First Exam Notes

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Western University
Management and Organizational Studies
Management and Organizational Studies 2276A/B
Phillip King

Chapter 1 – Integrated Marketing Communications: An Overview - There has been a movement toward targeted media and away from mass media - The overall goal of communications now is to deliver the same message through a variety of media in order to have a synergistic impact on the target The Integrated Marketing Communications Mix - Integrated Marketing Communications: the coordination of all marketing communications in a unified program that maximizes the impact on the intended target audience - It embraces many unique yet complementary forms of communication: Media advertising (a focus on message strategies and media strategies in a traditional media environment) Direct response communications (communications that encourage immediate action) Digital communications that include online, mobile (cell phone) and CD-DVD communications Sales promotion (both consumer and trade promotions) Public relations Experiential marketing Personal selling - Figure 1.1 on page 4 - Any customer touch-point is part of integrated marketing communications - Rarely does an organization employ all the various components of the mix at one time, but rather selects and uses those components that are deemed appropriate for the situation at hand - Integration of message strategy, regardless of the medium, is crucial to generating maximum impact on the target audience - Clients look for a “total solutions” communications approach to resolve their business problems Not always feasible Advertising - Advertising: the placement of persuasive messages in time or space purchases in any of the mass media by organizations that seek to inform and persuade members of a target market about their products, services, organization or ideas - Good advertising (advertising that has an impact on the audience) will influence the behaviour of that audience – that is its primary function - Advertising can be either product oriented or promotion oriented Product advertising provides information and helps build an image for the product, whether it’s a brand or a company; in doing so, the features, attributes and benefits of the product are presented in a persuasive manner (e.g. Kellogg’s stresses that it has essential nutrients, SpongeTowels stresses that it truly soaks up big spills) PromotionalAdvertising: advertising that communications a specific offer to encourage an immediate response from the target audience (e.g. coupon) Coupon provides the incentive to buy, whereas the ad presents the features and primary benefits of the product to help build the image Direct Response Communications - Direct Response Communications: The delivery of a message to a target audience of one; the message can be distributed by direct mail, direct response television or telemarketing - “Direct” means direct from the marketing company to a specific user or a prospective user of the company’s product - This segment is growing at a much faster pace than traditional forms of advertising - Time-pressed consumers find the convenience of direct response appealing - E.g. Tylenol 8 hour tablets direct mail package that included product information, sample tablets and a $2.00 coupon on the first purchase of the product Digital (Interactive) Communications - Digital (Interactive) Communications: the placement of an advertising message on a website, or an ad delivered by email or through mobile communication devices (cell phone, etc.) - There is little doubt that communications by way of electronic devices will be the future of marketing communications - Many consumers see online or cell phone advertising as intrusive - Customer Relationship Management (CRM): a process that enables an organization to develop an ongoing relationship with valued customers; the organization captures and uses information about its customers to its advantage in developing the relationship - The new emphasis that businesses place on CRM, combined with their ability to manage internal databases, is forcing them to move toward direct-response and interactive communications Sales Promotion - Sales Promotion: involves special incentives to stimulate an immediate reaction from consumers and distributors - An organization’s promotion expenditures tend to be divided between consumers and distributors Strategies that include coupons, free samples, contests and cash refunds are classified as consumer promotions Offering price discounts to distributors for purchasing goods in large quantities or for performing some kind of marketing or merchandising task on behalf of a marketing organization is classified as a trade promotion - It is imperative that consumer promotion strategies be aligned effectively with consumer advertising programs and that trade promotions be aligned effectively with personal selling programs Public Relations - Public Relations: messages that influence the attitudes and opinions of interest groups to an organization to gain public understanding and acceptance - PR generates “free” exposure through press releases and offers a legitimacy that advertising does not have - PR can also help in time of crisis (e.g. Maple Leaf recalls in 2008 for bad meat) - Online tools are now a part of good PR strategy as traditional PR strategies are changing rapidly Experiential Marketing - Experiential Marketing: a form of marketing that creates an emotional connection with the consumer in personally relevant and memorable ways - The core of experiential marketing is event marketing where consumers are immersed in a branded experience The experience could be anything from attending an event where a sponsor’s product is freely distributed to devising a specific branded event that becomes the focal point of an entire IMC campaign (e.g. Budweiser’s Bud Camp contest) - Event Marketing: involves