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Midterm

Midterm 1.docx

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Department
Business Administration
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Business Administration 3301K
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Alex Mc Dougall

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Chapter One: Overview of Marketing What is Marketing?  Transactions are considered marketing because you were exchanging something of value that satisfies a need  Marketing: a set of business practices designed to plan for and present an organizations products or services in ways that build effective customer relationships o Requires thoughtful planning with an emphasis on ethical implications  Marketing plan: a written document composed of an analysis of the current marketing situation, opps and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, actions programs, and projected or proforma income (and other financial) statements  In any exchange, the buyer and the seller should be satisfied with the value they obtained from a transaction Marketing is about satisfying customer needs and wants  Understanding and satisfying consumer needs and wants is fundamental  The company must first identify the customers or market for its product or service o Market: refers to the groups of people who nee or want a company’s products or services and have the ability and willingness to buy them  Marketers divide the market into subgroups or segments, need to know which market segments your product is most relevant Marketing entail value exchange  Marketing is about an exchange: the trade of things of value between the buyer and the seller so that each is better off as a result  Buyers complete the exchange by giving money and information to the seller Marketing requires product, price, place and promotion decisions  Marketing traditionally has been divided into a set of four interrelated decisions known as the marketing mix/four P’s: product, place, price and promotion—the controllable set of activities that a firm uses to respond to the wants of its target markets  Product: main purpose of marketing is to create value by developing a variety of offerings, including goods, services, and ideas to satisfy customer needs o Goods: items that you can physically touch o Services: intangible customer benefits that are produced by people or machines and cannot be separated from the product o Ideas: include thoughts, opinions, philosophies, and intellectual concepts  Price: the overall sacrifice a consumer is willing to make—money, time, energy—to acquire a specific product or service o Doesn’t always have to be monetary o For marketers, the key to determining prices is figuring our how much customers are willing to pay so that they are satisfied with the purchase and the seller achieves a reasonable profit  Place: describes all the activities necessary to get the product form the manufacturer or producer to the right customer when that customer wants it o Place decisions are concerned with developing an efficient system for merchandise to be distributed in the right quantities, to the right places and at the right time in the most efficient way in order to minimize system wide costs while satisfying the service levels required by their customers  Promotion: communication by a marketer that informs, persuades and reminds potential buyers about a product pr service to influence their opinions or elicit a response o Even the best products/services will go unsold if marketers cannot communicate their value to customers o Enhances a products/services value Marketing is shaped by forces and players within the firm  Marketing activities are shaped by factors that are both internal to the firm and external to the firm  The consumer is the center to all marketing activities and offering the best value possible will attract customers to products and keep them loyal  Must leverage the full potential of their internal capabilities; work effectively with their partners; and constantly evaluate and respond to the competitive environment  Suppliers or even natural disasters can exert substantial influence on a company’s marketing activities, sometimes with devastating consequences Marketing is shaped by forces and players external to the firm  External forces such as cultural, demographic, social, technological, economic and political and legal changes shape a company’s marketing activities  Two current social trends that are reshaping the marketing activities of most firms are concerns about the environment and obesity  Marketers beginning to use more environmentally friendly packaging for their products; some companies are even using alternative materials in their products themselves  The store layout, merchandise, level of service and prices cater specifically to the needs of this segment of the Canadian demographic Marketing can be preformed by both individuals and organizations  Marketing intermediaries, such as retailers, accumulate merchandise from producers in large amounts and then sell it to you in smaller amounts  The process in which businesses sell to consumers is known as B2C (business to consumer)  The process of selling merchandise or services from one business to another is known as B2B (business to business)  The process in which consumers sell to other consumers C2C (consumer to consumer)  Individuals can also undertake activities to market themselves  Accountants, layers, financial planners, physicians and other professional service providers also market their services  Social media is quickly becoming an integral part of their marketing and communications strategies Marketing occurs in many settings  Although most think of marketing as a way for firms to make profit, it also works equally well in the non-profit sector  Marketing isn’t useful only in countries with well developed economies, it can also jump-start the economies of less developed countries by actually putting buyers and sellers together to create new markets  Marketing is often designed