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York University
PSYC 1010
William Pietro

MARKETING FINAL EXAM NOTES List of Topics: 7 Ps of service Brand Equity Competition-based pricing (services) Consumer buyer behavior Consumer surplus Consumerism Conventional distribution channel vs vertical marketing system Core product & Supplementary services (flower of service) Criticisms of marketing CRM (Customer Relationship Management) Strategies Cycle of failure, mediocrity, success Demand management approaches Demand Management Strategies Differentiation Strategies Dimensions of service quality Distribution channel conflict Environmentalism Establishing service levels Four categories of service Four service focus strategies Front and back stage personnel Gaps in service design and delivery General Pricing Approaches Good vs. Service High vs. Low involvement products Important vs determinant attributes Jack Trout’s four principles of positioning Marketing communications mix Marketing concepts Marketing Environment Marketing Intelligence Marketing Mix Marketing Research Marketing/Distribution channels Maslow’s Hierarchy of Needs Needs/Wants/Demands New product Development LECTURE 1 MARKETING INVOLVES: -consumers -government -advertisers -producers -manufacturers WHAT CAN YOU MARKET? -everything, but air WHAT CAN WE CONTORL IN MARKETING? -target market -availability/supply -demand -product WHERE CAN YOU MARKET? -internet -side of buses -stocks -magazines -posters -T.v. -newspapers WHAT IS MARKETING? -conception -pricing -promotion -distribution of ideas goods and services -to create exchanges that satisfy individual SOME EXAMPLES OF MARKETING: -product/services -pricing -promotion -distribution Concept of life, luxury, clothes, cars LECTURE 1 Who are the experts? Consumers • Exposure: to messages, tactics, programs What is marketing? • Attracting new customers by promising and delivering superior value • Building long-term relationships with customers by delivering continued customer satisfaction • Creating, building, and managing these relationships profitably over time The Marketing Process: (fig. 1.1) 1. Understand the marketplace and customer needs and wants 2. Design a customer driven marketing strategy 3. Construct a marketing program that deliver superior value 4. Build profitably relationships and create customer delight 5. Capture value from customers to create profits and customers equity Needs, Wants, Demands • needs are states of felt deprivations • wants are needs shaped by culture and individual personality • demands are wants combined with buying power Value and Satisfaction • if the performance and the customer’s experience is lower than expectations, the customer satisfaction is low • if the performance and the customer’s experience meet expectations, the customer is satisfied • if the performance and the customers experience exceeds expectations, the customer is delighted Terminology • Market • Consumers vs. Customers Exchange and Transactions Exchange: the act of obtaining a desired object from someone by offering them of something in return Transaction (unit of measurement): a trade between two parties that involves: • two things of value • agreed upon conditions • time of agreement • place of agreement Customer-Driven Marketing • Divide markets into segments • Choose the right segment to target • Offer a unique value proposition • Differentiate your offer from competitor offers • Build customer value and satisfaction • Nurture long-term customer relationships Marketing Concepts Production: affordability and availability Product: quality and innovation Selling: promotion and hard selling Marketing: customer satisfaction and relationships Societal: long-term value to both customer and society Relationship Marketing Customer Relationship Management: • The process of building and maintaining profitable customer relationship by delivering superior customer value and satisfaction -figure 1.4 The Customers Experience: Customer perceived value: • customer’s subjective view of the offers value compared to competitive offers Customer satisfaction: • customers subjective view of the value received in return for the purchase price Customer delight • Customers subjective view of the increased value received above the purchase price Non-For-Profit Marketing Marketing of ideas, values and institutions -increasing awareness that these organizations must build relationships with constituents and stakeholders -challenge of using new marketing techniques for non-profit initiatives Lecture 2 CHAPTER 2: MARKETING STRATEGY What is Strategic planning? -The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. Steps in Strategic Planning Corporate Level Business unit, product, and market levels Defining the company mission Setting company objectives and goals Designing the business portfolio Planning, marketing and other functional strategies Strategic Planning -Defining a clear company mission: • Setting supporting objective • Designing a sound business portfolio • Coordinating functional strategies -Mission Statement: • Statesthe organizations purpose • Market and customer-oriented • Provides direction to internal stakeholders -Customers are the front-line Strategic Business Unit (SBU) - a unit of the company that has a separate mission and separate objectives and that can be planned independently from other company businesses - can be a company division, a product line within a division or sometimes a single product or brand The Marketing Process • analyze current situation • analyze