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Midterm

Marketing Midterm Notes.docx

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Department
Marketing
Course
MKTG 2030
Professor
Linda Reeser
Semester
Winter

Description
CHAPTER 1: WHAT IS MARKETING? Marketing as a Business Function and a Business Philosophy o Business function: marketing's goal is to provide the business with a long-term competitive advantage in the marketplace by understanding the needs of/creating value for customers o Marketplace: Any location or medium used to conduct on exchange o Marketing Concept: Focuses on achieving organizational objectives by understanding customer needs, the associated costs of satisfying them, and thinking about ways to satisfy those needs o Marketing: The process of planning and executing the conception, pricing, promotion, ad distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives Marketing Satisfies Needs o Consumer: Ultimate user of a good or service. Can be an individual or an organization o Needs: Recognition/Difference between a consumer's actual state and some ideal or desired state o Want: The desire to satisfy needs in specific ways that are culturally and socially influenced o Benefit: The outcome sought by a customer that motivates buying behaviour o Social Marketing Concept: Emphasizes customer needs must be satisfied in ways that benefit society Marketing Is an Exchange of Value o Exchange: Transfer of value occurs between a buyer and seller (Giving money for food) o Both parties must be satisfied with the exchange - this happens because value is perceived - different people have different ideas o The marketer must create, price, distribute, and communicate an attractive value proposition to the customer o Product: A tangible good, service, or idea, or combination that, through the exchange process, satisfies consumer or business customer needs Marketing's Tools: The Marketing Mix o Customer Value: What the customer gets in the purchase, use, and ownership of a product relative to the costs and sacrifices incurred o Marketing Mix: A combination of the product itself, the price of the product, the place where it is made available, and the activities that introduce it to consumers, which creates a desired response among a set of predefined consumers o Above Value and Mix is created by : Product, Price, Promotion, and Place  Product: Good, service, idea, place, person (What is being offered for exchange)  Price: Seller's assessment of value to a product  Place: Availability of the product at the desired time/location. Channels of distribution  Promotion: The coordination of communication efforts by a marketer to influence consumers or organizations about goods, services, or ideas o Market: All of the (potential) customers who share a common need that can be satisfied by a specific product, who have the resources to exchange for it, who are willing to make the exchange, and who have the authority to make the exchange How are Marketing Decisions Made? o Marketing Planning: Achieve objectives by creating superior customer value, for exchange with customers in one or more target market segments, with a sustainable strategy o Finding and Reaching a Target Market Segment:  Market Segment: A distinct group of customers within a larger market, who are similar to one another in some way and whose needs differ from other customers in the larger market  Target Market: The market segment(s) on which an organization focuses its marketing plan and toward which it directs its marketing efforts  Mass Market: All possible customers in a market, regardless of the differences in their specific needs and wants o Segmenting the market, selecting a target market nationally and globally, developing and positioning the offering  Market Position: The way in which the target market perceives the offering in comparison to competitors' brands. o Marketing as a Process: Final Thoughts  Relationship Marketing: A marketing philosophy that focuses on building long term relationships with customers, suppliers, and distributors, etc to satisfy mutual needs  Stakeholders: Individuals/organizations who affect/are affected by the activities of a firm When did Marketing Begin? The Evolution of a Concept o The Product Orientation: Management philosophy that emphasizes the most efficient ways to produce and distribute products o The Selling Orientation: A managerial view of marketing as a selling function, or a way to move products out of warehouses to reduce inventory o The Costumer Orientation: A management philosophy that focuses on being proactive and responsive in identifying and satisfying consumer needs and wants o The New Era Orientation: Management philosophy in which marketing decision making means a devotion to excellence in designing and producing products that benefit the customer plus the firm's employees, shareholders, and fellow citizens Marketing's Role in Society: Ethical Behaviour o Social and Ethical Criticisms of Marketing:  Marketers create artificial needs  Marketing teaches us to value people for what they own rather than who they are: We learn that to be happy/popular, we need to buy products  Marketers promise miracles: Marketing leads to consumers believing that