to benefit an entire industry, which can help many firms simultaneously Marketing helps create value  Over the last 100 years, marketing has evolved from an activity designed simply to produce and sell products to an integral business function aimed at creating value for consumers and the company’s shareholders  Marketing orientations and philosophies;  Product orientation: focus on developing and distributing innovative products with limited concern about whether the products best satisfy consumer needs o Generally start out by thinking about the product they want to build, they try selling the product afters it is developed rather than starting with an understanding of the customers needs and then developing a product to satisfy those needs  Sales orientation: view marketing as a selling function where companies try to sell as many of their products as possible rather than focus on making products consumers really want o Typically heavy doses of personal selling and advertising to attract new customers, tend to focus on making a sale or on each transaction rather than building long-term relationships, generally believe if the consumers try their products, they will like them  Market orientation: start out by focusing on what consumers want and need before they design, make or attempt to sell their products and services, believe their customers have choice and make purchase decisions based on factors (quality, convenience and price) o “Customer is king”, marketers role is to understand and respond to the needs of consumers and to do everything possible to satisfy them  Value-based orientation: most successful firms today are market oriented, they have gone beyond a production or sale orientation and attempt to discover and satisfy their customers needs and wants o Value: reflects the relationship of benefits to costs, or what you get for what you give o Customers seek a fair return in goods and or services for their hard-earned money and scarce time o The challenge for firms is to find out what consumers are looking for and to attempt to provide those goods and services but still make a profit o Companies must implement its strategy according to what its customers value, these valuable benefits could include speed, convenience, size, accuracy, price, cost-savings or user-friendliness What is Value-Based Marketing?  Customers naturally seek options that provide the greatest benefits at the lowest costs  Marketing firms attempt to find the most desirable balance between providing benefits to customers and keeping their costs down  Value-based marketing: focuses on providing customers with benefits that far exceed the cost (money, time, effort) of acquiring and using a product or service while providing a reasonable return to the firm  A business must also understand what customers view as the key benefits of a given product or service and how to improve on them  Some critical benefits may be service quality, convenience and merchandise quality  The other side of the value equation entails the firms ability to provide either a better product/service mix at the same cost or the same level of quality and convenience for a lower cost How firms compete on the basis of value  In today’s quickly changing world, consistently creating and delivering value is quite difficult  Consumer perceptions change quickly, competitors constantly enter markets, and global pressures continually reshape opportunities, thus marketers must keep a vigilant eye on the marketplace  Value-based marketing should be at the core of every firms functions  Even nonprofit organization need to focus on creating value to ensure the services they provide to stakeholders are of high quality while also minimizing the total fundraising required How firms become value-driven  Firms become value driven by focusing on 3 activities  Sharing information: about their customers and competitors across their own organization and with other firms that might be involved in getting the product or service to the marketplace o They share the information that has been collected through customer relationship management, and integrate it across the firms various departments  Balancing benefits with costs: value-oriented marketers constantly measure the benefits that customers perceive against the cost of the their offering o They use available customer data to find opportunities in which they can better satisfy their customer needs and in turn develop long-term loyalties  Building relationships with customers: transactional orientation regards the buyer-seller relationship as a series of individual transactions, so anything that happened before or after the transaction is of little importance o Relational orientation based on the philosophy that buyers and sellers should develop a long-term relationship, the lifetime profitability of the relationship matters, not how much money is made during each transaction o Customer relationship management (CRM) a business philosophy and set of strategies, programs, and systems that focus on indentifying and building loyalty among the firms most value customers o Firms that employ CRM systematically collect information about their customers needs an then use that information to target their best customers with the products, services and special promotions that appear most important to those customers Why is Marketing Important?  