep their focus on satisfying the needs of customers, rather than focusing on satisfying accompanying benefits. o Example: Kodak focused on producing film, rather than ensuring they maintained at the forefront of the industry of “capturing life’s moments” Implications: Companies must continuously evolve and adapt to the demands of the marketplace. o “Lead customers where they want to go, before they know where they want to” Session Three Customer Value and Marketing Planning Customer Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them. Role of marketing management (ADCS): o Analyze customer markets (needs and wants) o Design marketing strategy o Communicate value proposition o Serve customers (before, during and after purchasing process) Two key questions (answer to these questions comprise a Marketing Plan): 1. What customers to serve? 2. How can we serve them best? 1 Selecting Customers to Serve Marketing segmentation involves dividing the market into segments of plausible customers. o Segments should be homogenous within and heterogeneous without Target marketing involves selecting the best segment to cultivate to grow demand or even reduce demand (de-market). Choosing a Value Proposition (Or how do we serve customers best?) The set of benefits that the marketer promises to deliver to customers to satisfy their needs. o Here is what we can do for you… differentiation The proposition must (answer the questions: what benefits do your products have over competitors): o Differentiate this value proposition from the competition o Build customer value and satisfaction through the offer Positioning: o Arranging for a product to have a clear, distinctive and desirable place relative to competing products in the minds of consumers. o Essentially answers the question: “Why should I choose your brand rather than a competitor’s?” Integrated Marketing o Employing all elements of the marketing mix to support value proposition and reach goals of the marketing program o Will align and incorporate all four elements of the marketing mix to have a clear, consistent message o Marketing Mix: The Four P’s Marketing Management Philosophies Production Concept – more products, more outliers, more buyers  maximize production, push product o Management focus: improve production and distribution efficiency Product Concept – better product, more buyers  goal of producing the best product o Continuous product improvement is required Selling Concept – making a lot of something and telling a lot of people will allow you to sell a lot  persuade consumers to buy o Large-scale selling and promotion strategy Marketing Concept – knowing consumers wants and needs  building relationships based on satisfaction o Must be better than that of competitors Societal Marketing Concept – people, profit, planet  value to customers and society o Marketing decisions should consider consumer’s wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests Customer Relationship Management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction o Note: costs about 5 to 10 times more to attract a new customer than to retain a current customer o Marketers must be concerned with the lifetime value of the customer – both their loyalty and their profitability. Building Relationships Customer (perceived) value and satisfaction o Must exceed expectations Loyalty and retention: o Increases as satisfaction levels increase o Delighting consumers should be the goal o Loyalty programs may be useful to increase customer retention o Customers have relationships with brands and companies, just like they do with people, and these must be nurtured Is loyalty always the goal? o Not always!  Loyal, high volume customers know their value to you and may exploit you to get premium services and discounts.  Customers spread the word only if they feel, as well as act, loyal. o Selective relationship building  Building relationships with the right customers  Realize that not all customers are profitable… 2 Customer Relationship Groups Customer lifetime value: the dollar value of all the purchases of a particular product/brand/retailer that a customer will make in their lifetime. Share customer: the portion of a particular customer’s purchasing in the marketer’s product category. Customer equity: the total combined customer lifetime value of all of the company’s customers. Marketing Plan Steps involved include: 1. Learn about your environment 2. Define your objectives 3. Design a strategy to achieve those objectives 4. Measure results to determine if you did achieve your objectives The purpose of a SWOT analysis is to build an understanding of the internal and external situation of a company. A SWOT is performed for relevant strategic business unit or a relevant customer segment. Otherwise you are not focusing on valuable information. Includes implications – never put anything on a SWOT that doesn’t matter to your company or business unit Avoid SWAGs (scientific wild a__ guess) Microenvironment Macroenvironment Do not confuse opportunities and alternatives: The Company Demographics o “Have the ability to launch a new campaign” – possible course of action o “Consumers are trending towards organic foods” – opportunity Suppliers Economy o “Opportunity to design a new brand” – course of action Marketing Natural Environment o “Decreased labour costs in China” – opportunity Intermediaries Environmental analysis – the marketing environment consists of actors and forces inside and outside the organization that affect management’s ability to Customers Technology build and maintain relationships with target customers. o Microenvironment – actors close to the company, affecting ability to Competitors Politics serve o Macroenvironment – larger societal forces beyond your control Publics Culture Setting Objectives: o The mission of the organization is translated into detailed, quantifiable objectives. o The rest of the planning process is supported by these objectives. o Objectives are SMART: specific, measurable, achievable, relevant and timely. 