planning, organizing, and marketing an event, whether it is an event for a company or a brand of a company, that integrates a variety of communications elements - Sponsorship: the act of financially supporting an event in return for certain advertising rights and privileges (e.g. Rogers with the Rogers Cup) Companies have advertising and on-site signage privileges at the event and can use the event logo to help market their product to the public Personal Selling - Personal Selling: face-to-face communication involving the presentation of features and benefits of a product or service to a buyer; the objective is to make a sale - Advertising money can be lost if a sales rep is not prepared to fully sell the product - Integration of marketing communications fosters a cooperative approach to communications planning, presents a unified message, and creates a higher level of impact on the target audience Factors Encouraging Integrated Marketing Communications - Selecting the right combination of marketing communications alternatives to solve unique business problems is the key to success today; this is a difficult challenge - Contemporary thinking suggests an approach in which each communications alternative is an equal partner, where there is media neutrality and in which creative solutions are recommended to solve business problems - Several key issues and trends continue to affect marketing and marketing communications practice: Consumers’media habits are changing in a manner that makes them more difficult to reach The strategic focus on relationship marketing, commonly referred to as CRM The expanding role of database marketing The dramatic impact of the internet and other communications technologies The greater demand for efficiency and accountability in organizations Media Consumption Trends - Consumers are spending more time with the internet and less with TV/radio - Consumers tend to multi-task with the media (surf web while watching TV, etc.) Database Management Techniques and Customer Relationship Marketing - Database Management Systems: a system that collects information about customers for analysis by managers to facilitate sound business decisions - Companies that embrace database management can predict how likely the customer is to buy, and then develop a message precisely designed to meet that customer’s unique needs - Technological advances allow a company to zero in on extremely small segments of the population, often referred to as niches - The ultimate goal is to aim directly at the smallest segment – the individual - Equal consideration must be given to attracting new customers and to retaining existing customers - Usually traditional means of communication are used to pursue new customers and non- traditional is used to retain customers Digital Communications Technologies - Strategically thinking managers now realize that online and other forms of interactive communications are complementary to traditional media and, when used together, improve awareness levels and stimulate more action The Demand for Efficiency and Accountability - Communications strategies that are efficient are popular, as are strategies that can be measured easily in terms of return on investment - Electronic communications are preferred because the results can be tracked and are tangible Input for Marketing Communications Planning: Consumer Behaviour Essentials - Consumer Behaviour: the study of how people buy, what they buy, and why they buy - Essentially, consumer behaviour is the psychology behind marketing and the behaviour of consumers in the marketing environment Needs and Motives - Need: the perception of the absence of something useful - Motive: a condition that prompts an individual to take action to satisfy a need - An appealing presentation of a product’s features and benefits as they relate to a target’s needs is often good enough to stimulate action – a purchase decision (e.g. want a fresh sandwich, go to Subway) - Maslow Hierarchy of Needs and Theory of Motivation Behaviour is influenced by needs yet to be satisfied Figure 1.6 on page 16 Personality and Self-Concept - Personality: a person’s distinguishing psychological characteristics that lead to relatively consistent and enduring responses to the environment in which that person lives - Personality is influenced by self-perceptions, which in turn are influenced by family, reference groups and culture - Self-Concept Theory 1. Real Self: an objective evaluation of one’s self. How are you really are. 2. Self-Image: how you see yourself. It may not be your real self, but a role you play with yourself. 3. Looking-Glass Self: How you think others see you. This can be quite different from how they actually see you. 4. Ideal Self: How you would like to be. It is what you aspire to. - Many communications campaigns revolve around the looking-glass self and the ideal self - Marketing communicators know that consumer buy on emotion, so they present messages for goods and services that make consumers feel and look better, for they know the next level of fulfillment is attractive Attitudes and Perceptions - Attitudes: an individual’s feelings, favourable or unfavourable, toward an idea or object - Organizations present their product in accordance to attitudes held strongly by their target audience (e.g.Apple being daring to attract a youthful crowd) - Perception: the manner in which individuals receive and interpret messages - Consumers accept messages that are in line with their needs, personality, self-concept, and attitudes, and ignore or reject messages that are not - Three levels of selectivity: 1. Selective Exposure: our eyes and minds notice only information that interests us 2. Selective Perception: we screen out messages that conflict with our attitudes 3. Selective Retention: we remember only what we want to remember Reference Groups - Reference Group (Peer Group): a group of people who share common interests that