Marketing has evolved into a major business function that crosses all areas of a firm or organization  It works with other departments such as research and development, engineering, and production, to ensure that high- quality, innovative products that meets customers needs are available in the right quantity, at the right prive, and at the right place, tat is wherever they want to purchase it  Creates mutually valuable relationships between the company and its suppliers, distributors, and other external firms that are involved in the firms marketing process  Without marketing, it would be difficult for any of us to learn about new products and services Marketing expands firms global presence  Understanding customers is critical, without the knowledge that can be gained by analyzing new customers needs and wants on a segment by segment, region by region basis—one of marketing’s main tasks—it would be difficult for a firm to expand globally Marketing is pervasive across the organization  In value-based marketing, they work seamlessly with other functional areas of the company to design, promote, price and distribute products Marketing is pervasive across the supply chain  Manufacturers buy raw materials and components from suppliers, which they sell to retailers or other businesses after they have turned the material into their products  Every time materials or products are bought or sold, they are transported to a different location which sometimes requires that they be stores in a warehouse operated by yet another organization  Supply chain: the group of firms and set of techniques and approaches firms use to make and deliver a given set of goods and services o Excellent supply chains effectively and efficiently integrate their supple chain partners to produce and distribute goods in the right quantities, to the right locations and at the right time  Often supply chain participants take a transactional orientation in which each link in the chain is out for its own best interest  Supply chain members don’t enjoy any cooperation or coordination, but for them to provide significant value to the ultimate customer to share data, make joint forecasts and coordinate shipments  Effectively managing supply chain relationships often has a huge impact on a firms ability to satisfy the customer which results in increased profitability for all parties Marketing makes life easier  Marketing provides you as a consumer, with product and service choices as well as information about those choices, to ensure that your needs are being met  After the sale, they provide reasonable guarantees and return policies  Marketing responsibility also includes offering pleasant and convenient places for you to shop, appropriate opening hours for you to shop, products and services in the form you want and purchase options (often referred to as time, place, form and ownership utility) Marketing provides career opportunities  On the creative side, positions such as artists, graphic designers, voice talent, animators, music composers, and writers  On the analytical side, marketing requires database analysts, market researchers, and inventory managers who can quickly digest information, cross-reference data, and spot trends that might make or break a company  On the business side, marketing requires strategists, project/product/brand managers, sales associates and analysts who are capable of designing and implementing complex marketing strategies that increase the bottom line Marketing enriches society  Marketing should focus on factors other than financial profitability, such as good corporate citizenry because they encourage their employees to participate in activities that benefit their communities and invest heavily in socially responsible actions and charities  Canadian companies recognize that a strong social orientation is in both their and their customers best interest  It should the consumer that the firm can be trusted with their business  Also, investors view firms that operate with high levels of corporate responsibility and ethics as safe investments Marketing can be entrepreneurial  Marketing is at the centre of the success of numerous new ventures initiated by entrepreneurs, or people who organize, operate, and assume the risk of business venture  Key to the success of many such entrepreneurs is that they launch ventures that aim to satisfy unfilled needs Chapter 2: Developing a Marketing Plan & Marketing Strategies Levels of Strategic Planning in Corporations  Strategic planning occurs on two levels; the corporate level & the functional level  Corporate level planning is done by the company’s top management and focuses on the overall direction of the entire company o Focuses on the long term direction of the company which is updated regularly to respond to changes in the business environment  Functional level (HR, finance, manufacturing, marketing) o The marketing function develops marketing plans for the company’s various products, brands, and markets  SBU (strategic business units): a division of the company that can be managed somewhat independently from other divisions since it markets a specified set of products to a clearly defined group of consumers  The marketing function may also be involved in both corporate-level and SBU-level planning because of its focus on creating value for customers and the company  Marketing can advise top management where business opportunities exist as well as possible threats to their business  Marketing can advise SBU’s of changing customer trends of recommend that SBUs develop customer service and loyalty programs for all business units  Marketing Planning Process: a set of steps a marketer goes through to develop a marketing plan The Marketing Plan  A marketing plan is a writing document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or pro forma income and other financial statements  3 major phases: planning, implementation, control  It is important that everyone involved in implementing the plan knows that the overall objectives for the firm are and how they are going to be met  A written marketing plan also provides a reference point for evaluating whether or not the firm met its objectives  5 steps: o Step 1 & 2: planning phase  where marketing executives and other top managers define the mission and objectives of the business, and (step 2) evaluate the situation by assessing how various layers, both inside and outside the organization, affect the firms potential for success o Step 3 & 4: implementation phase  where marketing managers identify and evaluate different opportunities b engaging in a process known as segmentation, targeting, and positioning. They then develop and implement the marketing mix by using the four P’s o Step 5: control phase: the part of the strategic marketing planning process when managers evaluate the performance of the marketing strategy and take any necessary corrective actions Step 1: Define the Business Mission & Objectives  Mission statement: a broad description of a firm’s objective and the scope of activities it plans to undertake; attempts to answer two main questions: what type of business is it? What does it need to do to accomplish its goals and objectives?  