Marketing Final Exam Review
Marketing: Marketing is the activity, set of institutions, and process for creating,
communication, delivering, and exchanging offerings that have value for customers,
partners and society.
-Marketing is managing profitable customer relationships.
Overview of Goods and Services
-Experts of marketing are the customers
-Promising and delivering superior value
-Building long-term relationships continues satisfaction
-Managing these relationships profitably over time
Refer to figure 1.1 on page 4!
Needs, Wants, Demands
Needs: States of felt deprivation. They include basic physical, social, and individual
needs, such as the need for food and shelter, and the need for belonging and affection,
and the need for knowledge and self-expression. These needs exist in all human beings,
regardless of their country, culture, language, or personality.
Wants: The form needs take as they are shaped by culture and personality. Wants are
choices we make to fulfill our needs. Our wants are greatly influenced by our culture and
surroundings, are frequently influences by marketing messages we encounter, and are
highly personal in nature.
Demands: Wants that are backed by buying power. We as customers demand products
and services that provide us with value that we believe will satisfy our needs.
Value and Satisfaction
Performance and experience are highly correlated if performance and experience is lower
then expectation = low satisfaction.
If performance and experience meet expectation = satisfied
If performance and experience exceed expectations = Delighted Customer Delight
-Satisfied customers buy the same products, or visit the same retailers, again and again,
and tell others about their good experiences. Dissatisfied customers also tell others about
their experiences, and may, in turn, influence their friends purchase decision.
-Marketers understand that customer value and satisfaction are key building blocks for
developing and managing customer relationships.
Exchange and Transaction
Exchange: act of obtaining an object (product, service, information, or experience) from
someone by offering something in return (money, time, effort).
Transaction (unit of measurement): A trade between two parties that involves
-2 things of value
-Agreed upon condition -Time of agreement
-Place of agreement
Customer Driven Market
* Briefly review pg. 26-29 while studying for a more in depth analysis.
-Market: The set of actual and potential buyers in a market offering.
-Involves marketing management which is: The combined management tasks of
analyzing customers and markets, designing marketing strategy, communicating value
propositions and serving customers.
- A marketing manager must first select a target market, which is a group of people with
shared characteristics that is likely to respond favourably to a market offering.
-The process of dividing a large market into smaller groups that can be more precisely
identified and described is called market segmentation.
-Occasionally in a customer driven market, demarketing can occur, which is that active
discouragement of the consumption of a product or service.
-The company must also decide how it will serve its customers, or how it will
differentiate itself from the compitition. A company‘s value proposition is the set of
benefits or values (contained in the market offering) that the marketer promises to deliver
to customers to satisfy their needs. A marketer‘s value proposition is what differentiates
one brand from another.
The Production Concept: It is one of the oldest ways of thinking about marketing and
involves the idea that customers will favour products that are widely, easily, and
inexpensively available, and that the proper focus on marketing management is to
improve production and distribution efficiency.
The Selling Concept: The selling concept is the idea that customers need to be persuaded
into buying anything, and that therefore the proper focus of marketing management is to
directly help and support the sales team. It is another old-fashioned view of marketing.
Runs on the concept that if the salesperson is good enough, a customer will buy anything,
whether or not the customer needs it. Some firms fall back on this concept when they
face overcapacity and then aim to sell what they make rather then what the market wants.
This is a high-risk endeavour.
The Product Concept: Believes that the focus of marketing management should be on
product development and improvement. The idea that customers will favour the best
products, and therefore the proper focus of marketing management is to design and
develop superior products. Product will not sell unless the manufacturer designs,
packages, and prices it attractively; places it in convenient distribution channels; brings it
to the attention of the people who need it and convinces buyers that it is a better product.
The Marketing Concept: The idea that customers will favour products that best serve
their needs, and that therefore the proper focus of marketing management is to understand
the needs and wants of the target market. It involves delievering the values and satisfactions the customers need, want, and demand, and doing it better then the
competition. This is a customer-centered concept. Customer-Driven marketing means
understanding customer needs better than customers themselves do and developing
market offerings that will meet those needs now and in the future.
The Societal Marketing Concept: The idea that customers will favour products offered by
companies that care about society, and that therefore the proper focus of marketing
management is to serve customers while also in some way serving society.
*Refer to figure 1.4 on page 13
Customer Perceived Value: The customer‘s evaluation of the difference between all the
benefits and all the costs of a market offering relative to those competing offers. As
consumers we do not judge these values and costs accurately or objectively, rather we
judge them against our personal definition of value—in other words, our perceived value.