influence the attitudes and behaviour of its members - It is common for brands to associate with a particular situation or lifestyle the target consumer could become interested in (e.g. Lululemon and yoga) - Reaching youth only works if the message is authentic; therefore, if a brand “goes underground” or uses some kind of viral marketing technique (such as a video on YouTube) it has a better chance of connecting with the target Family Influences - The biggest influence on behaviour within families today relates to the “changing roles and responsibilities” of family members - Double-Targeting: marketing strategies that reach both genders effectively - Today’s children have considerable influence on family buying decisions Inputs for Marketing Communications Planning: Business and Organizational Buyer Behaviour - Organizations exhibit more rational buying behaviour than consumers – consumers do a lot of buying based on emotion - Business-to-Business (B2B): a market of goods and services needed to produce a product or service, promote an idea, or operate a business; this market includes business and industry, governments, institutions, wholesalers and retailers, and professionals - Business markets have fewer buyers, and those buyers tend to be concentrated in industrial areas in and near large cities - Business buyers make decisions based on the best buy according to predetermined requirements and there is usually a formal buying process for evaluating product and service alternatives - In most situations, buying requirements are established by the business in advance and companies can compete with each other by submitting bids; the buyer customarily chooses the bid with the lowest price, assuming the criteria has been met - Requirements: Quality: buyers want consistent quality on every order. What they buy could have a direct impact on the quality of goods they in turn product and market. Service: buyers want reputable suppliers who provide prompt service and believe that the initial order is simply the start of a business relationship. Continuity of Supply: buyers want suppliers that can provide goods over the long term.A steady source of supply ensures consistent production scheduling. Price: buyers evaluate price in conjunction with the other criteria. The lowest price is not always accepted. Potential long-term savings could outweigh an initial low price. - Buying Committee: a formal buying structure in an organization that brings together expertise from the various functional areas to share in the buying decision process - Buying Centre: an informal purchasing process in which individuals in an organization perform particular roles but may not have direct responsibility for the actual decision - Figure 1.10 on page 22 - The seller must know who on the committee or within the buying centre has the most influence - Personal selling and direct forms of communication are vital components when trying to influence the decisions of business buyers Integration and Partnering Influences B2B Communications Strategies - CRM promotes the seamless transfer of information throughout the channels to ensure the efficient and continuous flow of goods - e-procurement: an online, B2B marketplace through which participants can purchase goods and services from one another - The combining of CRM practices with e-procurement systems fosters long-term relationships between buyers and sellers and presents a situation where participants are directly influenced by the decisions of other participants - Creating awareness is always the first step, so traditional communications will continue (e.g. print ads and sales reps) - Products must live up to the promise made by any form of marketing communications Ethical Issues in Marketing Communications Practice - Issues: Sex in advertising Extreme advertising (dangerous or disturbing situations) Misleading advertising Exaggerated green claims Targeting children Cultural diversity Chapter 12: Evaluating Marketing Communications Programs The Role and Scope of Marketing Research - Marketing research helps to ensure that the action a company might take is the right action - Marketing Research: a marketing function that links the consumer/customer/public to the marketer through information; the information is used to define marketing opportunities and problems, generate marketing strategies, evaluate marketing actions, and monitor performance - Marketing managers also rely on their own experience and intuitiveness when making decisions - Reliability (Of Data): degree of similarity of results achieved if another research study were undertaken under similar circumstances - Validity (Of Data): a research procedure’s ability to measure what it is intended to measure Research Techniques for Marketing Communications Primary Research - Primary Research: the collection and recording of primary data - Primary Data: data collected to resolve a problem and recorded for the first time - Figure 12. 1 on page 345 - Research Objectives: a statement that outlines what the marketing research is to accomplish - Hypothesis: a statement of outcomes predicted in a marketing research investigation Sample Design - Sample: a representative portion of an entire population that is used to obtain information about that population - Basic steps to develop a representative sample: 1) Define the Population (Universe): in marketing research, a group of people with certain age, gender, or other demographic characteristics 2) Identify the Sampling Frame: a list used to access a representative sample of a population; it is a means of accessing people for a research study (e.g. the telephone directory) 3) Determine the type of sample Chapter 12: Evaluating Marketing Communications Programs Probability Sample: a sample of respondents who are known to have an equal chance of selection and are randomly selected from the sampling frame Non-Probability Sample: a sample of respondents who have an