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Midterm

MKTG 2030 Midterm Review.docx

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Department
Marketing
Course
MKTG 2030
Professor
Aleem Visram
Semester
Winter

Description
MKTG 2030 Midterm Review Chapter 1 Objective I: What marketing is and how value creation is central to the marketing concept  Marketing: creating, communicating, delivering, and exchanging offerings that have value  Value & value proposition: the benefit customer receives from buying a good/service o Value from customer’s perspective: bundle of benefits to satisfy needs or wants relative to cost o Lifetime value of customer: long term cost to acquire/retain a customer vs. benefit  Marketing meets needs o Customer = businesses/not end-user o Consumer = end use  Marketing concept: identifying and satisfying consumer needs to ensure LT profitability  Needs: difference b/w actual state and desired state  Want: desire to satisfy specific need  Demand: desire for products coupled with resources to obtain them  Market: group of consumers with a common need that can be satisfied by a product o Target market: the group of consumers a company chooses to serve  Marketplace: any location/medium used to conduct an exchange  Heart of marketing is an exchange relationship – transfer of value b/w buyer and seller Objective II: How marketing is decision making process and the planning & marketing mix tools used in the process  Marketing decision making process involves: o Understanding the opportunity o Developing marketing strategy o Designing marketing mix o Realizing value  For external analysis/environmental analysis: PEST (Political, Social-cultural, Economic, Technological), SWOT, Porter’s 5 forces (rivalry, bargaining power of suppliers/buyer, threat of substitutes/new entrants)  For consumer marketing strategy: o Segmentation – based on common needs, wants, preferences o Targeting – decide which segment to focus on o Positioning – how brand will be known by consumers  Internal analysis: corporate capabilities -> core competencies, current strategy, resources  Marketing Mix: the 4 Ps o Product – objectives, service, design, brand o Price – MSP, RSP, margins, mark-up o Promotions – audience, messaging/tactics, communication mix, budget o Place – objectives, distribution system, suppliers/buyers, channel management, supply chain  Positioning a brand involves: o USP – unique selling proposition (distinctive competency): what a brand does really well and better than its competition o POD – point of difference (differential benefit): benefit uniquely offered by brand o Brand personality: what is the distinctive, desirable image of the brand  Value chain: series of activities involved in creating end product/service  Consumer generated value: consumer interaction-> co-creation that is integrated in product development. Think crowdsourcing Objective III: Ethical decisions in marketing and other perspective in marketing  Triple bottom line: Financial, Social, Environmental  Customer Relationship Management (CRM): integrating the customer. Tracking their needs in a way that benefit society and profit firm.  Social marketing concept: managers must satisfy customers’ needs in a way that also benefits society and earns profit  Sustainable development: creating products that meet present needs and ensure future generations can meet theirs o Green marketing one type  Other perspective on marketing o Product orientation -> emphasis on most efficient ways to produce/distribute products o Selling orientation -> infomercials (pushing the product). Marketing is a sales function o Consumer orientation -> marketing campaign: needs and problems Objective IV: Ethical issues relating marketing decisions  Business ethics: rule of conduct in organization  Code of ethics: written standards of behaviour to which everyone in org must subscribe to  Consumerism: social movement that attempts to protect consumers from harmful business practices  Consumer’s Association of Canada: inform and educate consumers. Advocate on consumers’ behalf Chapter 2: Strategic Market Planning Objective I: How businesses develop plans at different levels within organization  Business planning o Identifies/builds on firm’s strengths o Helps managers make informed decisions o Develops objectives before action is taken  Levels of planning: o Top-level (big picture): Strategic planning  Managerial. Matches firm’s resources and capabilities to market opportunities for long-term growth and survival  Defines firm’s purpose and objectives  Strategic business units – semi-autonomous entities that operate in an independent business o Middle-level: Functional planning  Decision process that concentrates on developing detailed plans for strategies & tactics for short term. Supports organization’s long term strategic plan  Conducted by functional areas of firm  Type of functional planning  Typically includes 3-5 year broad plan to support strategic plan and a detailed annual plan o Bottom-level: Operational planning  Focus on day-to-day execution of functional plans  Conducted by first-line managers  Typically includes one or more of: annual, semi-annual, quarterly plans  Strategic planning steps: o 1. Define the mission  Determining the mission/purpose of existence of an organization  “What business are we in? What customers should we serve? How do we develop firm’s capabilities and focus its efforts?  Mission statement: formal document and describes firm’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources o 2. Evaluate internal & external environment  Situational analysis  Assessment of firm’s internal and external environment (environmental analysis/business review)  Internal: Strengths and weaknesses o Controllable elements inside a firm that influence how well it operates  External: Threats and opportunities o Uncontrollable elements outside a firm that may affect it (PESTO) o 3. Set organizational/SBU objectives  What the firm hope to accomplish with long-range business plan  Needs to be specific, measurable, attainable, sustainable o 4. Establish business portfolio  Business portfolio: group of different products/brands owned by a firm and having different income generating capabilities  Portfolio analysis: assess potential of a firm’s SBU and decide how to allocate resources  BCG growth-market share matrix is a portfolio analysis model  SBUs are classified into one of the following 4 categories based on market growth rate and relative market share o Cash cows: dominant market share and low growth rate o Stars: dominant market share and high growth rate o Question marks: low market share and high growth rate o Dogs: low market share and low growth rate o 5. Develop growth strategies  Product-market growth matrix: characterizes four different growth strategies according to type of market and type of product  Market penetration: seek to increase sales of existing products to existing markets  Market development: seek to increase sales of existing products to new markets  Product development: seek to increase sales of new products to existing markets  Diversification: seek to increase sales of new products to new markets Objective II: Steps in marketing planning process