Chapters 1 to 8 Notes.docx

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Management (MGM)
Alison( Jing) Xu

Chapter 1 • Customers Needs, Wants, and Demands o Wants – the form human needs take as shaped by culture and individual personality o Demands – Human wants that are backed by buying power • Market Offerings – Products, Services and Experiences o Market Offerings – Some combinations of products, services, information, or experiences offered to a market to satisfy a need or want o Marketing myopia – The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products • Exchanges and Relationships o Exchange – The act of obtaining a desired object from someone by offering something in return o Market – The set of all actual and potential buyers of a product or service  These buyers share a particular need or want that can be satisfied through exchange relationships. • Designing a Customer Driven Marketing Strategy o Marketing Management – The art and science of choosing target markets and building profitable relationships with them  Aim to find, attract, keep, and grow target customers by creating, delivering, and communicating superior customer value • What customers will we serve (what’s our target market) ? • How can we serve these customers best (what’s our value proposition) o Five alternative concepts under which organizations design and carry out their marketing strategies  Production Concept: The idea that consumers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency  Product Concept: The idea that consumers will favour products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements • Marketing myopia will occur if company only focuses on products and not consumers. If they ‘build a better mousetrap, the world will beat a path to their door’  Selling Concept: The idea that consumers will not buy enough of the firms products unless it undertakes a large-scale selling and promotional effort. • Must be sure to also build profitable customer relationships rather than only aggressive selling • Takes an inside out perspective  Marketing Concept: The marketing management philosophy that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. • Takes an outside in perspective  Societal Marketing Concept: Questions whether the pure marketing concept overlooks possibleconflicts between consumer short-run wants and consumer long –run welfare • Society well being e.g. going green o Marketing Mix Example  Product –Firm must create a need-satisfying market offering  Price – Decide how much it will charge for the offering  Place- How it will make the offering available to target consumers  Promotion – It must communicate with target customers about the offering and persuade them of its merits • Building Customer Relationships o Customer Relationship Management – The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.  Involves managing detailed information about individual customers and carefully managing customer ‘touchpoints’ o Customer-Percieved Value – The customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative those competing offers o Customer Satisfaction depends on the product’s perceived performance relative to a buyer’s expectations.  If the product falls short of expectations the customer is dissatisfied. • Customer Relationship Levels and Tools o Frequency marketing programs reward customers who buy frequently or in large amounts o Club Marketing Programs Offer members special benefits and create member opportunities (e.g. Harley Davidson sponsers the Harley Owners Group • Relating with More Carefully Selected Customers o Most marketers realize they want to target fewer, more profitable customers  This is called selective relationship management o Customer-centricity strategy distinguishes between its best customers (called angels) and less profitable ones (called demons) • Relating more Deeply and Interactively o Greater consumer control and now companies can practice marketing by attraction (creating market offers and messages that involve consumers rather than interrupt them, and no longer rely on marketing by intrusion.  Example: Companies have Facebook pages. o Consumer-generated Marketing – marketing messages, ads, and other brand exchanges created by consumers themselves –both invited and uninvited. o Partner relationship management –working closely with partners in other company departments and outside the company to jointly bring greater value to customers. • Marketing Partners Outside The Firm o Marketing channels consist of distributors, retailers, and others who connect the company to its buyers o Supply Chain describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers.  Supply chain management is companies strengthening their connections with all partners along the supply chain. • Success at building customer relationships also rests on how well their entire supply chain performs against competitors’ supply chains. • Creating Customer Loyalty and Retention o Customer Lifetime Value – The value of the entire stream of purchases that a customer would make over a lifetime of patronage. • Growing Share of Customer o Share of Customer – The portion of the customer’s purchasing that a company gets in its product categories.  