marketing opportunities • select target markets • develop the marketing mix • manage the marketing effort BCG- Growth-Share Matrix Value Delivery Network: 1. Company’s Value Chain 2. Suppliers 3. Customers 4. Distributors  Number one goal in marketing- Long-term profitable customers relationships Marketing Mix: • The set of controllable, tactical marketing tools that firm blends to produce the response it wants in the target market • Product, Price, Promotion, Place The Four Ps and the Four Cs Product provides Customer Satisfaction Price represents Customer Cost Place provides Convenience Promotion enables 2-way Communication Manage the Marketing Effort • Build strong operational Marketing plan • Organize marketing department • Leverage vale chain and value network • Exercise Control -Set goals -Measure and evaluation performance -Take corrective action What is a Marketing Plan? Marketing Control Process Set goalsMeasure PerformanceEvaluate performanceTake corrective action CHAPTER 13: Introduction to Services Why Study Services? • Services Dominate Economy in Most Nations • Most New Jobs are Generated by Services -Fastest Growth Expected in Knowledge-based industries -Many new jobs are Well-paid requiring good educational qualifications • Many manufacturing firms moved to marketing stand-alone services. Contribution of Services Industries to Global GDP Agriculture, 4% Industry, 32% Services, 64% What are Services? • Services involve a form of rental, offering, benefits without transfer of ownership Include rental of goods Marketing tasks for services differ from those involved in selling foods and transferring ownership Five Broad categories within non-ownership framework: 1. Rented goods services 2. Defined space and place rentals 3. Labor and expertise rentals 4. Access to shared physical environments 5. Systems and networks: access and usage Four Broad categories of Services: • Based on differences in nature of service act (tangible/intangible) and who or what is the direct recipient of service (people/possessions), there are four categories of services: 1. People 2. Possessions 3. Tangible Actions 4. Intangible Actions The 7 Ps of Services Marketing: 1. Product elements 2. Place and time 3. Price and other user outlays 4. Promotion and education 5. Process * 6. Physical environment * 7. People * Chapter 3 Overview: What is our role as consumers? What is our role of producers? What is the role of the marketing system? Socially Responsible Marketing: -Most Canadians feel that companies are 'just average' in their social responsibility -Half of consumers say they would not purchase from a company that was not socially responsible -Canadians have high expectations of their companies -What is the difference between being responsible and socially responsible marketers? - following laws/socially looking after community Ethics: • In your own words: --> Differences about what's right and wrong? --> What is meant by professional ethics? --> What differentiates 'illegal' from 'unethical'? • Guidelines/polices and procedures of what company thinks is right and wrong, usually made public shouldn’t do it, cant do it Criticism of Marketing: -High Prices: lead to higher prices due to marketing activities -Unnecessary Advertising: Ex. Ads in washrooms, email spam -High pressure selling: ex. limited time deal -Deceptive advertising: ex. vacation prices (taxes) -Creating false needs: ex. cologne/perfume Consumerism Environmentalism Consumer Protection Act: Scanner Price Accuracy Voluntary Code -If the scanned item is higher than the shelved price, you can get it for free, up to a $10 maximum -endorsed by the Competition Bureau -Over 5000 retailers across Canada are Voluntary Code participants Lecture 3 CHAPTER 4 Marketing Environment Defined: • The process and forces outside marketing’s direct control that affect marketing management’s ability to develop and maintain successful transactions with target customers. Microenvironment: • Factors close to the company that affect its ability to serve its customers • Unique to the company • Factors: The company, suppliers, marketing intermediaries, customers, competitors, publics Microenvironment: • Larger societal forces that affect the microenvironment • Considered to be beyond the control of the organization • Forces: Demographic forces, economic forces, natural forces, technological forces, political forces, cultural forces Demographics • Marketers track changing age and family structures, geographic population shifts, educational characteristics and population diversity Baby Boomers: • 9 million born between 1946-1964 • Account for one-third of population • High amount of disposable income • Now moving into middle-age Economic Environment: • All those factors that affect consumer buying power and spending patterns -Income levels and distribution -The ‘necessity’ of products -Changes in trends and consumer spending -Economies of different nations Cultural Environment: • The institutions and other forces hat affect a society’s basic values, perceptions, preference and behaviors • Cultural values are highly persistent • Learned from family and community International Trade Issues • Trade restrictions -tariffs -quotas -Exchange controls -Non-tariff barriers • World Trade Organization • Economic conditions Chapter 5 Managing Information • Imagine a type of company that needs information to be successful Conducting Marketing Research: -What is the difference between primary and secondary data? Types of Research: • Exploratory: preliminary information that will