3 Business Portfolio Analysis Product Market Expansion Grid Market penetration – making more sales without changing its original product Market development – identifying and developing new markets for its current product Product development – offering modified or new products to current market Diversification – starting up or acquiring businesses outside the company’s current products and markets Session Four Segmentation, Targeting, Positioning I Market segmentation involves dividing the market into clearly defined groups based on geography, demographics, psychographics, and behavioural characteristics to design separate marketing mixes and provide the highest value to each segment. Can’t be all things to all customers!! o We can better satisfy certain people by making a product that is tailored to their specific needs. o Products that satisfy consumers’ needs are valuable – they will pay for them.  Products that satisfy important needs are more valued. o Consumers differ in the importance and grouping of these needs. o It’s very tempting to try to satisfy everyone – typically by adding additional features – but most consumers only value specific needs, so additional features add cost, but not value. Geographic segmentation: dividing a market into different geographic units such as nations, states, regions, countries, cities, or neighbourhoods. Demographic segmentation: dividing the market into groups based on observable demographic characteristics of the population. o Includes: age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality, generation o Provides a convenient way of describing segment, but correlation to underlying needs might be low o Easier to measure than other variables Psychographic segmentation (how do you exist in the world): dividing a market into different groups based on: o Shared attitudes o Behaviours o Lifestyles o Values, motivations, and activities o Personality  Personality type  How someone likes to take in information (sensing v intuition)  Decision making (thinking or feeling) Behavioral segmentation: divide market into groups based on consumers’ product-related behaviour such as knowledge, attitudes, use, or response to a product. o Popular variables would include:  Benefits sought ex. Active wear – “Champion”  User status  Usage rate – light, medium, and heavy ex. Burger King  Loyalty status ex. Apple Segmentation is important for two reasons: 4 1. Measure the segment (how big is it?) 2. Reach and understand the segment (better understand the needs) How do we do segmentation? o Think of who has the needs we have identified as relevant for the product o Describe the group using the segmentation variables defined earlier. Market segments must be MASDA: o Measurable – how big the market is o Accessible – have to be able to get to them o Substantial – enough buying power to keep a flow o Differentiable – different from other groups o Actionable – things you can do with marketing mix to attract Target Market: Selection o The target market is the set of buyers, sharing common needs, that the company decides to serve. o Ultimately we want to choose the most profitable segment(s) that fir with long-run objectives o Under certain conditions, it might be viable to go after multiple segments. When doing so, you must consider:  Timing of entry – resources  Potential synergies across segments  Preempting competitive offerings  Extent of cannibalization A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Market-coverage strategies: Undifferentiated (mass) marketing – strategy where firm ignores market segment differences and goes after WHOLE market with one offering Differentiated (segmented) marketing – target several markets, with multiple offerings for each Concentrated (niche) marketing – firm goes after a large share of one or a few smaller segments Micromarketing – tailoring products and marketing programs to fit the tastes of specific individuals and locations o Local marketing – targeting a small group of people who live in the same city or neighbourhood o Individual marketing – tailoring products and marketing programs to the needs of individuals customers (aka mass customization) Session Five Segmentation, Targeting, and Positioning II Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place in consumers’ minds relative to the competition. Product position: how the product is defined by consumers on important attributes relative to competing products Positioning: o Where you want to be in the minds of consumers o Involves creating psychological associations between our product offering and the elements we think are important o In psychology this is known as a schema – an associative network of related concept and ideas o We want the schema for our products to be distinctive, positive and easily recalled o Questions for marketers to consider:  What association should we have?  How many associations should we create?  