F11_MCS-1000_ExamNotes

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

Description
Fall 2011 MCS 1000 Notes Marketing 1000 Final Exam Study Notes Needs/Wants/Demands Needs - States of felt deprivation, including basic physical needs for food, clothing, warmth, and safety. Social needs for belonging and affection, individual needs for knowledge and self-expression, these needs were not created by marketers; they’re basic part of human make up. -ex need for shelter, food, Wants - Form of human needs that take as shaped by culture and individual personality - We need food, but we want Big Mac’s Demands - Human wants that are backed by buying power -we as consumers demand products that we believe will satisfy our wants Marketing Concepts The Production Concept Production Concept – the idea that the buyers will favour products that are widely available and highly affordable. -management should focus on improving production and distribution efficiency -useful in two situations: when demand>supply, and when the product’s cost is too high so the company can use improved efficiency to bring it down -can cause marketing myopia – businesses can lose sight of the real objective of building customer relationships by satisfying customers’ needs The Product Concept Product Concept – the idea that buyers will favour products that offer the most in quality, performance, and innovative features. -marketing strategy should focus on making continuous product improvements The Selling Concept Selling Concept – the idea that the market will not buy enough of the firm’s products unless it undertakes a large-scale selling effort. -typically used with unsought goods, such as insurance and blood donations -used when a firm faces overcapacity -marketing focuses on selling what they make rather than what the market wants -focus on creating sales transactions rather than building long-term customer relationships The Marketing Concept Marketing Concept – the marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. -customer focus and value are the paths to sales and profits www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -job is to find the right products for your customers The Societal Marketing Concept Societal Marketing Concept – a principle of enlightened marketing that holds that marketing strategy should deliver value to the organization’s customers in a way that maintains or improves the well-being of society. -questions whether the pure marketing concept overlooks possible conflicts between the short-term needs and wants of individuals and the long-run welfare of society Strategic Planning Strategic Planning – the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing market opportunities. -strategic planning involves adapting the firm to take advantage of opportunities in its constantly changing environment. Corporate Level: Defining Company Mission  Setting Company Objectives and Goals  Designing the Business Portfolio Business Unit, Product, and Market Level: Planning Marketing and Other Functional Strategies -marketing planning occurs at the business unit, product, and market level and it supports company strategic planning with more detailed plans for specific market opportunities. -“if you fail to plan, you are planning to fail” Strategic Business Unit Strategic Business Unit (SBU) – a unit of the company that has its own mission and objectives and that can be planned independently from other company businesses. Service Profit Chain Service-Profit Chain – the chain that links service firm profits with employee and customer satisfaction. -reaching service profits and growth begins with taking care of those who take care of customers Five links: 1) Internal Service Quality –superior employee selection and training, quality work environment, strong support for those dealing with customers…which results in.. 2) Satisfied and Productive Service Employees – which results in… 3) Greater Service Value – more effective and efficient customer value creation and service delivery.. which results in.. 4) Satisfied and Loyal Customers – which results in… 5) Healthy Service Profits and Growth – superior service firm performance www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Requires: Internal Marketing – marketing by a service firm to train and effectively motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction. -must precede external marketing Interactive Marketing – marketing by a service firm that recognizes that perceived service quality depends heavily on the quality of buyer-seller interaction. -service companies have three major marketing tasks: competitive differentiation, service quality, and productivity Product Life Cycle Product Life Cycle – the lifespan of a new product, from its development to its eventual decline. - All products will pass through the PLC What’s different is: How long it takes between stages How long it remains in each stage 5 Stages of the PLC: 1) Development – no customers, sales=0, heavy spending -when company finds and develops a new product idea 2) Introduction – early adopter customer, slow sales growth, no profits, high launch costs -product is introduced in the market 3) Growth – early majority customers, rapid sales growth and revenues -rapid market acceptance and increasing profits 4) Maturity – late maturity customers, flat sales, declining profits -increased marketing outlays to defend product against competition 5) Decline – laggard customers, declining sales and profits, replaced by new products Criticisms of Marketing Customer Concerns: -High Prices – caused by unnecessary advertising -High-Pressure Selling – commission based sellers -Deceptive Practices www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -Unsafe Products -Planned Obsolescence – holding back features then revealing them later to make older models obsolete -Weblining – discriminating against customers based on their purchase behaviour, spending