Satisfaction: High levels of customer satisfaction leads to greater customer loyalty.
Delight: Delight a customer and you will have a customer for life. A company can always
increase customer satisfaction by lowering its prices, but that isn‘t always smart
marketing. Companies that are able to delight their customers must create this customer
-The 4 P‘s of Marketing: Product
The Marketing Mix: A set of controllable, tactical, marketing tools that the firm blends to
produce the response it wants in the target market.
Analyze the current situation
Analyze marketing oppourtunities
Select Target Market
Develop the marketing mix
Manage the marketing effort
Strategy and Marketing Mix:
Product ‖Provides‖ Customer Satisfaction
Price ―Represents‖ Customer Cost
Place ―Provides‖ Convenience
Promotion ―Enables 2way‖ Communication
Marketing Control Process: Evaluating the results of marketing strategies and plans, and
taking corrective action to ensure that marketing objectives are attained. Services Marketing: Most new jobs are generated by services, many manufacturing firms
moved into stand-alone services.
Services involve a form of rental, offering benefits without the transfer of ownership.
5 Broad Categories within non-ownership framework:
Rented Goods and Services: These services allow customers to obtain the temporary
right to use a physical object that they prefer not to own. Examples include:
-Fancy Dress Costumes
-Construction and excavation equipment.
Defined space and place rentals: This is when customers obtain the use of a certain
portion of a larger space in a building, vehicle, or area. They usually share this space with
other customers. Examples of this kind of rental include:
-Seat on an aircraft
-Suite in an office building
-Storage Container in a warehouse
Labor and expertise rentals: Here, other people are hired to perform work that
customers either cannot or choose not to do themselves. Some examples include:
Access to shared physical environments: Customers rent the right to share the use of
the environments. The locations may be indoor or outdoor, or a combination of both.
System and networks: access and usage: Customers rent the right to participate in a
specified network. Service providers use a variety of terms for access and use, depending
on customer needs. Examples include:
4 Broad Categories of Services:
People processing: Services that involve tangible actions to people‘ bodies. Customers
have to be present at the physical location. This requires planning about the service
operation. Active cooperation of the customers in needed in the service delivery process.
Need for managers to think about the process and output from the customer‘s point of
view. Apart from financial costs, costs like times, mental and physical effort, and fear
and pain need to be taken into account.
Possession Processing: Tangible actions to goods and other physical possessions
belonging to customers. There is no simultaneous production and consumption. Customer involvement tends to be limited to just dropping off or picking up the product. Example:
house swarmed by insects, call an exterminator.
Mental Stimulus Processing: Intangible actions directed at peoples minds. These
services include education, professional advice, etc. The customers do not physically
have to be present in the service factory. They only need to be able to take in the info that
is being presented. Since the customers are in a position where they depend on the service
provider, there is a potential for them to be given info that is untrue. Therefore strong
ethical standards must be in place. Services in this category can be ―inventoried‖ for
consumption at a later date or consumed repeatedly.
Information processing: Intangible actions directed at customer assets.
*See figure 13.4 on pg. 302
In exchange for their money, time, and effort, services customers expect to obtain value
-Access to goods, labor, facilities, environments, professional skills, networks, and
-But they do not normally take ownership of any of the physical elements involved.
8 Common Difference between service and manufacturing sectors are:
Most service products cannot be inventoried
Intangible elements usually dominate value creation
Services are often difficult to visualize and understand
Customers may be involved in co-production
People may be part of the service experience
Operational inputs and outputs tend to vary more widely
The time factor often assumes great importance
Distribution may take place through non-physical channels
For 7 P‘s of service marketing please refer to pg. 309-311
Socially Responsible Marketing:
Most Canadians feel that companies are just average in social
½ of consumers say they would not purchase from a company that was not
Canadians have a high expectation of their companies.
Criticism of Marketing:
o Leads to higher prices due to marketing activity ($)
o Ex. Ads in washrooms
High Pressure selling
o Limited time deal Deceptive Advertising
o Vacation prices (taxes)
Creating false needs
Consumer Activism: The concept that an ever-expanding consumption of goods is
advantageous to the economy.
Environmentalism: Group of citizens, businesses and gov‘t agencies that…
Protect and improve the living environment
Maximize life quality, rather than consumption, choice, or
Strive for environmental stability
Enact gov‘t regulation to support these goals
Enlightened Marketing: The philosophy that a company‘s marketing should support the
best long-run performance of the marketing system.