unknown chance of selection and are chosen because of factors such as convenience or the judgment of the researcher 4) Determine the sample size Generally, the larger the sample, the greater the accuracy of the data collected and the higher the cost Data Collection Methods - Three primary methods of data collection: surveys, observation and experiment - Survey Research: the systematic collection of data by communicating with a representative sample by means of a questionnaire - Fixed-Response (Closed-Ended) Questioning: questions that are predetermined with set answers for the respondents to choose from - Open-Response (Open-Ended) Questioning: a situation where space is available at the end of a question where the respondents can add their comments - Survey research can be conducted by personal interview, telephone, mail, or online - Questionnaires follow a planned format: screening questions at the beginning, central issue questions (dealing with the nature of the research) in the middle, and classification (demographic) questions at the end - Observation Research: a form of research in which the behaviour of the respondent is observed and recorded; may be by personal or electronic means - Experimental Research: research in which one or more factors are manipulated under controlled conditions while other elements remain constant so that the respondent’s actions can be evaluated - Test Marketing: placing a commercial, set of commercials or print ad campaign in one or more limited markets that are representative of the whole to observe the impact of the ads on consumers; a form of experimental marketing Qualitative Data Versus Quantitative Data - Qualitative Data: data collected from small samples in a controlled environment; they describe feelings and opinions on issues; typically collected in focus group interviews - Focus Group: a small group of people with common characteristics brought together to discuss issues related to the marketing of a product or service Chapter 12: Evaluating Marketing Communications Programs - Focus groups are helpful because consumers’reactions to the message, the characters that present the message, the campaign theme and slogan, and their general likes and dislikes of the ad can be discussed at length - Focus groups are unreliable however, because the sample size is too small - Attitudes that are revealed in a focus group can be used as a foundation for forming questions and questionnaires if and when quantitative research is required - Quantitative Data: measurable data collected from large samples using a structured research procedure; attempts to put feelings, attitudes and opinions into numbers Survey Methodology - Four primary means of contacting consumers when conducting surveys to collect quantitative data: telephone, personal interview, mail, and the internet - Personal Interviews: the collection of information in a face-to-face interview; usually done through quantitative questionnaires - Telephone Interviews: involve communication with individuals over the phone; high refusal rate - Mail Interviews: the collection of information from a respondent by mail; cost-efficient, but there is a lack of control and it’s time consuming - Online Surveys: using an online questionnaire to collect data from people; questionable validity - Figure 12.5 on page 352 Data Transfer and Processing - Editing Stage: the review of questionnaires from consistency and completeness - Data Transfer: the transfer of answers from the questionnaire to the computer - Tabulation: the process of counting various responses for each question in a survey - Frequency Distribution: the number of times each answer in a survey was chosen for a question - Cross-Tabulation: the comparison of answers to questions by various subgroups with the total number of responses (e.g. a question dealing with brand awareness could be analyzed by the age, gender, or income of respondents) Data Analysis and Interpretation - DataAnalysis: the evaluation of responses question by question; gives meaning to the data Chapter 12: Evaluating Marketing Communications Programs - Data Interpretation: the relating of accumulated data to the problem under review and to the objectives and hypotheses of the research study; the researcher draws conclusions that state the implications of the data for managers Recommendations and Implementation - The recommendations outline suggests courses of action that the sponsoring organization should take in view of the data collected Measuring and EvaluatingAdvertising Messages Client Evaluation - ManagerialApproach 1) In terms of content, does the advertisement communicate the creative objectives and reflect the positioning strategy of the brand (company)? 2) In terms of how the ad is presented (strategy and execution), does it mislead or misrepresent the intent of the message? Is it presented in good taste? 3) Is the ad memorable? 4) Is the brand recognition effective? 5) Should the advertisement be researched? External Research Techniques and Procedures - The objective of most creative research is to measure the impact of a message on a target audience - Pre-Testing: the evaluation of commercial messages prior to final production to determine the strengths and weaknesses of the communications - Post-Testing: the evaluation and measurement of a message’s effectiveness during or after the message has run - Common techniques used to measure the effectiveness of creative are “recognition” and “recall testing”, “opinion-measure testing”, and “physiological-response testing” Recognition and Recall Testing - Recognition Tests: a test that measures a target audience’s awareness of a brand, copy, or of the advertisement itself after the audience has been exposed to the message Chapter 12: Evaluating Marketing Communications Programs - Recall Tests: a test that measure’s an ad’s impact by asking respondents to recall specific elements (e.g. the selling message) of