E.g. • Airlines want to increase ‘share of travel’ • Car companies want to increase ‘share of garage’  To increase share of customer, firms can offer greater variety to current customers ( sells many products) • Building Customer Equity o Companies want not only to create profitable customers, but to ‘own them for life’ • What is Customer Equity? o Customer Equity – the total combined customer lifetime values of all the company’s current and potential customers. o Sales and market share reflect the past, customer equity suggests the future • Building the Right Relationships with the Right Customers o Company can classify customers according to their potential profitability and manage its relationships with them accordingly  Strangers • Low potential profitability and little loyalty • Little benefit between the company’s offering and their needs  Butterflies • Potentially profitable but not loyal • Good fit between the company’s offerings and their needs • Butterflies because we can enjoy them but they will be gone after a while  True Friends • Profitable and loyal • Strong fit between their needs and the company’s offerings. • Firms want to make continuous relationship investments to delight these customers.  Barnacles • Highly loyal but not very profitable • Limited fit between their needs and the company’s offering • Low profit potential. • Most problematic customers, they should be fired • The Changing Marketing Landscape o There are major trends and forces that are changing the marketing landscape and challenging marketing strategy, we look at four major developments:  The Digital Age • Explosive growth in computer, cdigital technologies, internet etc.  Rapid Globalization • Marketers are now connected globally with their customers and marketing partners • All companies are touched by global competition now.  The Call for More Ethics and Social Responsibility • Social values and responsibility with the earth (demanding environmental movement)  The Growth of Non-for-Profit Marketing Chapter 1 Chapter 2 • Companywide Strategic Planning: Defining Marketer’s Role o Strategic Planning – Process of developing and maintaining a strategic fit between the organization’s goals and capabilities  Companies prepare annual plans, long-range plans, and strategic plans.  Involves adapting the firm to take advantage of opportunities in a constantly changing environment. • Defining a Market-Oriented Mission o Mission Statement – a statement of the organization’s purpose, what it wants to accomplish in the larger environment.  A clear mission statement acts as an invisible hand that guides people in the organization • Business Portfolio – The collection of businesses and products that make up the company. o The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment. • Analyzing the Current Business Portfolio o Portfolio Analysis – Management evaluates the products and businesses that make up the company  First step is to identify the key businesses that make up the company, called Strategic Business Unit (SBU) • This is a company division or product line within a division o A company classifies all its SBUs according to the growth-share matrix – A portfolio planning method that evaluates a company’s strategic business units in terms of its market growth rate and relative market share. SBUs are classified as stars, cash cows, question marks, or dogs  Stars • High growth, high share businesses or products • Often need heavy investemnts to finance their rapid growth • Eventually their growth will slow down and they will turn into cash cows  Cash Cows • Low growth, high share businesses or products • Need less investment  Question Marks • Low share-business units in high-growth markets • They require a lot of cash to hold their share • Management has to think hard about which questionmarks to build and which to be phased out  Dogs • Low growth, low share businesses and products. • Generate enough cash to maintain themselves but do not promise to be large sources of cash. o Company could invest just enough to hold the SBUu at current level, or they could harvest the SBU milking its short-term cash flow, or they could divest the SBU by phasing or selling it and using the resources elsewhere. o A problem to the Matrix is it doesn’t provide evidence for future planning • Developing Strategies for Growth and Downsizing o Product/Market Expansion Grid  A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification (Figure 2.3) • Market Penetration -Strategy for company growth by increasing sales of current products to current market segments without changing the product. o Supports them by advertising, e.g. tim hortons must bring the restaurant to the consumer. • Market Development - Strategy for company growth by identifying and developing new market segments for current company products. o Tim Hortons can make new demographic target markets such as ethnic groups or expand geographically. • Product Development - Strategy for company growth by offering modified or new products to current market segments o Tim Hortons introduced bagels, cappuccino and sandwiches to be more than just a doughnut shop. • Diversification -Could start up or buy businesses outside of its current products and markets o Tim Horton’s could buy a gas station. o It is important for companies to not only stratagies for growing their business portfolios but also strategies for downsizing them  Downsizing –Reducing the business portfolio by eliminating products or business units that are not profitable or no longer fit the company’s overall strategy • Partnering with Other Company Departments o Each company department can be thought of as a link in the company’s value chain o Value chain is the series of departments that carry out value-creating activities to design, produce, market, deliver and support a firm’s products. o Value Delivery Network – The network made up of the company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire system  It is important for Toyota to build close relationships with suppliers to help them produce lower-cost, higher quality cars which results in more satisfied customers.  