The fundamental business issues must be answered at the highest corporate levels  Most firms want to maximize shareholders’ wealth by increasing the value of the firms stock and paying dividends  Marketing holds the primary responsibility of enhancing the value of the company’s products for its customers and other constituents, whether or not the company pursues profit Step 2: Conduct a Situation Analysis  Situation analysis: is the second step in a marketing plan; uses a SWOT analysis that assesses both the internal environment with regard to its strengths and weakness and the external environment in terms of its opportunities and threats o It also includes an examination of market trends, customer analysis, and competitive analysis o Firms should also assess opportunities and uncertainties of the market place due to changes in cultural, demographic, social, technological, economic, and political forces  SWOT: designed to help the firm determine areas in which it is strong and can compete effectively and areas where it is weak and vulnerable to competitive attacks o It also enables firms to understand where it has sustainable competitive advantage or unique advantages that cannot be easily copied by competitors and how it can leverage those advantages in response to new opportunities arising from changes in its external environment o SWOT analysis requires the firm to undertake a critical assessment of its resources, capabilities, organization, strategies, and performance in relation to competitors Step 3: Identify and Evaluate Opportunities by Using STP (Segmentation, Targeting, and Positioning)  STP: the process of segmentation, targeting and positioning that firms use to identify and evaluate opportunities for increasing sales and profits o The firm must first understand customer needs and wants (through market research), then divide the market or customers into distinct subgroups or segments, determine which of those segments it should pursue or target, and finally decide how it should position its products and services to best meet the needs of those chosen targets Segmentation  Market Segment: a group of consumers who respond similarly to a firm’s marketing efforts  Market segmentation: the process of dividing the market into distinct groups of customers where each individual group has similar needs, wants, or characteristics – who therefore might appreciate products or services geared especially for them in similar ways Targeting  Target marketing/targeting: the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market Positioning  Market positioning: involves the process of defining the marketing mix variables so that target customers have a clear, distinct, desirable understanding of what the product does or represents in comparison with competing products Step 4: Implement Marketing Mix & Allocate Resources  Marketers implement the marketing mix – for each product and service on the basis of what it believes its target markets will value  It makes important decisions about how it will allocate its scarce resources to its various products and services Product and Value Creation  Firms attempt to develop products and services hat customers perceive as valuable to buy Price and Value for Money  Value- based marketing requires that firms charge a price that customers perceive as giving them good value for the products and services they receive  If a price is set too high, it will not generate much volume; if its set too low, it may result in lower then necessary margins and profits o Marketers should base price on the value that the customer perceives Price and Value Delivery  Make the product or service readily accessible when and where the customer wants it Promotion and Value Communication  Marketers communicate the value of their offering, or the value proposition to their customers through a variety of media  Marketers must consider which are the most efficient and effective methods to communicate with their customers  An increasing number of companies are using the Internet and their own websites to advertise and communicate with their customers and build closer relationships  Marketers must balance the effectiveness of their value communication activities with their costs  Marketing managers develop schedules: timelines for each activity and the personnel responsible for the respective activity to avoid bottlenecks and ensure smooth and timely implementation of the marketing mix activities  Marketers must design the organization that will be responsible for putting the plan into action Step 5: Evaluate Performance by Using Marketing Metrics  A metric is a measuring system that quantifies a trendy, dynamic, or characteristic o They explain why things happened and to project the future o They make it possible to compare results across regions, business units, product lines and time periods Who is accountable for Performance?  