the advertisement; can be aided (some information provided) or unaided - Effective advertising plays a role in building sales and market share - Two of the most common methods for collecting recognition and recall information are Starch readership tests and day-after recall tests - Starch Readership Test: a post-test recognition procedure that measures readers’recall of an advertisement (noted), their ability to identify the sponsor (associated), and whether they read more than half of the written material (read most); the client can measure the extent to which an ad is seen and read, the extent of clutter breakthrough can be determined, and various layouts and design options can be evaluated for effectiveness - Day-After Recall (DAR) Test: research conducted the day following the respondent’s exposure to a message to determine the degree of recognition and recall of the advertisement, the brand, and the selling message - The actual quantified measures obtained in a DAR test are described as related recall levels - Related recall measures two dimensions of the test commercial: intrusive and impact - Related Recall: the percentage of a test-commercial audience who claim to remember the rest commercial and can provide as verification some description of the commercial Opinion-Measure Testing - Opinion-Measure Testing: a form of research yielding information about the effect of a commercial message on respondents’brand name recall, interest in the brand, and purchase intentions; often called a “forced exposure test” - The test measures three key attributes: the audience’s awareness of the commercial based on the effect the commercial could have on purchase motivation Physiological-Response Testing - Eye Movement-Camera Test: a test that uses a hidden camera to track eye movement to gauge the point of immediate contact in an advertisement, how the reader scans the ad and the amount of time spent reading - Pupilometer Test: a device that measures pupil dilation (enlargement) of a person’s eye when reading: it measures emotional responses to an advertisement - Voice-Pitch Analysis Test: a test that uses a recording of a person’s voice response to measure change in voice pitch caused by emotional responses to the communications - These tests are good because they trigger physiological responses that reveal true feelings towards an ad Chapter 12: Evaluating Marketing Communications Programs Measuring and Evaluating Sales Promotions - The overall goal of sales promotions is to produce an increase in sales in the short term and to build brand loyalty in the long term - Promotions can be consumer or trade promotions Consumer promotions embrace activities such as coupons, contests, free samples, cash rebates, premium offers, and loyalty card programs These activities are designed to encourage trial purchase by new customers, repeat purchases by existing customers, and brand loyalty Trade promotions include activities such as trade allowances, performance allowances, cooperative advertising allowances, dealer premiums, and dealer display materials These activities are designed to secure listings of new products with distributors, build sales volume in the promotion period, and secure merchandising support from distributors - Redemption Rate: the number of coupons returned expressed as a percentage of the number of coupons that were distributed; the higher the redemption rate, the more successful the coupon promotion - Smart marketers seek additional information about consumers on the contest or rebate entry form such as demographic and psychographic information that ca be used to plan direct response communications programs Measuring and Evaluating Direct Response and Internet Communications - Knowing who is responding to each offer helps a firm better understand its customers and provides insight into how to develop better marketing communications strategies to reach particular targets - Response Cards: a card filled in, usually at the time of purchase, that collects information about customers that can be added to the organization’s database - Cookie: an electronic identification tag sent from a web server to a user’s browser to track the user’s browsing patterns - Online observation is a common form of recording and analyzing usage patterns - Ad Clicks (Clickthroughs): the number of times users click on a banner (clicking transfers the user to another website) - Ad Views: an ad request that was successfully sent to a visitor. This is the standard way of determining exposure for an ad on the web - Hits: each time a server sends a file to a browser - Ahigh number of hits can be attributed to the effectiveness of the message Chapter 12: Evaluating Marketing Communications Programs - The number of visitors to a website and the number of visits that each visitor makes over a period of time are factors that measure a website’s ability to communicate - Visitor: a unique user of a website - Visit: a sequence of page requests made by a visitor to a website; also called a session or a browsing period - Stickiness: a website’s ability to keep people at the site for an extended period or to have them return to the site frequently Measuring and Evaluating Public Relations Communications - Several ways to evaluate public relations communications: counting clippings, calculating the number of impressions based on the numbers of clippings, and employing a mathematical model that equates the public relations to an advertising value The latter is called a “advertising equivalency” - Clipping Service: an organization that scans the print and broadcast media in search of a company’s or brand’s name - The number of “impressions” generated is based on the circulation of the medium in which the organization’s name is mentioned - Advertising Equivalency: a mathematical model that equates public relations to an advertising value by evaluating the space occupied by a public relations message in relation