habits, etc Societys Concern: -false wants and too much materialism -business yields too much political power -marketing’s impact on other businesses -too few social goods -cultural pollution Environmentalism Environmentalism - An organized movement of concerned citizens, businesses, and government agencies working to protect and improve the natural environment -marketing system’s goal should be to maximize life quality Environmental sustainability - a management approach that involves developing strategies that both sustain the environment and produce profits for the company. -Sustainability is a crucial but difficult goal -goal is to establish a sustainable global economy: an economy that the planet is capable of supporting indefinitely Pricing Strategies/Pricing Methods Marketing Skimming Pricing – setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the price. -early adopters want new products right away, regardless of the price -introduced at the highest price marketers think consumers will pay for it -price is then lowered in stages Market Penetration Pricing – a strategy that sets a low price for a new product to attract a segment of buyers, then raises the price. -goal is to attract a large number of buyers quickly and gain a large market share -idea is that high sales volumes will reduce costs Prestige Pricing – a product that offers the buyer prestige in exchange for a high price. -ex Ferrari -can also work for ordinary products – for example Stella Artois Product Line Pricing Optional-Product Pricing – offering to sell an optional or accessory product along with their main product. -ex. Bluetooth in a car www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Captive-Product Pricing – setting a price for products that must be purchased along with a main product. -ex razor blades (that go with razors), printer cartridges (that go with the printer) By-Product Pricing – company seeks a market for byproducts to help offset the costs of disposing of them and to help make the price of the main product more competitive. Bundle Pricing – when marketers group more than one product together and charge a price for the set. -ex a combo at a fast food restaurant Consumerism Consumerism – an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. -Consumer Association of Canada Traditional Sellers Rights: -right to introduce any product in any size and style -right to charge any price for the product -right to spend any amount to promote the product -right to use any product message -right to use any buying incentive schemes Fundamental Consumer Rights: -right to safety -right to be informed -right to choose -right to be heard -right to redress against damage -right to consumer education Marketing Environment 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 customers – the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. Macroenvironment – actors and forces in society and the world that affect the microenvironment – demographic, economic, natural, technological, political, and cultural forces. www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Marketing/Distribution Channels Marketing Intermediaries – third-party companies – neither the marketer nor the customer – that help the company promote, sell, and distribute its goods to customers. Marketing Intermediaries include: Retailers – buy merchandise from manufacturers and resell them in stores to consumers Distributors – physically stock and move goods from their point of origin Brokers – arrange for the movement of goods from their point of origin to their retailer or wholesaler, but never physically touch or take possession of the merchandise Marketing Services Agencies – perform marketing tasks Financial Intermediaries – help finance transactions or insure against the risks associated with the buying and selling of products Wholesaler -wholesaler is the company that sells the product to the retailer who sells the product to the consumer -buy in bulk then break the lots into smaller quantities for retailers -takes a risk by holding the product between the manufacturer and retailer Retailer Retailing – all activities involved in selling goods or services directly to final customers for their personal (not business) use. -classified in terms of the amount of service they offer (self-service, limited service, full service), the breadth and depth of their product lines, their pricing approaches, and how they are organized. Marketing Intelligence Marketing Intelligence - A systematic collection and analysis of publicly available information about competitors and developments in the marketing environment. - Is a specific branch of competitive intelligence - Goal is to improve strategic decision making, assess and track competitors’ actions, and provide early warning of opportunities and threats - Growing use of marketing intelligence raises some ethical issues, most techniques are legal, but some are considered questionable -good marketing intelligence usually comes from public sources Marketing Research Marketing Research – the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. -can hire someone to conduct research on a specific area or buy data collected by outside firms www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Research Process The Marketing Research Process has four steps: 1.Defining the Problem and research objectives  2. Developing the research plan for collecting info  3. Implementing the research plan  4. Interpreting and reporting the findings Defining the Problem and Research Objectives -manager best understands the decision for which info is needed -researcher best understands marketing research and how to obtain the info -often the hardest step in the process -see research objectives section below Developing the Research Plan -need to determine exact info needed, develop a plan for gathering it efficiently, and present the plan to management -research plan includes: existing