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RSM100Y1 Study Guide - Marketing Mix


Department
Rotman Commerce
Course Code
RSM100Y1
Professor
John Oesch

Page:
of 8
March 16th 2011(chapter 15, 16, 17)
RSM session 20 Marketing, Pricing and Distribution
1.Marketing: Thinking about marketing strategically all the way, including all departments
in the firm.
Not just getting customers for our best products and services; but also getting
products and services for our best customers.(connecting buyers and sellers)
Value creation: providing valuable products/services profitably
planning and executing the development, pricing, promotion and distribution of
ideas, goods, services to create exchanges that satisfy both buyers and sellers
objective
Two basic activities: identifying customer needs and wants &getting the
product to the customer
Massive Innovation and Physical distribution (two underlying factors)
FedEx’s competition=Ups offers ground delivery but FedEx does not
The Value
Targeted advertising (Google)
database/data mining
viral marketing (i.e. Facebook, youtube customers put their experience up there)
the basic ideas apply to all industries including accounting firms, consulting
firms, government.
Relationship marketing: emphasizes lasting relationships with customers and
suppliers. (i.e. banks offer economic incentives to encourage longer-lasting
relationships)
2.Strategy: the Marketing Mix
- The combination of product, pricing, promotion, and distribution strategies used in
marketing a product
Marketing plan: a detailed strategy for gearing the marketing mix to meet
consumer need and wants
3C (uncontrollable): consumer, competition, company. Firms do not get the
chance to choose what customers choose, and firms cannot control the
competition and other companies in the industry.
4P: product, pricing, promotion, place
Segmentation: The act of slicing up the total market
Market segmentation: dividing a market into categories of customer types
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How to identify market segments?
I. Search for common traits between consumers
II. Focus on traits that affect product need or purchase behavior
-Geographic region
-Customer demographics: race, income, gender, age etc
-Customer psychographics: motives, attitudes, interests
-Behavioural variables/product use variables: the benefit they expect, their
reasons for purchasing it, and their loyalty to it.
Target Marketing and Market Segment
I.Target market: any group of people who have similar wants and needs and may be
expected to show interest in the same products
II. Market segmentation
The act of choosing one or more slices
targeting on teenage girls of sexy” clothing, shoes. Parents will be the people purchase
the products
III.Positioning: Giving your product some image to people in the chosen slice.
Understanding Consumers
3.Market Research
The systematic study of what buyers needs and how to meet those needs
-Focuses on the marketing mix elements
- the role is to increase the firms competitiveness by understanding the
relationship among the firms customers, marketing variables, and its
marketing decisions
- Leads to more effective marketing
- Increases the accuracy and effectiveness of market segmentation
The research process
Research Methods:
- Focus group: a small discussion group of prospective customers or product
users
- Survey people offer no insight into their own behavior
The question determines that answer
- Observationuseful for cases where actions occur automatically without
thinking (i.e grocery shopping) supermarket scanners, video mining
- Experimentvery costly
Collects data to help us to make decision how to segment, target, position.
4.Consumer Behaviour
The study of the process by which customers come to purchase and consume a
product or service
Influenced by psychological factors. personal factors, social factors, cultural
factors
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Consumer buying process
Purchase decision choice made upon:
-rational motives: cost, quality, usefulness
-emotional motives: fear, sociability, aesthetics, imitation of thers
Post-purchase evaluation:
-marketers must to ensure satisfaction& repeat purchases
-negative word-of mouth can be harmful
Organizational marketing and Buying Behaviour
I. Industrial market: business that buy goods to be converted into other products that will
be sold to ultimate consumers
II. Reseller market: intermediaries like wholesalers and retailers who buy finished products
and resell them
III. Institutional market: non-government organizations such as hospitals, churches,
schools.
The Marketing environment
5 environmental factors
I. Political and legal: gain support for their products, use advertising campaigns for
public awareness, result in favourable laws and regulations
II. Technological: these issues reflect the values, beliefs; have direct effects on business
III. Economic: economic conditions determine spending patterns by consumers, business,
and government.
IV.Competitive: marketing managers seek to make its product the most attractive
Product Strategy
Product differentiation: creating a product that has different image than existing products
on the market to attract consumers.
- Changing existing products by responding to trends or improving current offering
- Adding new products
Pricing Strategy
1)Low price strategy (salt) or High price strategy (mink coat)
Price must consider all costs (operation and administration, marketing research,
advertising)
Cost-oriented pricing: considers the cost of the product and adds a markup to arrive
a final cost
Break-even Analysis: cost-volume-profit relationship
- the number of units must be sold at a given price before the company begins to make
a profit.
Competitor-based pricing: in some markets is almost completely driven by
competitive concerns
Value-based pricing: set price to reflect the customers perceived value, not
production costs (customer benefits, available substitutes)
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