How do we go about creating those associations? Number of Associations Unique selling proposition (USP): focusing on one attribute and aggressively promoting as being the best on that benefit. Multiple selling proposition (MSP): choosing a number of attributes and promoting them all. The mix of benefits on which a product/brand is positioned is known as the value proposition. o Position should relate to the needs that are important for the target market o Should be rooted in company’s sustainable competitive advantage 5 o Might consider connections between our brand and the product category, the price, and even the competition. o Goal is to differentiate from competitors Possible Differentiation Product differentiation (e.g., consistency, durability, reliability, reparability) Services differentiation (e.g., speed, convenience, careful delivery) Channel differentiation (e.g., coverage, expertise) Brand image differentiation (e.g., convey benefits and positioning) People differentiations (e.g., hiring, training better people) Differentiation must: o Promote differences that are:  Important – highly valued by the target market  Distinctive – competitors do not offer the benefit  Superior – difference is better than competitors  Communicable – benefit can be communicated to target market  Preemptive – competitors cannot easily copy the difference  Affordable – target market can afford  Profitable – company can afford to offer it o DO NOT:  Underposition: failing to tell people what you stand for  Overposition: giving buyers to narrow a picture of the company – hard to expand later on  Confused position: leaving buyers with a confused image of the company Repositioning o An attempt to change the image consumers have of a brand or company o Necessary when marketers are unsatisfied with the schema that the collective consumer has formed o Can be difficult to change schemas significantly – might have to change brand name Choosing a Positioning Strategy o Decide the value proposition: the full positioning of a brand – the full mix of benefits on which it is positioned o Create the associations:  Consistent message and product  Repetition of message o Consumers need to process the message – we have to reach them and make sure they are interested Marketers often prepare perceptual positioning maps, which show consumer perceptions of their brands versus competing products on important buying dimensions. A means of displaying or graphing, in two or more dimensions, the location of products, brands or groups of products in customers’ minds. Positioning statement: positioning statements summarize the company or brand positioning o It takes this form: “To (target segment and need) our (brand) is (concept) that (point of difference).” o The positioning message is communicated through advertising and other promotional tools. o However, the positioning message should also be communicated through all the other touch points (from packaging to retail outlets carrying the product) to present a common theme. Session Six Consumer Behaviour and Decision Making Consumer buy behaviour – buying behaviour of final consumers (how do these people buy?) Three key categories of issues: 1. Factors that influence consumers – these allow us to understand our customers 2. Consumers and consumption – this tells us about consumer’s experiences with our product 3. Consumers decision making process – this tells us how consumers make purchase decisions Factors Influencing Behaviour CULTURAL SOCIAL PERSONAL PSYCHOLOGICAL 6 Cultural factors: Culture o Learned from family, church, school, peers, colleagues, society. o Includes basic values, perceptions, wants and behaviours. Subculture o Groups with shared value systems based on common life experiences and situations  Ascribed – born into this group  Achieved – chosen to belong to (i.e. Harley Davidson Motorcycle club) Social class o Relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviours o Who are the people we are exposed to or influenced by? Social factors: Reference groups o Groups that influence an individuals purchase behaviour through a set of norms and constraints  Personal influences – they belong to the group (opinion leaders, word of mouth)  Membership groups – groups to which you belong  Aspirational – want to be apart of the group  Dissociative – want to be distanced from the group Family o Important to marketers because families have the most influence in training and establishing a regularly used brand in which their children will take with them (i.e. I use Tide because my mom uses Tide to do laundry)  Information gatherer  Influencer  Decision maker  Purchaser  User Roles and status o Role: activities people are expected to perform according to the people around them (i.e. moms expected to cook) o Status: general esteem given to a role by society (i.e. doctors are well-regarded) Personal factors: Age and life cycle stage o Consumer needs change over time o Difference between chronological age and perceived age o Stage of life – e.g. single, independent and working, being a parent of young child, or being an ‘empty nester’  People at the same life stage generally have more in common than those simply the same age  Influence your outlook on life Occupation/Economic situation o Earnings heavily influence consumption patterns Lifestyle o Patterns of living as expressed by activities, interests, habits, ways of doing things and opinions. o A characteristic bundle of behaviours that makes sense to both others and oneself in a given time and place, including social relations, consumption, and entertainment, and dress. Personality o Unique psychological characteristics that lead to consistent/lasting responses o Personality factors:  Neuroticism – tendency to easily experienced unpleasant emotions  Extraversion – energy and the tendency to seek stimulation and the company of others  Openness to experience – appreciation for art, emotion, adventure,
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