data, spells out research approaches, contact methods, sampling plans, and instruments that researchers will use to gather new data -research plan should be presented in a written proposal -proposal should cover management problems addressed and research objectives, info to be obtained, and how the results will help, and research costs Primary Data – info collected for the specific purpose at hand. Secondary Data – info that already exists somewhere, having been collected for another purpose. Gathering Secondary Data -can use companys internal database, commercial data sources, government sources, etc Online Databases – computerized collections of data available online, either from closed, subscriber- only services, or via the public internet. -secondary data can usually be obtained faster and at a lower cost than primary data -evaluate info to make sure it is relevant, accurate, current, and impartial Primary Data Collection -research approaches: observational, survey, experiment Observational Research – the gathering of primary data by observing relevant people, actions, and situations. -mechanical observations, ex meters attached to TV sets Research Objectives: Exploratory, Descriptive, Causal -market research is about finding the answers to questions and businesses problems so that marketing managers can make decisions www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -defining the problem and clearly stating the research objective is the hardest part -can often begin with exploratory research to help define the problem and later follow with causal or descriptive research Exploratory Research Exploratory Research – marketing research to gather preliminary info that will help define problems and suggest hypotheses. -Formats problems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming hypothesises -Does not seek to test them, just finds them out Descriptive Research Descriptive Research – marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers who buy the product. -Seeks to describe a product, determine how many people use the product -Defines questions, prepares the company for required changes Causal Research Causal Research – marketing research to test hypotheses about cause-and-effect relationships. -Seeks to find cause and effect relationships between variables -Accomplishes this by experiments Types of Research Observational research – defined above Mechanical Observation – ex meters on TV sets Survey Research – the gathering of primary data by asking people questions about their knowledge, attitudes, preferences, and buying behaviour. Experimental Research – the gathering of primary data by selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. Single-Source Data Systems – systems that combine surveys of huge consumer panels and electronic monitoring of respondents’ purchases and exposure to various marketing activities in an effort to better understand the link among consumer characteristics, attitudes, and purchase behaviour. Consumer Buyer Behaviour Consumer Behaviour – the buying behaviour of consumers – individuals who buy goods and services for their own use and consumption. www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -consumer influences are strongly influenced by cultural, social, personal, and psychological characteristics Maslow’s Hierarchy of Needs Self-Actualization Needs (self-development and realization) Esteem Needs (self-esteem, recognition, status) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst) -tries to explain why people are driven by different needs at different times -most pressing at bottom, least at top -once most important need is satisfied, they move onto the next High vs. Low Involvement Products -low involvement products -ex toothpaste or laundry detergent -may require no info search www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -high involvement products -ex motorcycle -usually requires search time by consumers, such as, where can I buy it? Segmentation -identify bases for segmenting the market; develop segment profiles Market Segmentation – dividing a market into distinct groups with distinct needs, characteristics, or behaviour that might need separate products or marketing mixes. Market Segment – a group of potential customers who respond in a similar way to a given set of marketing efforts. -when segmenting markets, caution and sound ethics must be used Targeting -develop measure of segment attractiveness; select target segments Target Marketing – the process of evaluating each market segment’s attractiveness and selecting the most appropriate ones to enter. -target segments should be chosen based on an analysis of which ones it feels will profitably generate the greatest customer value and sustain it over time -niches are relatively small market segments -most companies enter a market by serving a single segment, if this is successful, they expand to serve additional segments -large organizations sometimes strive to meet the entire market Positioning -develop positioning for target segments; develop a marketing mix for each segment -a position is a place the product occupies in the mind of the potential customer, and relative to competitors Market Positioning – arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of the buyer. -therefore, positions are intended to distinguish their products from competing brands and given them the greatest strategic advantage in their target markets -positioning ultimately exists in the mind of the individual -first the marketer needs to establish a possible competitive advantage on which to build the position -effective positioning begins with actual differentiating the company’s marketing offer so that it gives the consumer more than the competitor www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes -once a position is chosen, the company must communicate that position to its customers -the marketing program must support the