Customer Orientated Marketing: A principle of enlightened marketing that holds that
the company should view and organize its marketing activities from the customer‘s point
of view. This allows companies to build long and profitable customer relationships
because they understand the customer‘s perspective.
Innovative Marketing: A principle of enlightened marketing that requires a company to
continuously seek real product and marketing improvements. The company that
overlooks new and better ways to do things will eventually lose customers.
Value Marketing: A principle of enlightened marketing that holds that a company
should put most of its resources into value-building marketing investments. Calls for
building long-term customer loyalty by continually improving the value customers
receive from the firm‘s marketing offer.
Societal Marketing: A principle of enlightened marketing that holds that a company
should make marketing decisions by considering consumers‘ wants, the company‘s
requirements, and society‘s long-run interests.
Marketing Environment: All the actors and forces outside the marketing department that
affect marketing management‘s ability to perform its functions.
Microenvironment : The actors and forces close to the company that affect its ability to
serve its customers—the company, suppliers, marketing intermediaries, customer
markets, competitors, and publics.
*See figure 4.1 pg. 67
Macroenvironment: Actors and forces in society and the world that affect the
microenvironment—demographic, economic, natural, technological, political, and
*See fig. 4.2 on pg. 71 Demographics: Marketers track changing age and family structure, geographic population
shifts, educational characteristics and population diversity.
Economic Environment: Economic factors and forces that affect consumer purchasing
power and spending patterns.
Cultural Environment: All the institutions and forces that form a society‘s basic values,
perceptions, preferences, and behaviours. Please read pg. 84-86.
Segmentation, Targeting and Positioning:
Think of a pie, there is no such thing as a product for ―everyone‖ besides water
Segmentation leads to stereotypes
o Push yourself simply beyond identifying every market and segment to age,
gender and income level.
o Don‘t be afraid to use demographic and psychographic characteristics.
Overview of the 3-Step Process in attached notes.
Market Segmentation: (Review pg. 143-150)
Segmentation: Dividing a market into distinct groups with distinct needs,
characteristics or behaviours that might require separate products or marketing
Bases of Segmentation:
o Geographic: Dividing a market into different geographical units such as
nations, regions, provinces, counties, cities, or neighborhoods. Population
density, climate and other factors can also be classified under Geographic
o Demographic: Dividing the market into groups based on demographic
variables such as age, gender, family size, family life cycle, income,
occupation, education, religion, race, generation, and nationality.
o Psychographic: Describing market segmentation according to shared
attitudes and behaviours, lifestyles and personality.
o Behavioural: Dividing a market into groups based on consumer
knowledge, attitude, use, or response a product.
Not every product uses all of the variables in its segmentation
Segmenting International Markets:
Geographical Locations: Companies can segment international markets using one
or a combination of several variables. They can segment by geographical location,
grouping countries by regions such as Western Europe, the Pacific Rim, the
Middle East or Africa. This assumes that nations close to one another will have
many common traits and behaviours. While this may be the case, there are
exceptions and in order to be successful they cannot be overlooked. Economic factors: World Markets can be segmented on the basis of economic
factors. Countries may be grouped by population income levels or by their overall
level of economic development. A country‘s economic structure shapes its
population‘s product and service needs and, therefore, the marketing
oppourtunities it offers.
Politics and Culture: Countries segmented by political and legal factors such as
the type and sustainability of government, receptivity to foreign firms, monetary
regulations and the amount of bureaucracy. Such factors play a crucial role in a
company‘s choice of which countries to enter and how. Cultural Factors can also
be used, grouping markets according to common languages, religions, values and
attitudes, customs and behavioural patterns.
Intermarket Segmentation: Forming segments of consumers who have similar
needs and buying behaviours even though they are located in different countries.
o Can it be measured?
o Can it be reached and served?
o Profitable/large enough to serve?
o Substantially different then other segments
o Effective programs can be designed.
Selecting Target Market Segments:
Mass Marketing (Undifferentiated): No Segment and single marketing mix. This
is a market-coverage strategy in which a firm decides to ignore market segment
differences and go after the whole market with one offer. This strategy focuses on
what is common in the needs of the market rather then on what is different. Relies
on mass distribution and mass advertising. Tries to appeal to the largest number of
Differentiated (Segment) Marketing: Large segments with specific marketing
mixes. This is a market-coverage strategy in which a firm decides to target several
market segments and designs separate offers for each. By offering product and
marketing variations to segments, companies hope for higher sales and a stronger
position within each market segment. Developing a stronger position within
several segments creates more total sales then undifferentiated marketing across
all segments, but also increases the cost of doing business.