Competition takes place between entire value delivery networks instead of individual competitors. • Customer-Driven Market Strategy o Market Segmentation is dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing programs  Can be grouped and served in various ways based on georgraphic, demographic, psychographic and behavioural factors o Market Segment is a group of consumers who respond In a similar way to a given set of marketing efforts  In the car industry, the consumers who want the biggest most comfortable car make up one market segment o Market Targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter • Market Differentiation and Positioning o Marketers want to develop unique market positions for their products o Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. > why a shopper would pay a little more for your brand o Differentiation is actually differentiating the market offering to create superior customer value. o 4 C’s  Customer Solution  Customer Cost  Convenience  Communication • Managing the Marketing Effort o Four marketing management functions are analysis, planning, implementation and control  Plan gets translatied into marketing and other plans for each division, product and brand.   Marketing Implementation is the process that turns marketing plans into actions to accomplish strategic marketing objectives.  Control consists of measuring and evaluating the results of marketing activities and taking corrective action where needed  Analyisis provides information and evaluations need for all the other marketing activities  Marketer should conduct a SWOT Analysis – Overall evaluation of the company’s strengths, weaknesses , opportunities, and threats • Strengths include internal capabilities, resources and positive situational factors that may help the company to serve its customers and achieve its objectives. • Weaknesses include internal limitation and negative situational factors that may interfere with the companys performance • Opportunities are favourable factors or trends in the external environment that the company may be able to exploit to its advantage • Threats are unfavourable external factors or trends that may present challenges to performance. • Marketing Department Organization o Chief Marketing Officer is the head in a companies entire marketing operation and they are on equal puttings as CEO and CFO o Most common form of marketing organization is the functional organization  Different activities are headed by a functional specialist – a sales manager, advertising manager, marketing research manager, customer service manager, or new-product manager.  Could also have geographic organization  Companies with very different products or brands create a product management organization  For companies that sell one product line to many different types of markets may use a market/customer management organization • Marketing Control o Marketing Control – the process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved  Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary.  Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities. o Return on Marketing Investment(ROI) is the net return from a marketing investmenet divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities. Chapter 2 Chapter 3 • Marketing Environment – the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. o Marketing environment is made up of a microenvironment and a macroenvironment. • Microenvironment – the actors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets, competitor and publics. • Macroenvironment – The larger societal forces that affect the environment – demographic, economic, natural, technological, political and cultural forces • Marketing Intermediaries – firms that help the company promote, sell and distribute its goods to final buyers. o Include:  Resellers – distribution channel firms that help the company find customers or make sales to them. (Walmart, Winners)  Physilcal Distribution Firms help the company to stock and move goods from their points of origin to their destinations.  Marketing Services Agencies are the marketing research firms, advertising agencies, media firms, and marketing consultant firms that help the company target and promote its products to the right markets.  Financial Intermediaries include banks, credit companies, insurance companies etc. • Public – any group that has an actual or potential interest in or impact on an organizations ability o E.g. Financial, media, government, citizen-action, local, general and internal publics • Changing Age Structure of the Population o Baby Boomers – The 9.8 million Canadians born during the baby boom following World War II and lasting until the mid-1960s  Canadian boom produced an average of 4 children, American boom 3.5  Most powerful force shaping the marketing environment o Generation X – The 7 million Canadians born between the 1967 and 1976 in the ‘birth dearth’ following the baby boom.  