Notes for RSM100Y1 Test 1.doc

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Department
Rotman Commerce
Course
RSM100Y1
Professor
Michael Khan
Semester
Fall

Description
Review for RSM100Y1 Test 1 Chapter 1,3,5,11,12,13 Chapter 1 The changing face of business At the heart of every business is an exchange between a buyer and a seller. The quest for profits is a central focus of business Not-for-profit organizations operate in both the private and public sectors.  Private sectors: museums, libraries, trade associations, and charitable and religious organizations// Public sectors: government agencies, political parties, and labor unions  Receive funding from both government sources and private sources, including donations  Respond to emergencies/ Merchandising, profit making side businesses Factors of production: Natural resources, Capital, Human Resources, Entrepreneur Natural resources: agricultural land, building sites, forests and mineral deposits Capital: technology, tools, information, and physical facilities Human resources: anyone who works, from CEO to a self-employed editor. Including physical labor and the intellectual inputs contributed by workers Entrepreneur: the willingness to take risks to create and operate a business The private enterprise system/capitalism  An economic system that rewards firms for their ability to identify and serve the needs and demands of customers  Competitive differentiation, the unique combination of organizational abilities, products, and approaches that sets one company apart from its competitors in the minds of customers.  Rights of the citizens: Private property (the most basic right), competition, profits, freedom of choice Entrepreneurship Alternative Entrepreneurship leads to growth in the Canadian Economy. Entrepreneurship creates jobs and sells products, innovation Entrepreneurship is also important for existing companies. [Apple applications] The most employment in Canada is in the retail trade sector, followed by accommodation and food services. Six Eras in the history of business The colonial period, the industrial revolution (semi-skilled workers, aided by machines), the age of industrial entrepreneurs, the production era, the marketing era( the great depression caused this to happen since most people’s income dropped), the relationship era. Consumer orientation: a business philosophy that focuses first on consumers’ unmet wants and needs, and then designs products to meet those needs. Transaction management: building and promoting products in the hope that enough customers will buy the products to cover costs and earn acceptable profits. Relationship management: the collection of activities that build and maintain ongoing, mutually beneficial ties with customers and others. Changes in the workforce Challenges: the aging of population and a shrinking labor pool, the growing diversity of the workforce, the changing nature of work, the need for flexibility and mobility, and the need to work with others to innovate. Outsourcing is the use of outside vendors to produce goods or fulfill services and functions that were previously handled in house or in country. Offshoring is the relocation of business processes to lower-cost locations overseas. Nearshoring is the outsourcing of production or services to nations near a firm’s home base. Critical thinking is the ability to analyze and assess information to pinpoint problems or opportunities. Creativity is the capacity to develop novel solutions to perceived organizational problems. Chapter 3 Economic challenges facing contemporary business The private enterprise system Pure competition: a market structure where large numbers of buyers and sellers exchange similar products, and no single participant has a large influence on price. Monopolistic competition: a market structure similar to the structure for retailing: large numbers of buyers and sellers exchange distinct and differentiated products, so each participant has some control over price, quality, or other features. Oligopoly: a market situation where few sellers compete and high start-up costs act as barriers to keep out new competitors. Monopoly: where a single seller controls trade in a good or service, and buyers can find no close substitutes. A regulated monopoly is a firm that is granted exclusive rights in a specific market by a local, provincial or federal government. Planned economies is an economic system where business ownership, profits and resource allocation are shaped by a plan to meet government goals, not goals set by individual firms. Price level changes Inflation: rising prices caused by a combination of excess consumer demand and higher costs of raw materials, component parts, human resources, and other factors of production. Consumer Price Index (CPI): a measurement of the monthly average change in prices of goods and services. A monetary policy is a government plan to increase of decrease the money supply and to change banking requirements and interest rates to affect spending by changing bankers’ willingness to make loans. Fiscal policy is a plan of government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth. Global economics challenges: 1) International terrorism 2) The shift to a global information economy 3) The aging of the world’s population 4) The growth of China and India 5) Efforts to enhance the competitiveness of every country’s workforce. Chapter 11 Customer-driven marketing Marketing: an organizational