Niche Marketing: Small segments with specialized marketing mixes. This is a
market-coverage strategy in which a firm goes after a very narrowly defined
market segment. One advantage of targeting a niche market is that there are
usually fewer competitors, which allows marketers to achieve a stronger market
position. Micromarketing: Customized marketing to individuals. This is defined as the
practice of tailoring products and marketing programs to the needs and wants if
specific individuals and local customer groups-includes local and individual
Positioning: The way the product is defined by consumers on important attributes; the
place the product occupies in consumers minds relative to competing products. How you
view a product in a person‘s mindset.
o How a product is viewed by consumers relative to competing products.
Three Positioning Steps:
o Identify competitive advantages on which to build a differentiated position
o Choose the right competitive differentiation
o Select an overall positioning strategy
Competitive Advantage: Extent to which a company can position itself as providing
Read pg.163 in text about Identifying Competitive Advantages.
Important: The difference delivers a higher valued benefit to the target buyers.
Distinctive: Competitors do not offer the difference, or the company can offer it in
a more distinctive way.
Superior: The difference is superior to other ways that customers might obtain the
Communicable: The difference is communicable and visible to buyers.
Preemptive: Competitors cannot easily copy the difference.
Affordable: Buyers can afford to pay for the difference.
Profitable: The company can introduce the difference profitably.
o Failing to really position the company at all
o Giving buyers too narrow a picture of the company
o Leaving buyers with a confused image of the company
Please see the Value Positions chart of pg.166 Figure 7.4*
Also Refer to Basic Focus Strengths for services on pg.334*
Importance of Determinant Attributes:
Consumers choose between alternative service offerings Determinant attributes determine buyers choices between competing alternatives.
Please read pg.338 on service levels and tiers (Make decisions on service levels, price vs.
service level, service tiering)
4 Principles of Positioning Strategy:
1. A company must establish a position in the minds of its target customers.
2. The position should have one simple and consistent message
3. The position must set a company apart from its competitors
4. A company cannot be all things to all people-it must focus its efforts.
Positioning as a Diagnostic Tool:
Understand relationships between products and markets.
o Compare to competition on specific attributes
o Evaluate products ability to meet consumer needs/expectations
o Predict demand at specific prices/performance levels
Identify market oppourtunities
o Introduce new products
o Redesign existing products
o Eliminate non-performing products.
Make Marketing mix decision, respond to competition.
o Distribution/service delivery
Please read pg.340-342 on developing a market positioning strategy.*
A product: Does not need to be a tangible good
A product is anything that the marketers market
o Hospital Lotteries and Charities
Experience: Type of product that combines a service or physical product with a
Biggest influence on purchase of product
o ‗Purchase experience‘
Levels of a Product
Core Product or benefit
Actual Product o Packaging, features, design, quality level, brand name
o Warranty, delivery, etc.
Products: Parts, materials, capital items, etc.
Convenience, shopping, specialty, unsought
Convenience: Frequent, immediate purchases, law involvement
Shopping: Less frequent purchases, careful comparison between products
Specialty: Unique characteristics or brand, buyers put forth special effort to
Unsought: Not usually purchased, not known about.
Please Refer to Figure 8.3*
o Quality features, style, and design
o Name, term, sign, symbol, or combination that identifies the maker or
seller of a product/service
Product Support Services
o Additional services that delight the customer and yield profits for
A brand is not a logo
A brand is an idea
o Not a physical or visual ―thing‖ it is an idea
o Set of attributes and emotion
o May be represented by objects, logos, names
o Set of associates that exists in the mind of the consumer
Brand Equity: The idea that a brand has a numeric dollar value even though there are no
Why develop a new product?
Follow changing market demands
Keep up with changing market
New Product Development Idea Generation Idea screening Product Concept Market Strategy Business
analysis Product Development Test Marketing Commercialization
Product Life Cycle:
All products will pass through the PLC
o Development-No customers, no profits, heavy spending
o Introduction- Early Adapter customers, no profits, high launch costs
o Growth- Early majority customers, rapid sales, growth and revenues
o Maturity-Late majority customers, flat sales, declining profits
o Decline-Laggard customers, declining sales, replaced by new products.
Options at Maturity Stage:
Modify the market
Modify the product
Modify the packaging
Refer to the diagram in the notes depicting style, fashion, fad in the notes
Pricing Conditions and Strategies
What is a price?
Sum of all the values that consumers