to advertising space Measuring Experiential Marketing, Events, and Sponsorships - The most common measures of an event’s success are how well the event reaches the target audience and how well the brand or company is associated with event - Certain indicators are commonly used to measure the benefits of sponsorships; an organization might look at awareness and association measure as well as changes in image perceptions among its customers; another common measure is the impact on brand sales Measuring the Integrated Marketing Communications Effort - An increase in market share would indicate greater acceptance by more customers, a higher degree of brand loyalty among current customers, and a strong competitive position - Market Share: the sales volume of one product or company expressed as a percentage of total sales volume in the market the company or brand is competing in - Sales must generate an adequate level of profit for the company to thrive and survive in the long term - Every employee of an organization plays a role in providing customer satisfaction Chapter 12: Evaluating Marketing Communications Programs - With regard to social responsibility objectives, planned public relations programs play a key role - Brand equity and company image are directly influenced by the quality of social programs and ethical behaviour that a company and its employees demonstrate to the public Chapter 2: Strategic Planning Principles - All business planning is an integrated process that involves planning at three levels of an organization: corporate planning (planning conducted by senior executives), marketing planning (planning conducted by brand and marketing managers), and marketing communications planning (plans designed by communications specialists based on guidelines provided by brand and marketing managers) Factors Influencing Strategic Planning - Strategic Planning (Corporate Strategy): the process of determining objectives (setting goals) and identifying strategies (ways to achieve the goals) and tactics (specific action plan) to help achieve objectives - 3 common variables: Objectives: statements of what is to be accomplished in terms of sales, profit, market share or other measures Strategies: statements that outline how the objectives will be achieved, such as the direction to be taken and the allocation of resources needed to proceed Tactics: action-oriented details, including precise details about the cost and timing of specific activities Economic Influences - The general state of the economy has a direct impact on how aggressive or conservative a company is with its business plans - Based on all kinds of factors, a country’s economy goes through cycles: recession, depression, recovery and prosperity Competitor Influences - Oligopoly: a market situation in which only a few brands control the market - Monopolistic Competition: a market in which there are many competitors, each offering a unique marketing mix; consumers can assess these choices prior to making a buying decision - Competition comes in two forms: direct and indirect competition - Direct Competition: competition from alternative products and services that satisfy the needs of a target market - Indirect Competition: competition from substitute products that offer the same benefit as another type of product Demographic Influences Chapter 2: Strategic Planning Principles - An organization must stay abreast of demographic and lifestyle trends occurring in Canada to create a target market profile The Population is Aging - Generation Y is a primary target for marketers now and in the future - By 2021 it is estimated that baby boomers will comprise 40% of the population, so they are also a primary target Urban Population - 80% of the population lives in urban areas - Companies now devise plans that are regional in nature or dwell specifically on key urban areas Changing Household Formations - Trends such as the postponement of marriage, the pursuit of careers by women, increases in divorce rates, and same-sex partnerships are producing new households in Canada - Canadian households are shrinking in size Ethnic Diversity - Subcultures: subgroups within the larger cultural context that have distinctive lifestyles based on religious, racial and geographical differences - Companies that embrace ethnic marketing will profit the most in the future - The key to an organization’s success is to spend time learning more about the target – their customs, beliefs, morals, and so on – and then formulate appropriate communications strategies Spending Power and Wealth - Given the income trends, it seems wise for organizations targeting lower- and middle- income groups to stress value in their marketing communications strategies Chapter 2: Strategic Planning Principles Social Influences - Canadians are very concerned about the natural environment and what companies are doing to preserve and protect it Lifestyles - Two key issues prevail in terms of lifestyle: Canadians are living a very hectic lifestyle and they are trying to live a healthier lifestyle Natural Environment - Today’s consumers tend to favour companies that have a strong reputation for protecting our natural resources and for contributing to worthy causes Technology Influence - New products, new packaging, and new forms of communications are the direct result of technological advancement - How people communicate and conduct buying transactions is also affected by technology - The digital media now plays a more prominent role in the marketing mix - Consumers are spending less time with the traditional media (TV, radio and print) as they increase their consumption of digital media - Media planners are moving away from mass reach and frequency campaigns towards strategies that stress selective reach and engagement with the target audience Legal and Regulatory Influence - “Competition Act”  three purposes: To maintain and encourage competition To ensure small