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Midterm

ADMS 2200 Study Guide - Midterm Guide: Marketing Myopia, Relationship Marketing, Swot Analysis


Department
Administrative Studies
Course Code
ADMS 2200
Professor
Alexander Rusetski
Study Guide
Midterm

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Chapter 1 Marketing: The Art and Science of Satisfying Customers
Utility is the want-satisfying power of a good or service. There are four types of utility.
Form utility (conversion of raw materials and components into finished products)
Time utility
Place utility (availability of goods and services at convenient locations)
Ownership utility (ability to transfer title to goods and services from marketer to buyer)
The three steps are: identify needs in the marketplace, find out which need(s) the organization
can profitably serve, and develop a product or service to convert potential buyers into customers.
Marketing also involves analyzing customer needs, securing information needed to design and
produce products that match buyer expectations, efficiently distributing products, satisfying
customer preferences, and creating and maintaining relationships with customers and suppliers.
The four eras are the production era (quality products will sell themselves), the sales era (creative
selling and advertising will overcome consumer resistance and convince them to buy), the
marketing era (the consumer rulesfind a need and fill it), and the relationship era (build and
maintain cost-effective long-term relationships with customers, employees, suppliers, and other
parties for mutual benefit).
During the sales era, companies assumed customers would resist purchasing products not
deemed essential, and that the task of personal selling and advertising was to convince them to
buy. During the marketing era, there was a shift in the focus of companies away from products
and sales to satisfying customer needs.
Relationship marketing is the development and maintenance of long-term, cost-effective
relationships with individual customers, suppliers, employees, and other parties for mutual
benefit. Strategic alliances and partnerships among manufacturers, retailers, and suppliers often
benefit everyone. Walmart, for instance, works closely with its suppliers to ensure products are
available when and where consumers want them. These relationships reduce costs, which leads
to higher profits for the firms involved and lower prices for consumers. The premise underlying
this philosophy is that, although it is important to seek new customers, it is still cheaper to
maintain existing relationships than to continually build new ones.
Marketing myopia is defined as management’s failure to recognize the scope of its business.
Firms can avoid marketing myopia through a broader focus on the benefits of their products
rather than the products themselves. A trucking company defining itself as a transportation
company, or a telephone company defining itself as a communications company, are examples of
how to avoid marketing myopia. Nokia defining itself as a cell phone manufacturer would be a
myopic view. However, Nokia seeing its mission as connecting people shows that the creative
focus of the company is on better ways to bring people together using telecommunications.
Not-for-profit organizations are less concerned with the bottom line: the overall financial
performance and profitability of the organization. This doesn’t mean, however, that not-for-
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profits can totally ignore financial issues. They still need to find cost-effective means of
marketing their goods and services.
10. Explain the potential challenges created by a major contributor to a not-for-profit
organization.
ANS:
A major resource contributorwhether a cash donor, volunteer, or someone who provides other
resourcesmay try to interfere with the marketing program in order to promote a message the
contributor believes is relevant. Major contributors might even restrict a contribution to achieve
their objectives.
11. List and describe the five types of nontraditional marketing. Give an example of each.
ANS:
Cause marketing is the identification and promotion of a social issue, cause, or idea to selected
target markets (Breast Cancer Research, Save the Rainforest). Person marketing is designed to
cultivate the attention and preference of a target market toward a person (a political candidate).
Place marketing is designed to attract visitors to, improve the image of, or entice business
opportunity to utilize a particular city, province, nation, or geographic area. (A city vying for the
rights to host an Olympic event will place market to the Olympic committee.) Event marketing
is the promotion of specific recreational, sporting, cultural, or charitable activities to a specific
target market (concert promotion, the Grey Cup). Organizational marketing is the effort to
influence others to recognize the goals, accept the goods and services, or contribute in some way
to the organization (Salvation Army Christmas campaign, Mothers against Drunk Driving,
Canadian Armed Forces recruiting).
Interactive marketing refers to buyer-seller communications in which the customer controls the
amount of information received from the marketer. The buyer has immediate access to key
product information when he or she needs it.
Examples:
The Internet is an all-purpose global network through which a personal computer can send and
receive images and data. Virtual reality kiosks are another example.
An advocate is a customer who not only buys a firm’s products but also recommends them to
others. The process begins when a new customer is acquired. The new customer is then turned
into a regular purchaser and then into a loyal supporter. Only then can the customer be turned
into an advocate.
14. Differentiate between transaction-based marketing and relationship marketing.
ANS:
Historically, marketing was viewed as a simple exchange process, that is, a process that moved
from transaction to transaction without any significant carry-forward of effects. In other words,
closing deals was more important than making friends. More recently, a new concept explicitly
realizes that relationships are important and maintaining a long-term relationship between
marketing firm and customer is not only satisfying, but also cost effective. If a one-time
customer can be converted to a loyal customer, more sales will be generated over the long run. In
short, it’s cheaper to keep a customer than to constantly find new ones. The lifetime value of a
customer is critical in relationship marketing.
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15. Organizations occasionally form strategic alliances with one another for mutual benefit. How
would a for-profit and not-for-profit company benefit from such an alliance?
ANS:
Marketing alliances between for-profit and not-for-profit organizations can benefit both parties
by helping each other achieve their objectives. The not-for-profit benefits from the advertising
potential of the profit organization, giving it more exposure. The for-profit organization benefits
from the goodwill it generates with customers and employees alike. Additionally, given a choice
between two products of similar quality and price, the customer will select the product aligned
with a cause.
16. List the four facilitating functions and provide examples.
ANS:
Standardization and grading can be found in the construction industry (sizing of doors, gauge
of wiring, dimensions of cut lumber, and height of cabinetry). The financing function allows
wholesalers and retailers to purchase goods and services on credit, allowing time to resell the
products before the payment is due (allowing wholesalers to pay invoices in full in 90 days).
Securing market information is collecting data on the potential customer; identifying their
needs, wants and buying habits, and competitive products in the market; and collecting feedback
after the sale (marketing research surveys at the malls and on the Internet). Risk taking is the
analysis of the cost and benefit of producing and marketing goods and services. It measures the
uncertainty of future sales.
17. Define ethics and social responsibility. Why are these two concepts important for marketers?
ANS:
Ethics consists of moral standards of behaviour expected by a society. Social responsibility
involves marketing philosophies, policies, procedures, and actions whose primary objective is
the enhancement of society. Following ethical standards and exhibiting social responsibility
often improves customer relationships, employee loyalty, marketplace success, and financial
performance.
Chapter 2 Strategic Planning in Contemporary Marketing
Porter’s Five Forces are: threat of substitute products, potential new entrants, the bargaining
power of buyers, the bargaining power of suppliers, and rivalry among competitors. The first
four forces influence the fifth force.
Strategic vs. Tactical planning. Strategic is long term vision vs tacticial planning is
implementing the strategy in shorter term use. High top management uses strategic, mid-
level uses tactical and supervisors do day to day supervision.
Organizations missions vs objectives. Their visions vs how they will improve their long
term plans for the year such as receiving a certain profit.
SWOT = Strengths, Weaknesses, Opportunities, Threats. Looks at internal and external
environment. Recognizing internal weaknesses that might prevent capitalizing on opportunities,
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