positioning strategy Based on four priniciples: 1. A company must establish a position in the minds of 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 Requirements for Effective Segmentation -There are many ways to segment a market, but not all segmentations are effective -To be useful, markets segments must be: Measureable: the size, purchasing power, profiles of the segments, can be measured Accessible: the segments can be effectively reached and served Differentiable: the segments are conceptually distinguishable and respond differently to different marketing mix elements and programs Actionable: effective programs can be designed for attracting and serving the segments Differentiation Strategies Differentiated Marketing – a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. -generates higher sales and a stronger position within each market segment -more expensive Types of differentiation: -product -people -channels -services -image www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Positioning Strategies Good vs. Service 8 differences between goods and services: 1. Most service products cannot be inventoried -customers may be turned away or have to wait 2. Intangible elements usually dominate value creation -customers can’t taste, smell, or touch these elements and not may be able to see or hear them -harder to evaluate service and distinguish from competitors 3. Services are often difficult to visualize and understand -customers perceive greater risk and uncertainty 4. Customers may be involved in co-production -customers interact with provider’s equipment, facilities, and systems -poor task execution by customers may hurt productivity, spoil service experience, curtail benefits 5. People may be a part of the service experience -appearance, attitude, and behaviour of service personnel and other customers can shape the experience and affect satisfaction www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes 6. Operational inputs and outputs tend to vary more widely -harder to maintain consistency, reliability, and service quality or to lower costs through higher productivity -difficult to shield customers from results of service failures 7. The time factor often assumes great importance -customers see time as a scarce resource to be spend wisely; dislike wasting time waiting, want service at times that are convenient 8. Distribution may take place through nonphysical channels -info-based services can be delivered through electronic channels but core products involving physical activities or products cannot Product Types Consumer Products Consumer Products – product bought by individuals for person consumption. Convenience Products – consumer product that the individual usually buys frequently, immediately, and with a minimum of comparison and buying effort. Ex soap, candy, newspapers, fast food Shopping Products – consumer product that people, in the process of selection and purchase, characteristically compares on bases such as suitability, quality, price, and style. Ex furniture, clothing, used cards, major appliances, hotel and airline services Specialty Products – consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Ex cars, high-priced photography equipment, designer clothes, services of legal or medical specialists Unsought Products – consumer product that the consumer either does not know about or knows about but does not normally think of buying. Ex life insurance, cemetery plots, blood donations Industrial Products Industrial Products – product bought by individuals and organizations for further processing or for use in conducting a business. -materials and parts, capital items, and supplies and services Product line Product Line - A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. www.uofgexamnetwork.com Fall 2011 MCS 1000 Notes Service characteristics Four Service Characteristics: Intangibility – services cannot be seen, tasted, felt, heard, or smelled before purchase Inseparability – services cannot be separated from their providers Perishability – services cannot be stored for later sale or use Variability – quality of services depends on who provides them and when, where, and how 7P’s Of Service -combines the 4 Ps of marketing (product, price, place, promotion) with an additional 3 service-specific Ps (process, physical environment, people) Product Elements -Service products lie at the heart of a firm’s marketing strategy, if it’s poorly designed, it won’t create meaningful value for customers -Service products need a core product that response to the customers’ primary need and an array of supplementary service elements that help use the core product effectively Place and Time -When delivering, it involves decisions on when and where to deliver, as well as methods -Use the electronic or physical channels, speed and convenience of place and time have become important determinants of effective service delivery today Price and other user outlays -Make sure customer sees this price as “worth it”, if not, go beyond this -Make it worth it to the customer, and give the customer satisfaction Promotion and Education -Be sure to use marketing programs, without them, no one will know about your product -Suppliers need to inform customers about benefits of this service, where and when to obtain it, and how their participation can provide the best results Process -How a firm does things, the underlying processes, these are just as important as what it does -Create an effective process -Customers are often involved in these processes, as co-producers -If it’s badly designed slow processes and ineffective, it leads to a disappointing experience as well -Make sure front line staff does the best they can Physical Environment -Appearance of buildings, landscaping, vehicles, interior furnishing, equipment, staff uniforms, signs, printed materials, and other visible cues are all si
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