The business unit and its manager should be held accountable only for the revenues, expenses, and profits that they can control  Performance evaluations are used to pinpoint problem areas Performance Objectives and Metrics  One approach to compare a firms performance over time or to competing firms, using common financial metrics such as sales and profits  Another method of assessing performance is to view the firms products or services as a portfolio Financial Performance Metrics  Common metrics to assess performance: revenues, sales, profits  They may compare sales or profits of this year to sales/ profits last year or they may compare their sales to a benchmark company  The metrics used to evaluate a firm vary depending on (1) the level of the organization at which the decision is make and (2) the resources the manager controls Strategic Planning is Not Sequential  After they’ve defined the business mission, they perform the situation analysis, identify opportunities, evaluate alternative, set objectives, allocate resources, develop the implementation plan and evaluate their performance and make adjustments (can move back and forth among these steps) Portfolio Analysis  Evaluates the firms various products and businesses and allocates resources according to which are expected to be the most profitable for the firm in the future (performed at the SBU)  Strategic Business Unit: a division of the company that can be managed somewhat independently from other divisions since it markets a specific set of products to a clearly defined group of customers  Product line: a group of products that consumers may use together or perceive as similar in some way  Relative market share: a measure of the products strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry  Market growth rate: the annual rate of growth of the specific market in which the product competes Growth Strategies Market Penetration  Market penetration strategy: a growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers (requires greater marketing efforts) Market Development  Market development strategy: a growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international or segments not currently served by the firm  International expansion is risky because companies deal with differences in government regulations cultural traditions, supply chain considerations and language Product Development  Product development strategy: a growth strategy that offers a new product or service to a firms current target market Diversification Strategy  A growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve  Can be either related (purchasing a firm from existing vendors that use the same distribution and/or management information system) or unrelated (new business lacks any common elements with the present business)  A market penetration strategy is the easiest to implement since it focuses on promoting existing products to existing customers  Downsizing: existing markets, reducing product portfolios, or closing certain businesses or store or plant locations Marketing Strategy and Sustainable Competitive Advantage  Marketing strategy: identifies a firms target markets a related marketing mix – the 4 P’s, and the bases upon which the firm plans to build a sustainable competitive advantage  Sustainable competitive advantage: something the firm can persistently do better then its competitors that is not easily copied and thus can be maintained over a long period of time Building a Sustainable Competitive Advantage  Establishing a sustainable competitive advantage is key to long-term financial performance o Just because a firm implements an element of the marketing mix more effectively than its competition, it doesn’t necessarily mean that it is sustainable  There are 4 strategies that focus on aspects of the marketing mix that create and deliver value and develop sustainable competitive advantages  Customer Excellence: involves a focus on retaining loyal customers and excellent customer service o Retaining loyal customers: viewing customers with a lifetime value perspective rather then on a transaction – by – transaction basis, is the key to modern customer retention programs  One such way of doing this is a clear and precise positioning strategy  Another method is to create an emotional attachment through loyalty programs o Customer service: firms that offer good customer service must instill its importance in their employees over a long time period so that it becomes part of the organizational culture  Operational Excellence: involves a focus on efficient operations and excellent supple chain management o Efficient operations: enables firms to either produce their customers with lower priced merchandise or, even if their prices are not lower than those of the competition, to use the additional margin they warn to attract customers away from competitors by offering even better service, merchandise assortments, or visual presentations o Excellent supply chain management & strong supplier relations: firms achieve efficiencies by developing sophisticate distribution and information systems as well as strong relationships with vendors  Firms with strong relationships may gain exclusive rights to (1) sell merchandise in a particular region, (2) obtain special terms of purchase that are not available to competitors, (3) receive popular merchandise that may be in short supply o Human resource management: knowledgeable and skilled employees committed to the firms objectives are critical assets that support the success of companies  Product Excellence: involves a focus on achieving high-quality products and effective branding and positioning  Locational Excellence: involves a focus on a good physical location & internet presence (location is not easily duplicated) Chapter Three: Analyzing the Marketing Environment A Marketing Environment Analysis Framework  Marketers who understand and manage the changes in their marketing environments are able to adapt their product and service offerings to meet new challenges and opportunities  Many marketers get their ideas for new products or services from monitoring and studying the marketing environment  Analyzing the marketing environment also helps marketers assess their continued strengths ad the value of their products and services and any weaknesses resulting from changes in the marketing environment  Consumers may be influenced directly by the firms microenvironment, including the immediate actions of the focal company, the company’s competition, and the corporate partners that work with the firm to make and supply products and services to customers  One of the goals of value-based marketing is to provide greater value to consumers than competitors offer o This provision requires that the marketing firm looks at the entire business