Marketing Final Exam Review1.docx

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Department
Marketing and Consumer Studies
Course
MCS 1000
Professor
Douglas Adlam
Semester
Fall

Description
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. Marketing Concepts 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 Value 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 value profitably. Marketing -The 4 P‘s of Marketing: Product Price Place Promotion The Marketing Mix: A set of controllable, tactical, marketing tools that the firm blends to produce the response it wants in the target market. Marketing Process:  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: -Boats -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: -House cleaning -Car repair -Management consulting 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. Examples include: -Theme parks -Trade shows -Toll roads 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: -Telecommunications -Utilities -Banking 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 from -Access to goods, labor, facilities, environments, professional skills, networks, and systems; -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 responsibility.  ½ of consumers say they would not purchase from a company that was not socially responsible.  Canadians have a high expectation of their companies. Criticism of Marketing:  Higher Prices o Leads to higher prices due to marketing activity ($)  Unnecessary Advertising o Ex. Ads in washrooms  High Pressure selling o Limited time deal  Deceptive Advertising o Vacation prices (taxes)  Creating false needs o Cologne/Perfume 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 satisfaction  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. 4 Principles 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 cultural forces. *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 and air.  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 mixes.  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 segmentation. 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. Evaluating Segments:  Measurability o Can it be measured?  Accessibility o Can it be reached and served?  Substantiality o Profitable/large enough to serve?  Differentiability o Substantially different then other segments  Actionability 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 people.  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 marketing. 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. Successful Positioning:  Product Position 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 superior value. Read pg.163 in text about Identifying Competitive Advantages. Successful Differentiation:  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 same benefit.  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. Positioning Errors:  Under Positioning o Failing to really position the company at all  Over Positioning o Giving buyers too narrow a picture of the company  Confused Positioning 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: (1)  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 (2)  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 o Pricing o Communication Please read pg.340-342 on developing a market positioning strategy.* Product Strategy: A product: Does not need to be a tangible good  A product is anything that the marketers market o Country o Hospital Lotteries and Charities Experience: Type of product that combines a service or physical product with a memorable experience.  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  Augmented Product o Warranty, delivery, etc. Products: Parts, materials, capital items, etc. Consumers Products:  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 purchase.  Unsought: Not usually purchased, not known about. Please Refer to Figure 8.3*  Product Attributes o Quality features, style, and design  Branding o Name, term, sign, symbol, or combination that identifies the maker or seller of a product/service  Packaging  Labeling  Product Support Services o Additional services that delight the customer and yield profits for company Brand Decisions  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 tangible assets. Ch. 7 Why develop a new product?  Follow changing market demands  Remain competitive  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
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