businesses to have equal opportunity to participate in trade Chapter 2: Strategic Planning Principles To provide consumers with product choice and competitive prices - Advertisers should follow the “Canadian Code ofAdvertising Standards”, which contains regulations about gender portrayal, product claims, price claims, advertising involving product comparisons, and advertising to children Strategic Planning Process - Acommon approach to developing strategic plans is to start at senior executives and work downward to middle managers - Corporate Plan: a strategic plan formulated at the executive level of an organization to guide the development of functional plans in the organization - Marketing Plan: a short-term, specific plan of action that combines strategy and tactics; determines how the various elements of the marketing mix will be employed so that they have the desired impact on the target market - Once the role of marketing communications has been determined, specific plans are then developed for the various components of the marketing communications mix - The corporate plan provides guidance for the marketing plan and the marketing plan provides guidance for the marketing communications plan - Corporate plans are strategic in nature - Marketing plans and marketing communications plans are both strategic and tactical in nature The Corporate Plan - Mission Statement: a statement of an organization’s purpose and operating philosophy; provides guidance and direction for the operations of the company - Agood mission statement is customer and marketing oriented, considers the competition, and looks to the long term - Corporate Objective: a statement of a company’s overall goal; used to evaluate the effectiveness or ineffectiveness of a company’s strategic plan; usually financial in nature (e.g. increase company sales revenue from $50,000,000 to $60,000,000 in 20XX, be more socially responsible by investing in environmentally-friendly equipment) - In such cases where the company decides to get smaller, they may decide on a divestment strategy and sell off various divisions or products - Penetration Strategy: a plan of action for aggressive marketing of a company’s existing products; the goal is to build the business by taking customers from the competition or by expanding the entire market Chapter 2: Strategic Planning Principles - New Product Development Strategy: a marketing strategy that calls for significant investment in research and development to develop innovative products - Acquisition Strategy: a plan of action for acquiring companies that represent attractive financial opportunities - Strategic alliances, when separate companies with complementary strengths join resources to satisfy their shared customers, are now very popular among companies searching for ways to reduce costs or improve operating efficiency (e.g. Nissan and Chrysler) Chapter 2: Strategic Planning Principles Marketing Planning - Marketing Planning: the analysis, planning, implementing, and controlling of marketing initiatives to satisfy target market needs and achieve organizational objectives - Marketing plans are short term in nature (one year), specific in scope (they involve precise actions for one product), and combine both strategy and tactics (they are action oriented) - The marketing plan should also include a contingency plan - Contingency Plan: the identification of alternative courses of action that can be used to modify an original plan if and when new circumstances arise - An essential ingredient in the development of a marketing plan is a precise description of the target market - Target Market: the group of persons for whom a firm creates and markets a product Demographic Characteristics - Demographics describe a customer group in terms of age, gender, income, occupation, education, marital status. household formation, and ethnic background Psychographic - Characteristics Psychographics describe a customer group in terms of attitudes, interests, opinions, and activities - The focus is on the “lifestyle” of the members in the group Geographic Characteristics - Marketers have the option of marketing nationally, regionally, or in designated urban areas Behaviour Response - Some members may consume a product more quickly than others – described as “heavy users” Chapter 2: Strategic Planning Principles - Some members may demonstrate more loyalty than others - Amarketing plan is divided into two major sections: 1) Acompilation of background information about the market, target market, competition and product 2) The plan itself; it contains the objectives, strategies, and tactics for the product for the year ahead and provides specific details about how the budget is allocated and the timing of all activities Market Background - SWOTAnalysis: an analysis procedure that involves an assessment of an organization’s strengths, weaknesses, opportunities and threats; strengths and weaknesses are internal variables, whereas opportunities and threats are external variables Strengths and Weaknesses - The internal capabilities and resources are reviewed to determine the relative condition of a brand and determine its capability to pursue new directions - May extend to the areas of manufacturing, finance, human resources, and technology Opportunities and Threats - The manager reviews relevant external data that may impact the direction of the marketing plan; such a review may include economic trends, demographic trends, social trends, legal and regulatory influences, competitive activity, and technology influences External Influences - Economic Trends: the current and predicted states of the economy are considered - Social and Demographic Trends: basic trends in age, income, household formation, immigration, migration and lifestyles are evaluated to identify potential target market - Technology Trends: technological trends that affect buyer behaviour have to be determined; technology quickens the