process from a consumers point of view o Consumers needs and wants evolve over time  They monitor the Macroenvironment to determine how such factors influence consumers and how they should respond to them, firms can even anticipate trends Microenvironment Factors Company Capabilities  The first factor that affects the consumer is the firm itself, successful marketing firms focus their efforts on satisfying customer needs that match their core competencies  Marketers can us an analysis of the external environment, like the SWOT analysis to categorize an opportunity as either attractive or unattractive and, if it appears attractive, to assess it relative to the firms existing competencies Competition  Competition also significantly affects consumers in the microenvironment  Greater competition may mean more choices for consumers, which influences their buying decisions  It is critical that marketers understand their firm’s competitors, including their strengths, weaknesses, and likely reactions to the marketing activities their own firm undertakes  Firms use competitive intelligence (CI): to collect and synthesize information about their position with respect to their rivals o CI enables companies to anticipate changes in the marketplace rather than merely react to them  The strategies to gather CI can range from simply sending a retail employee to a competitive store to check merch, prices, and foot traffic to more involved methods, such as; o Reviewing public materials (websites, press releases, industry journals etc) o Interviewing customers, suppliers, partners or former employees o Analyzing a rival’s marketing tactics, distribution practices, pricing and hiring needs  Certain methods of obtaining info have come under ethical and legal scrutiny Corporate Partners  Few firms operate in isolation automobile manufacturers collaborate with suppliers of sheet metal, tire manufacturers, component part makers, unions, transport companies, and dealerships to produce and market their automobiles successfully  Parties that work with focal firms are its corporate partners Macroenvironmental Factors  Marketers must also understand the Macroenvironmental factors that operate in the external environment, namely the culture, demographics, social trends, technological advances, economic situation, and political/legal environment (CDSTEP) Culture  Culture: the shared meanings, beliefs, morals, values and customs of a group of people  Get passed down from generation to generation and learned over time  The challenge for marketers is to have products or services identifiable by and relevant to a particular group of people  Our various cultures influence what, why, how, where and when we buy  Country culture: entails easy to spot visible nuances that are particular to a country, such as dress, symbols, ceremonials, language, colours, and food preferences and more subtle aspects, which are trickier to identify  Regional subcultures: the region in which people live in a particular country affects the way they react to different cultural rituals, or even how they refer to a particular product category Demographics  Demographics: indicate the characteristics of human populations and segments, especially those used to identify consumer markets  Provide an easily understood “snapshot” of the typical consumer in a specific target market Generation Cohorts  A group of people of the same generation, have similar purchase behaviours because they have shared experiences and are in the same stage of life  Tweens: not quite teenagers but not young children either, the importance of them stems from their immense buying power, estimated at $2.9 billion annually in Canada and $260 billion annually in the united states, influence another $20 billion annually in family purchases o Particularly the cell phone market o In Canada tweens spend their money mainly on food and drinks, electronics, and clothing o They learn about new products mainly from tv shows and friends o They are not an easy group to market to, 3 in 4 make shopping decisions jointly with their parents, they are also known as speeders because they do everything at lightening speed o Marketers are inventing increasingly innovative ways to reach tweens through the internet, once they get bored tweens are gone, so firms needs to engage them quickly and with sincerity  Generation y: also called millennials or the echo boom, represent just over 7 billion Canadians or about 21% of the population, varies the most in age, ranging from teenagers to young adults o They grew up in a more media-intense and brand conscious era than their parents, thus they are more sceptical about what they hear in the media o Believes the sell is too hard, then they wont buy o They are internet and technological savvy and love digital electronics o In the next 10 years will be prime targets for homes and durable household products o Strong emphasis on balancing work and life  Generation x: people between the ages of 36-34, more than 5 million candians/15% of the population o First generation of latch-key kids: those who grew up in a house in which both parents worked o More likely to be unemployed, carry higher debts, travel the world and move far away from their parents o More likely to live longer with their parents, compared with baby boomers who at their age couldn’t wait to move out o Possess considerable spending power because they tend to wit to get married and buy houses later in life o They demand convenience and less likely to believe advertising claims o Marketing to them is difficult but word of mouth advertising from people they know and trust can give marketers the credibility needed to market to this cohort o Developed shopping savvy at an early age o Much less likely to be interested n status products because they just don’t see the point  Baby boomers: those between the ages of 48-66, the largest cohort of Canadians, represents 30% of the population o They are individualistic, leisure time represents a high priority for them o They have an obsession with maintaining their youth, believe