help define problems and suggest hypothesis • Descriptive: to better describe marketing problems, situations, or markets • Casual: to test hypothesis about cause-and-effect relationships A new Pepsi Product: • Give the product a name: • What questions do you need to have answered before launching this product? -Is there a market? -What is the target market? -How much target market is willing to pay for it -Does it taste good? Putting Marketing Research to use: • Marketing research is conducted to collect data- but marketing managers much translate that data information • Customer Relationship Management (CRM) systems—what are they and what do they do? -Company based system managing potential suppliers CRM Example: • “Netflix,, Amazon Lead E-Retailers in Customer Satisfaction” -Kellogg wants to investigate if young children have an impact on their parents’ decisions to buy breakfast foods: secondary, casual -University Bookstore wants to get some insights into the impact on sales If they increased process by 20%: primary, casual, survey -Gillette wants to determine whether a market exists for a new line of deodorant for children: primary, descriptive, focus group • Important to understand how cultural, social, personal, physiological factors affect purchase decisions. -Same decision-making process applies to cars as it does to coffee From a buyers perspective… An example of a business buyer would be a hospital • Who do you think buys the scalpels and the x-ray machines, how do they decide which ones to buy? -Same decision-making process applies to cars as it does to coffee The Consumer Buyer Decision Process: Figure 6.4 Business markets and business buyer behavior • What factors would influence business buyer behavior? -Fixed price vs. negotiation -Cash/credit vs. payments • Decision criteria is professional, not personal -Consumers buy items one at a time and focus on brand/price -Business buyers purchase by the thousands, focus on total cost of ownership and after-sales service Types of Needs: • Overall aspects, not categorize • Main not individuals Maslow’s Hierarchy of Needs Personal Needs: Goals, achievements, self-satisfaction/actualization Social Needs: Friends, Family Safety Needs: Free from attack Physiological Needs: Shelter, Food CHAPTER 14 : Consumer Behavior in a SERVICES Context Pre-purchase Stage Service Encounter Stage Post-purchase Stage Pre-purchase Stage: • Risk-reduction strategies that service suppliers can develop • Service expectations • Need awareness • Information Search • Evaluation of Alternatives • Purchase Decision -Evoked set: set of possible services or brands that a customer may consider in the decision process -the different alternatives need to be evaluated before a final choice is made Service Attributes: Style, color, texture, taste, sound Experience Attributes: vacations, sporting events, medical procedures Credence Attributes: Quality of repair and maintenance work Perceived Risks: -Functional -Financial -Temporal _Physical -physiological-fears negative emotions -social- how others think and act -sensory-unwanted impact on 5 senses How to handle them? -seeking information from respected personal sources -using internet to compare service offerings and search for independent reviews and ratings replying on a firm that has a good reputation -looking for guarantees and warranties -visiting service facilities or trying aspects of service before purchasing -asking knowledgeable employees about competing services Service Encounter Stage: • Encounters range from high to low contact • An integrative perspective: Service facilities, Personnel, Role and script theories • 2.20 • The Servuction System Fig. 2.22 • Post Purchase Stage -Evaluation of service performance -future intentions Lecture 4 Segmentation, Targeting, and Positioning • Understand that a market, a market segment, and a target market are all variations of the same concept-a group of people! • Think of a pie • No such thing as a product that is for “everyone” • Segmentation leads to stereotypes • Don’t be afraid to look beyond… push yourself beyond simply indentifying every market segment according to age and gender • Don’t be afraif touse demographic and psycholographic characteristics Overview of the 3-Step Process Market Segmentation: Identify bases for segmenting market Develop profiles of resulting segments Market targeting: Develop measures of segment attractiveness Select the target segments Market Positioning: Develop positioning for each segment Develop marketing mix for each segment Market Segmentation -Bases of segmentation: Geographic: • Area, population density, climate, etc Demographic: • Age, sex, lifecycle, income, job, etc. Psychographic: • Lifestyle, personality Behavioral: • Benefits sought, status, usage rate, loyalty, attitudes, etc. Example: Labatt’s Beer Segments: Watch sports who also play want light beer Example 2: YouTube video Segment: Loyalty to your friend, focused on guys Segmenting Business Variables • Major Criteria for segmenting business marketings are: -operating characteristics of the company -purchasing approaches -situational factors -customer size -Geographic location Segmenting International Markets • Geographic locations • Economics Factors • Political and legal factors • Cultural factors (language) Evaluating Segments Marketers must evaluate the effectiveness of those segments: • Measurability -Can be measured • Accessibility -Can be reached and served • Substantiality -profitable/large enough to serve • Differentiability -Substantially different than other