speed with which new products come to market and the way companies deliver messages about products to customers - Regulator Trends: a company should always stay abreast of changes to any laws and regulations affecting the marketing of its products Chapter 2: Strategic Planning Principles Market Analysis - Market Size and Growth: a review of trends over several years is considered for the purpose of making sales projections for the year ahead - Regional Markets: sales trends by region are analyzed to determine what areas need more or less attention in the year ahead - Market SegmentAnalysis: there could be numerous product segments in a market; are all segments growing at the same rate, or are some segments doing better than others? - SeasonalAnalysis: seasonal or cyclical trends over the course of a year are examined Target Market Analysis - Consumer Data: the profile of primary users (and secondary users, if necessary) is reviewed for any changes during the past few years - Consumer Behaviour: the degree of customer loyalty to the market and products within a market is assessed Product (Brand) Analysis - Sales Volume Trends: historical volume trends are plotted to forecast sales for the year ahead - Market Share Trends: market share is a clear indicator of brand performance; market share trends are examined nationally, regionally, and by key markets to determine areas of strengths and weaknesses - Distribution: the availability of the product nationally and regionally is reviewed - Marketing Communications: current activities are assessed to determine if strategies need to be retained or changed; a review of expenditures by medium, sales promotions, and events and sponsorships is necessary to assess the impact of such spending on brand performance - New ProductActivity: sales performance of recently implemented initiatives is evaluated Competitor Analysis - Market Share Trends: it is common to plot and review the market share trends of all brands from year to year; such analysis provides insight into what brands are moving forward and what brands are moving backward - Marketing Strategy Assessment: an attempt is made to link known marketing strategies to competitor brand performance Chapter 2: Strategic Planning Principles Marketing Plan - The marketing plan clarifies the positioning strategy of the company’s brands, establishes objectives for the year, determines how the various elements of the marketing mix will be employed and outlines the investment and timing of all activities that are recommended Positioning Strategy - Positioning: the selling concept that motivates purchase, or the image that marketers desire a brand to have in the minds of consumers - Positioning Strategy Statement: a summary of the character and personality of a brand and the benefits it offers customers Target Market Profile - Demographic Profile: depending on the nature of the product, some demographics are more important than others - Psychographic Profile: the lifestyle profile includes three essential characteristics: the target’s activities, interests and opinions - Geographic Profile: the profile considers the location of the target market in terms of region or key market; typically a key influence on how budget is allocated across the country Marketing Objectives - Marketing Objectives: a statement that identifies what a product will accomplish in a one-year period, usually expressed in terms of sales, market share and profit; tend to focus on financial measures such as sales and profits, etc. but can also be qualitative - Objectives are written so they can be measured to facilitate evaluation at the end of the plan period Marketing Strategies - Marketing Strategy: a plan of action that shows how the various elements of the marketing mix will be used to satisfy a target market’s needs - The goal should be to have the right strategy and then simply to work on better execution as time goes on - In the development of the marketing strategy, the role and contribution of each component of the marketing mix are identified; priority may be given to certain components depending on the nature of the market - The budget allocated to the product will be identified in the strategy section of the plan Chapter 2: Strategic Planning Principles Marketing Execution (Tactics) - The tactics (execution) outlined in the plan are program detail drawn directly from the strategy section of the plan; such details will identify what programs are to be implemented, how much they will cost, what the timing will be, and who will be responsible for implementation - Typically, only the key elements of various marketing communications plans (advertising, sales promotion, Internet communications, public relations, direct response, etc.) are included in the marketing plan Budget and Financial Summary - In order for a marketing plan to be improved, it is crucial to show the financial implications of the activities to be undertaken - Afinancial statement is included that should provide some financial history for the previous year, current year, and a forecast for the plan year - The financial statement will include such measures as sales, market share, cost of goods sold, gross profit, marketing expenses, and net profit before taxes Evaluation and Control - Marketing Control: the process of measuring and evaluating the results of marketing strategies and plans and of taking corrective action to ensure marketing objectives are achieved - The evaluation also provides an opportunity to change marketing strategies if necessary - It is an opportunity to review key financials, such as sales, costs, and profits, and reforecast the figures for the balance of the year Marketing Communications Planning - Since plans have to be struck well in advance of their implementation date, the marketing communications plan is developed simultaneously with the marketing plan so that its k
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