products have magical properties Careers in Marketing o Marketing Management o Marketing Research o Marketing Consulting o Product and Brand Management o Sales o Advertising CHAPTER TWO: Planning Well: - Business planning occurs on an annual basis at three levels: 1. Strategic Planning:  A managerial decision process that matches an organizations resources and capabilities to its market opportunities for long-term growth and survival  Difference between strategic and marketing planning: 1. Time Horizon 2. Marketing plan contains details regarding the marketing mix elements (product strategy, pricing strategy, channel of distribution strategy, marketing communication strategy), while strategic plan does not contain this detail Four Key Stages in Top Level Strategic Planning: Defining the Organization's Business Mission:  Mission Statement: A formal statement in an organizations strategic plan that describes the overall purpose of the organization and what it intends to achieve in terms of its customers, products, and resources Evaluating the Environment: SWOT Analysis  Strengths and weaknesses in the organization's internal environment, and opportunities and threats from outside the organization  External Opportunities (OT): The uncontrollable elements outside of a organization that may affect its performance either positive or negatively. (e.g.: Demographics)  Internal Opportunities (SW): The controllable elements inside an organization, including its people, facilities, and how it does things that influences the operations of the organization Setting Organizational Objectives Planning for Growth: The Business Portfolio:  Large firms who find risk in relying on one product become Strategic Business Units  Strategic Business Units: Individual units within the firm that operate like separate businesses with each having its own mission statement, business objectives, resources, managers, and competitors  Business Portfolio: The group of different products or brands owned by an organization and characterized by different income-generating and growth capabilities 2. The Marketing Planning Process  A document that describes the marketing environment, outlines the marketing objectives and strategy, and identifies who will be responsible for carrying out each part of the marketing strategy Creating a Competitive Advantage: The ability of a firm to outperform the competition, providing customers with a benefit the competition cannot Marketing Planning to Functional Planning: o Marketing plan sets a common foundation for the development of functional plans such as sales, HR, and production Setting the Budget and Business Objectives: o Top Management sets a yearly budget based on marketing and functional plans and sets objective the business hopes to achieve Strategic Marketing Mix Decisions in International Markets: o Standardization vs. Localization: Focusing on different cultures and how products should adapt to that o Product Decisions: A firm seeking to sell a product in a foreign market has three choices:  Straight Extension Strategy: Retains the same product for domestic/foreign markets  Product Adaption Strategy: Recognizes people in different cultures have strong and different product preferences  Product Invention Strategy: Company develops new product as it expands “foreignly” o Marketing Communications (Promotion) Decision: Deciding whether to change product promotions in a foreign market o Price Decisions: Transportation, tariffs, and differences in currency exchange rates often make the product more expensive for a company to make or sell in foreign markets Grey Market: Unauthorized party imports products and sells them for ¼ price   Dumping: Pricing products lower in a foreign market than in domestic market o Distribution Decisions: Storage goods and distributing can be much more difficult/unreliable Ethical and Socially Responsible Behaviour in the Marketplace o Many consumers are concerned with the ethical practices of companies o Social Profit: Benefit organization & society receives from organization's ethical practices, community service, efforts to promote cultural diversity, concern for natural environment Doing it Right: Behaviour in the Marketplace o Business Ethics: Rules of conduct for an organization o Code of Ethics: Standards of behaviour to which everyone in the organization must subscribe o High Cost of Unethical Marketplace Behaviour: Unethical behaviour proves to be expensive o Consumerism: Fight Back: Attempts to protect consumers from harmful business practices Ethics in the Marketing Mix: o Making a Product Safe: Tempting to cut costs on design, safety testing, and production to be able to rush to a new product to market or to beat competitors on price o Price Fixing: Illegal – firms decide in advance on a common price for their product o Promoting the Product Ethically: Marketing management's decision on how to promote a product is likely to draw the most criticism from consumers o Getting the Product where it Belongs: Channels of distribution can cause ethical dilemmas  Slotting Allowance: A fee paid by a manufacturer to a retailer in exchange for agreeing to place products on the retailer's shelves Doing it Right: A Focus on Social Responsibility: o A management practice in which organizations seek to engage in activities that have a positive effect on society and promote the public good  Environmental Stewardship: A position taken by an organization to protect or enhance the natural environment as it conducts its business activities.  