segments • Actionability -Effective programs can be designed Mass Marketing • No segments and single marketing mix Differentiated (segment) Marketing • Large segments with specific marketing mixes Concentrated (niche) marketing • Small segments with specialized marketing mixes Micromarketing • Customized marketing to individuals Positioning Designing the company’s offering and image for a distinctive place in the mind of the target market. Successful Positioning Product position: • How a product is viewed by consumers relative to competing products Three positioning steps • Identify competitive advantages on which to build a differentiated position • Choose the right competitive differentiation • Select an overall positioning strategy Gaining Competitive Advantage • Key to wining target customers is to understand their needs better than your competitors do and to deliver more value • Competitive Advantage: extent to which a company can position itself as providing superior value Identifying Competitive Advantage 1. Product Differentiation (eg. Consistency durability, reliability, reparability) 2. Services Differentiation (eg. Speed, convenience, careful delivery) 3. Image Differentiation (eg. Convey benefits and positioning) 4. People Differentiation (eg. Hiring, training better ppl than competitors) 5. Channel Differentiation (eg. Retail outlet stores vs. the internet) Example: Mountain Dew: -Image: you will do anything you can to get your hands on or protect your drink sponsoring to extreme sports, high energy, live on the edge consumer Successful Differentiation • Important- of value to consumers • Distinctive- obvious and clear • Superior- better value than competitors • Communicable- explainable • Pre-emptive- defendable and unique • Affordable- delivers value for cost • Profitable- company can make money Positioning Errors Under-positioning • Failing to really position the company at all Over-positioning • Giving buyer too narrow a picture of the company Confused positioning • Leaving buyers with a confused image of a company -To young, active, soft-drink consumers with little time for sleep Basic Focus Strategies for Services Considerations for using the Focus Strategies Market focused: • Narrow market segment with wide range of services • Need to make sure firms have operational capability to do and deliver each of the different services selected • Need to understand customer purchasing practices and preferences Service Focused: • Narrow range of services to fairly broad market • As new segments are added, firm needs to develop knowledge and skills in service each segment Unfocused: • Broad markets with wide range of services • Many service providers fall into this category • Danger- become a “jack of all trade and master of none” Importance of Determinant Attributes • Consumers choose between alternative service offerings • Determinant attributes determine buyers’ choices between competing alternatives Establishing Service Levels and Tiers • Need to make decisions on service levels-level of performance firm plans to offer on each attribute • Segment customers according to willingness to trade off price versus service level • Service tiering: positioning strategy based on offering server price-based classes of service concept **Four Principles of Positioning Strategy JACK TROUT** Positioning as a Diagnostic tool Understand relationships between products and markets • Compare to competition on specific attributes • Evaluate product’s ability to meet consumer needs/expectations • Predict demand a specific prices/performance levels Identify market opportunities • Introduce new products • Redesign existing products • Eliminate non-performing products Make marketing mix decisions, respond to competition • Distribution/service delivery • Pricing • Communication **Developing a Market Positioning Strategy (Everything that goes into creating) Anticipating Competitive Response • Competitors might pursue same market position • Get inside competitors heads • Analyze possible effects of alternative competitive moves -impact of price cut on demand, market share, and profits -Responses of different segments to changes in service attributes Using positioning Maps to Plot Competitive Strategy- used as a diagnostic tool, help you gain advantage over competitors, and see where you are. Lecture 5 Chapter 8: Product Strategy What is a product? A product need not be a tangible good A product is anything that the marketers market. -Cuba -Hospital Lotteries -Politicians -Services Defining products and services • Experience: type of product that combines a service or physical product with a memorable experience o Biggest influence on purchase of product o Purchase experience • Describe your last retail purchase experience Levels of Product • Core product or benefit • Actual product o Packaging, features, design, quality level, brand name • Augmented product o Warranty, delivery, credit, installation service The most basic level of a product: the core The best illustration of a product category would be: augmented Consumer or Business Products • Business Products: o Parts, materials, capital items, supplies • Consumer products: o Convenience, shopping, specialty, unsought • Industrial/business products o Parts & Materials  Raw and Manufactured o Capital Items  Aid in production or operation • Buildings, offices, equipment o Supplies  Operating supplies • Paper, lubricants  Maintenance items • Consumer Products o Convenience: frequent, immediate purchases, low involvement  Toilet paper o Shopping: Less