and SWOT analysis to understand decision context  Marketing planning process steps o 1. Perform a situational analysis  Identifies how environmental trends affect the marketing plan  Builds on SWOT analysis  Fatal business flaws  Failure to innovate  Failure to create value  Failure to persist over time  Failure to maintain uniqueness  Failure to prevent “appropriation” of value  Failure to be flexible and adapt o 2. Set marketing objectives  Specific to firm’s brands and other marketing mix elements  States what the marketing function must accomplish to be in line with firm’s overall objective  Sets metrics (measurable objectives) to assess performance o Examples: market share, perceived product/service quality, customer loyalty/retention, customer/segment profitability, relative price o 3. Develop marketing strategies  Marketing strategy involves 3 steps: Segmentation, Targeting, Positioning  Considerations in a positioning strategy  Differentiation  Desirability  Brand personality  Positioning statement: subset of value proposition that optimizes for marketing communications. Identifies target audience, product and category, specific benefit, and is differentiable from nearest competitive alternative.  Internal, non-emotional statement that becomes messaging cornerstone of a campaign  Marketing mix decision:  Product strategies: include product design, packaging, branding, support services, product variations, features  Pricing strategies: include setting prices for final consumers, wholesalers, retailers based on costs, demand, or competitor’s prices  Promotion strategies: advertising, sales promotion, PR, direct marketing, personal selling  Distribution (place) strategies: how, when, and where the product is available, to targeted customers o 4. Develop an implementation plan  Describes the tactics of how to carry out the marketing strategies. May include:  Action plans: guide the execution of marketing strategies at operational level. Indicate what needs to be done, by whom, and by when  Control plans: Measures actual performance, compare it to objectives, make adjustments. Return on Marketing Investment is the popular measurement. Revenue/profit margin generated by investment in specific marketing program divided by cost o 5. Evaluate the plan  Decisions are made on basis of: situational analysis, SWOT, consumer analysis, financial analysis, cost-benefit analysis, marketing theories and principles, whether to continue implementing the plan or not Objective III: Understanding international marketing and decisions firms must consider during globalization  Strategic marketing mix decisions in int’l markets: o 1. Whether to go global o 2. Which markets to enter o 3. What market-entry strategy to use  Four strategies, each one increases in level of commitment, extent of control, and risk  1. Exporting  2. Contractual agreements  Licensing agreement  Franchising  3. Strategic alliances  Joint venture  4. Direct investment o 4. How to adapt marketing mix strategy  Product decisions o Straight extension strategy: sell same product for market o Product adaption strategy: modify product for the market o Product invention strategy: develop brand new product for market  Communication decisions o Standardization: same message everywhere around world o Localization: use different message in different cultures  Price decisions o Danger of pricing too high  Competitors offer product at lower price.  Grey market goods o Danger of pricing too low  Dumping – illegal in many places. Pricing lower than in home country  Ethics o Price fixing – illegal practice in which competing firms decide in advance on a common price for product o Slotting allowance – fee paid by manufacturer to retailer in exchange for shelve space (believed to be unethical by many manufacturers) Chapter 3 – Market Research Objective I: Steps and key elements of marketing research process  Marketing research process o 1. Definition of research questions/topics/trends to investigate o 2. Community identification and selection o 3. Community participant-observation and data collection o 4. Data analysis and interpretation of findings o 5. Report findings, theoretical implications, OR STP (Strategy & Tactical Implications) o Textbook way:  1. Define the research problem  Managers need to clearly understand what information is required  3 parts: o I) Specify research objectives o II) Identify consumer population of interest o III) Place problem in environmental context  2. Determine the research design  What information marketers will collect and what type of study  2 categories: o I) Primary research: data from research conducted to make specific decision  A) Exploratory research: customer interviews, focus groups, projective techniques, case studies, etc. Typically generate insights into the future  B) Descriptive research: systematic, qualitative (mostly). Cross-sectional design: gathers quantitative data. Longitudinal design -> technique taking responses over time  C) Causal research: laboratory research – cause/effect o II) Secondary research: data collected for some purpose other than problem at hand  A) Internal sources  B) External sources  3. Choose the method to collect primary data  I) Survey: used to interview respondents  II) Observation: method where researcher records consumers’ behaviour without their knowledge  Data quality: o Validity: extent to which research measures what it intends o Reliability: extent to which research measurement techniques are free of errors o Representativeness: extent to which consumers in study are similar to larger group  4. Design the sample  Probability sampling o Simple random, systematic, stratified  Nonprobability sampling o Convenience, quota  5. Collect the data  Train and supervise collectors  Challenges in foreign countries o Costly o Culture o Back-translation is a process to overcome language barriers  6. Analyze and interpret the data  Tabulation: arranging data in a table or some summary form to get broad overview of responses  Cross-tabulation: Examining data by subgroups to see differences between categories  7. Prepare the research report Objective II: Role of marketing info system (MIS) and marketing decision support system (MDSS) in marketing decision making  MIS: system to gather, sort, analyze, store, and distribute relevant data o 3 components:  1. Four types of data  I) Internal company data  II) Marketing intelligence: method by which marketers get info about everyday happenings in marketing environment  III) Marketing research: process of getting data in business environment. Syndicated or custom research  IV) Acquired databases  2. Computer hardware and software  3. Information for marketing decisions Objective III: Data mining and how marketers can put it to good use  Data mining is sophisticated analysis techniques for MASS amounts of data o Some companies build data warehouses o Reality mining: market products based on specific phone users’ location and calling habits  Uses of data mining o Customer acquisition o Customer retention o Customer abandonment o Market basket analysis Chapter 4 – Consumer Behaviour Objective I: Define consumer behavior and explain
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