Green Marketing: A marketing strategy that supports environmental stewardship by creating an environmentally founded differential benefit in the minds of consumers Cause Marketing : A marketing strategy in which an organization serves its community by promoting and supporting a worthy cause or by allying itself with a not-for-profit organization to tackle a social problem Cultural Diversity: A management practice that actively seeks to include people of difference sexes, races, ethnic groups, religions, etc. In an organization's employees, customers, suppliers, and distribution channel partners CHAPTER 14: Why Develop a Market Plan: o Helps a business to set priorities regarding markets it wants to compete in (Market Segment), customers it wants to serve (Target Customers) , and how it plans to serve those markets (Marketing Mix Strategy) o Marketing Plan: A document that describes the marketing environment, outlines the marketing objectives and strategy, identifies who will be responsible for carrying out each part of the marketing strategy, and how the strategy will be adjusted to respond to a changing marketplace What Happens when a Business Does not Develop a Marketing Plan? o Causes underperformance o Business tends to drift o There is a lot of "pie in the sky" thinking, but no formal strategy o The business tends to waste resources trying one tactic after another (Not knowing outcomes) o The business lacks a playbook (No accountability with different functions) o There is no unity within the organization How to Develop Strong Marketing Plans: The Marketing Plan Template Four major sections: o Understanding the marketplace in terms of customers, competitors, and other factors o Designing marketing mix strategies to take advantage of marketplace opportunities o Delivering the marketing plan strategies via tactical plans o Managing the marketing plan efforts to ensure the plan is going according to schedule and making necessary changes along the way Using the Marketing Plan Template (Page 469) Dos and Don'ts in Developing a Strong Marketing Plan: o DOS:  Focus on key strategies and tactics  Keep the marketing plan short and actionable  Focus on the "so what" data, and not on the data itself  Develop marketing plan for a period of one year, but meet periodically to assess progress and examine marketing plan assumptions o DO NOTS:  Forget that the marketing plan template is directional  Forget that marketing is everyone's job CHAPTER 5: Understand Customers: o Consumer Behaviour: Process consumers go through to select, purchase, and use goods, services, ideas, or experiences to satisfy their needs and desires o Involvement: The extent of effort a person puts into deciding what to buy o Perceived Risk: Belief that use of a product has potentially negative consequences either financial, physical, or social The Consumer Decision Making Process: 1. Problem Recognition: The process that occurs whenever the consumer sees a significant difference between his current state of affairs and some desired or ideal state. Initiates Process. 2. Information Search: The process whereby a consumer searches for appropriate information needed to make a reasonable decision  Consideration Set: Set of alternative brands the consumer is considering 3. Evaluation of Alternatives: Narrowing down choices  Evaluation Criteria: Criteria that consumers use to compare competing product alternatives 4. Product Choice: Applying evaluate criteria:  Heuristics: A mental rule of thumb that leads to a speedy decision by simplifying the process  Brand Loyalty: A pattern of repeat product purchases, accompanied by an underlying positive attitude toward to brand, which is based on the belief that the brand makes products superior to its competition 5. Post-Purchase Evaluation:  The consumer evaluates the quality of the decision made  Cognitive Dissonance: The regret or remorse buyers may feel after making a purchase  Consumer (Dis)Satisfaction: Overall feeling a person has about a product after purchasing it Other Decision Processes: 1. Compensatory: Simple and Weighted Additive (Giving points and ranking the brands) 2. Non-Compensatory: Lexicographic, Elimination by Aspects, Conjunctive (Ranking criteria) 3. Heuristics: Habit (Buy same brand) – Price (Buy cheapest/expensive brand) - Affect (Buy what feels right) - Recommendation (Buy what is recommended) What Influences Consumer Decisions? 1. Internal Influences on Consumer Decisions: o Perception: Process by which people select, organize, and interpret information from the outside  Exposure: Stimulus must be within range of people's sensory receptors to be noticed  Perceptual Selection: Consumers are aware of messages which speak their current needs  Interpretation: People find meaning in ads based on prior associations they have learnt o Motivation: Internal state that drives to satisfy needs  Hierarchy of Needs: Cat
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