frequent purchases, careful comparison between products  Clothing, hotels o Specialty: unique characteristics or brand, buyers put forth special effort to purchase  Designer Clothes, legal services o Unsought: not usually purchases, or not known about  New innovations, blood donations Product Marketing Decisions • Figure 8.3 o Product Attributes  Quality, features, style and design o Branding  Name, term, sign, symbol or combination that identifies the maker or seller of product/service o Packaging o Labeling o Product support services  Additional services that delights the customers and yields profits for company • Product Line and Mix Branding Advantages • What are the advantages of branding? o For consumer o For marketer Service Characteristics Fig. 8.5 • Intangibility • Inseparability • Variability • Perishability Branding Decisions • A brand is not a logo • A brand is an idea o Not a physical or visual “thing” it is an idea o Set of attributes and emotions o May be represented by objects, logos, names o Set of associations that exist in the mind of the consumer Brand Equity • The idea that a brand has numeric dollar value even though there are no tangible assets Chapter 9: Developing and Marketing New Products Why develop new products? • Follow changing marketing demands • Remain competitive • Keep up with changing technology • Replace dying products • Refresh and evolve existing products • Diversify product offering to reduce risk New Product Development Idea generation Idea Screening Product concept Marketing strategy Business analysis Product development Test marketing Commercialization Product Life Cycle • All products will pass through the PLC o How long it takes between stages o How long it remains in each stage • Development- No customers, no profits, heavy spending • Introduction- Early adopter customers no profits, high launch costs • Growth- Early majority customers, rapid sales growth and revenues • Maturity-late majority customers, flat sales declining profits • Decline- laggard customers, declining sales, replaced by new products Maturity Stage Strategy • Modify the market • Modify the product • Modify the marketing mix Lecture 6 Pricing Considerations and Strategies What is a price? • Sum of all the values that consumers exchange for the benefits of having or using the good or service Price vs. Cost • Marketers do not make decisions about costs, they make decision about prices Dynamic Pricing: • The practice of charging different prices depending on individual customers and situations • Internet and web-purchasing provides the technological capability • Sites like eBay even add the ability to negotiate price to dynamic pricing practices Factors What INTERNAL factors influence pricing? -Marketing objectives -Marketing mix strategies -Costs -Organizational considerations EXTERNAL: -Nature of the market and demand -Competition -Other environmental factors ( economy, resellers, government, social concerns) Fixed vs. Variable- Your Call • Product packaging- Variable • VP of Marketing’s salary- Fixed • Cost of 3 month billboard campaign- Fixed • Annual advertising budget- Fixed • Cost of the parts that go into manufacturing the marketer’s product- Variable Price Elasticity • A way of measuring how sensitive the market is to price changes -Inelastic: minimal change in demand as price increases -Elastic: significant drop in demand as price increases General Pricing Strategies: • Cost-based approach -Cost-plus pricing -Break-even analysis -Target profit pricing • Value-based approach -Consumer perceptions of value • Competition-based approach (most common approach) -What competitors are charging Pricing in Different Markets: Pure Competition: Many buyers and sellers where each has little effect on the going market price Monopolistic Competition: Many buyers and sellers who trade over a range of prices Ex. Airlines Oligopolistic Competition: Few sellers and sensitive to each other’s pricing/marketing strategies Pure Monopoly: Market consists of a single seller Ex. LCBO Pricing New Products • Marketing skimming pricing -High price to reap maximum profit from early adopter segments -Strategy must be supported by product quality, production costs, and competitors’ difficulty in entering market • Market penetration pricing -Low price to gain maximum market share -Market must be price sensitive, costs must fall with rising volume, andprice must discourage competition Product Line Pricing Involve setting price steps between various products in a product line based on: • Cost differences between products • Customer evaluations of different features • Competitor’s prices Optional/Captive product pricing • Optional Product -Pricing optional or accessory products sold with the main product (eg. Ice maker with the refrigerator) • Product Bundle Pricing -Combining several products and offering the bundle at a reduced price (eg. Computer with software and Internet access. • Captive-product -Pricing products that must be used with the main product (eg. Replacement cartridges for Gillette razors) • By-product pricing -setting a price for by-products in order to make the main product’sprice more competitive (eg. Sawdust and buttermilk) Discounts and Allowances • Discounts: -Cash -Quantity -Seasonal • Allowances: -Trade-In -Promotional Segmented Pricing • Selling a good or service at two or more prices, where the difference in prices is not based on differences in costs -Customer-segment -Product-form -Location pricing -Time pricing www.uofge
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