function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Utility is the power of good or service to satisfy a want or need. Form Utility is created by converting raw materials, component parts, and other inputs into finished goods and services. Marketing function creates three types of utilities: Time utility is created by making a good or service available when customers want to purchase it. Place utility is created by making a product available in a location convenient for customers. Ownership utility refers to an organized transfer of goods and services form the seller to the buyer. Four eras in the history of marketing: Production, “a good product will sell itself.” Sales, “assume consumers would buy as a result of energetic sales efforts” Marketing, businesses began to adopt a consumer orientation Relationship Era: Businesses focus on customer satisfaction and building long-term business relationships. Marketing concept is a companywide consumer focus on promoting long-term success. Not-for-profit marketing: Canada leads the world in contributions to its gross domestic product by not-for-profit organizations; the US is a close second. Not-for-profit organizations often use one or more of five major categories of non-traditional marketing: person marketing, place marketing, event marketing, cause marketing, and organization marketing. Person marketing refers to efforts designed to attract the attention, interest, and preference of a target market toward a person. Place marketing is an attempt to attract people to a particular area, such as a city, region or country. Event marketing is marketing or sponsoring of short-term events such as athletic competitions and cultural and charitable performances. Cause marketing is marketing that promotes a cause or social issue, such as preventing child abuse, anti-littering efforts, and stop-smoking campaigns. Organizational marketing is a marketing strategy that influences consumers to accept the goals of an organization, receive the services of an organization, or contribute in some way to an organization. Developing a marketing strategy: (two steps) First, decision-makers study and analyze all possible target markets and choose the most suitable market. Second, they create a marketing mix to satisfy the chosen market. Consumer (B2C) product: a good or service that are purchased by end users. Business (B2B) product: a good or service purchased to be used, either directly or indirectly, in the production of other goods for resale. Some products can fit either classification depending on who buys them and why. (a computer and a credit card can be used by both a business and a consumer.) Target market: a group of people that an organization markets its goods, services, or ideas toward, using a strategy designed to satisfy this group’s specific needs and preferences. Marketing mix is a blending of the four elements of marketing strategy-product, distribution, promotion, and pricing- to satisfy chosen customer segments. Developing a marketing mix for international markets Standardization: offer the same marketing-mix in every market Reliable marketing performance, low costs (B2B goods work the best) Adaption: develop a unique mix to fit each market Mass customization allows a firm to mass-produce goods and services while also adding unique features to individual or small groups of orders. Applying Marketing Research Data Business intelligence: a field of research that uses activities and technologies for gathering, storing and analyzing data to make better competitive decisions. Data mining: the use of computer searches of customer data to detect patterns and relationships. Data warehouse: a customer database that allows managers to combine data from several different organizational functions. Market Segmentation: process of dividing a total market into several relatively similar groups. How Market Segmentation works: Consumer Markets [Oldest] Graphical Segmentation: dividing an overall market into similar groups on the basis of their locations. [Most common]Demographic Segmentation: dividing markets on the basis of various demographic or socioeconomic characteristics, such as gender, age, income, occupation, household size, stage in family life cycle, education, or ethnic group. Psychographic segmentation: dividing consumer markets into groups with similar attitudes, values, and lifestyles. Product-related Segmentation (three approaches): dividing consumer markets into groups that are based on benefits sought by buyers (focus on the qualities that people look for in a good or service and the benefits they expect to receive), usage rates (the amount people buy and use/ heavy/light) and loyalty levels( the degree to which consumers recognize, prefer, and insist on particular brand) Segmenting Business Markets Geographical segmentation, Demographic; Customer-based segmentation, End-use segmentation End-use segmentation: focuses on the precise way a B2B purchaser will use a product Consumer Behaviour: end consumers’ activities that are directly involved in obtaining, consuming, and disposing of products, and the decision processes before and after these activities. Steps in the Consumer Behaviour Process: Recognition of problem or opportunity --- search --- evaluation of alternatives --- purchase decision ---purchase act --- post purchase evaluation Life value of a customer: the revenues and intang
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