that they will always be able to take care of themselves and will always love rock and roll o Massive market for anti-aging products, cosmetics, pharmaceuticals, and biotechnology o Spend $30 billion per year on these products  Seniors: over the age of 65 and make up Canada’s fastest-growing group, their share of the population increased from 9.6 % to 13.7%, 56% of them are women o More likely to complain, need special attention, and take time browsing before making a purchase compared with younger groups o Older people seem to be buying goods and services at the same pace as younger generations o Travel, second homes, luxury cars, electronic equipment, investments, home furnishings and clothing are frequent purchases o Internet use among seniors more than quadrupled between 2000 and 2010 o Tend to like made in Canada items, and recognizable brand names, value, quality and classic styles o Typically loyal and willing to spend but are extremely quality conscious and demand hassle-free shopping o Prefer to buy a few high-quality items rather than a larger number of low-quality items Income  The median income for Canadian families in 2008 was approx $63,900  Upper class: very affluent, and their spending patterns are not influenced by economic condition, tend to purchase luxury items, their family income is usually in excess of $70,000 o More likely to be highly educated and work in managerial and executive roles, about 48% of Canadian households are in the upper class  Middle class: earn between $30,000-$70,000, majority tending toward the higher end of this scales o They can afford a good life, tend to be careful about their spending and are value-conscious, approx 38% of Canadian households fall in this category  Working class/low-income families: between $20,000-$30,000, barely sufficient income to cover their basic needs  Under class: earn less than $20,000 and often rely on assistance to cover their basic needs  Just under 15% belong to the working and under class  The richest 20% of the population spend 6-7 times more in every shopping category than the poorest 20% of Canadians  Another aspect of the income demographic relates to the concept of value  Between 1980 and 2005, median earning among the top 20% increased by 16.4%, median earnings for the bottom 20% fell 20.6%, among those in the middle 20% stagnated increasing only 0.1%, in 2010 the richest families on avg earned about 10 times more than the poorest families Education  Higher levels of education lead to better job and higher incomes  Sixty percent of Canadians with just high school level earn less than $20,000 and 60% with university degrees earn more than $80,000  In 2007, a bachelors degree were earning $45,00, masters $60,000, and doctorate $65,000, college $35,000  For some products, marketers can combine education level with other data such as occupation and income to obtain pretty accurate predictions of purchase behaviour Gender  Male/female roles have been blurred, this shift in attitude and behaviour affects the way many firms design and promote their products and services  More firms are careful about gender neutrality, attempt to transcend gender boundaries whenever they can  Women make the majority of purchasing decisions and then influence most of the remainder  Women now head more than 20% of Canadian households  To reflect changing family roles, commercials for most children’s gear now include dad interacting with the kids and being involved in purchase decisions  In 2008, women earned an avg of 71.3% of what a man makes Ethnicity  Stats Canada shows that the ethnic composition of Canada has changed over the last two decades and will continue to change in the next decade  1 out of every 5 Canadians was not born here, accounting for nearly 70% of Canada’s population growth  Canada’s growth will be attributed almost exclusively to immigration by 2030, the two fastest growing groups are the Chinese and south Asians  Estimated that ethnic groups or visible minorities will make up about 8.5 billion or 23% of Canada’s population by 2017  Many immigrants choose to settle in Montreal, Toronto, or Vancouver, typically young and wealthy  Currently more than ¼ of all visible minorities are under 14 years old; thus they have considerable influence over the economy in the future, south Asians are the largest group in Ontario  They represent both a challenge and a marketing opportunity to marketers  The challenge is for marketers to understand the culture, value, and spending patterns of the various groups and figure out the best way to communicate and serve them  The marketing opportunity it is estimated that ethnic groups spend more than $42 billion on retail goods and services and the avg Chinese household spends $63,500 per year, compared with the Canadian average of $58,500  In general, ethnic Canadians spend more than their white counter parts on big ticket times, many also have an affinity for brand names products because they equate them with quality Social Trends  Social trends shape consumer values in Canada, the US and around the world, they tend to change over time in their popularity and importance, and savvy marketers work hard to identify emerging trends to understand whether they present an opportunity or pose a threat to their business Green consumers  Involves strategic effort by firms to supply customers with environmentally friendly merchandise  More than 90% of Canadian feel that individuals can take action to reduce air pollution  A growing number of cities across Canada are introducing the green bin program  For companies selling environmentally friendly products, this trend represents a great opportunity  The demand for green-oriented products has been a boon to their firms the supply them  Health-conscious consumers continue to fuel the market for organic foods, natural cleaning and personal care products, air and water filtration devices, bottled water and organic fertilizers Marketing to children  In the past 20 years, child obesity has doubled in
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