Less materialistic  prize experience, not acquisition. o Generation Y or Millenials – The 10.4 million children of the Canadian boomers, born between 1977 and 2000.  More diverse  Tweens (aged 8-12), teens (13-18), young adults (20-somethings)  Typical millennia is always using technology (tv, radio, cell phone, internet, video games, often simultaneously) while Gen X spent a lot of time infront of TV • Generation Marketing o Marketers need to be careful about turning off one generation each time they craft a product or message that appeals effectively to another. Each generation spans decades of times and many socioeconomic levels • The Changing Canadian Household o “crowded nest” syndrome is the increasing percentage of young Canadians aged 20-29 that now live with their parents. • Geographic Shifts in Population o Rapid increase in number of people who ‘telecommute’ (work at home/remote office)  Booming SOHO(small office/home office) market o Canada population is becoming better educated • Economic Environment consists of factors that affect consumer buying power and spending patterns. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets. o Countries have  Industrial economies which constitute rich markets for many different kinds of goods  Subsistence economies which consume most of their own agricultural and industrial output and offer few market opportunities. (other extreme from industrial economies)  Developing economies which can offer outstanding market opportunities for the right kinds of products. (in the middle of these 2) • Value Marketing is just the right combination of a product quality and good service at a fair price • Engel’s Laws – differences noted over a century ago by Ernst Engel in how people shift their spending across food, housing, transportation, health care, and other goods and services categories as family income rises. o He found that as family income rises, the percentage spent on food declines, the percentage spent on housing remains constant, and both the percentage spent on most other categories and that devoted to savings increase. • Natural Environment – Natural resources that are needed as inputs by marketers or that are affected by marketing activities. • Marketers should be aware of several trends in the natural environment o First is the shortage of raw materials (especially oil, coal and various minerals) o Second is increased pollution o Third is increased government intervention in natural resources • The Canadian government passed the Environmental Protection Act in 1989 establishing pollution control measures as mean as their enforcement • Technological Environment – Forces that create new technologies, creating new product and market opportunities o Perhaps the most dramatic force now shaping our destiny o Every new technology replaces an older technology • Political Environment – Laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society • Governments develop public policy which is a set of laws and regulations that limit business for the good of society as a whole • Business legislation has been enacted for a number of reasons o The first is to protect companies from each other o Second purpose of government regulation is to protect consumers from unfair business practices (e.g. seller isn’t giving what they advertised) o Third purpose is to protect the interests of society against unrestrained business behavior • Cause-Related Marketing is excercising their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes o Companies ‘do well by doing good’ • Cultural Environment – institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviours. o Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business and government. o Secondary beliefs and values are more open to change  Believing in marriage is a core belief, believing in early marriage is a secondary belief • The Yankelovich Monitor identifies serveral consumer segements whose purchases are motivated by self views. o Do-it-yourselfers-Recent Movers :  Have a do it yourself attitude and view the experience as a form of self expression.  Mostly Gen X’s o Adventureres  follow a single path or do the same thing twice.  View the experience as far more exciting than the entertainment value  View themselves as doing things that others wouldn’t dare to do • More ‘cocooning’ which is people are going out less and staying home more to enjoy the creature comforts of home and wealth • There has been an overall decline in organizational loyalty • Some people feel ruled by nature, some people feel In harmony with it, and still others seek to master it. People have realized that nature is finite and fragile • Companies take a proactive stance toward the marketing environment and take aggressive actions to affect the publics and forces int heir marketing environment rather than simply watching and reacting. o Whenever possible, smart marketing managers will take a proactive rather than reactive approach to the marketing environment. chapter 3 Chapter 4 • Sustainable Marketing – Marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs o Considers both future needs of business, and future needs of consumers o Calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company. • High Prices o Critics charge that the marketing system cause prices to be higher than they would under more ‘sensible’ systems because of:  High costs of distribution • Supermarket chains are typically left with barely 1 percent profit on their sales  High advertising and Promotion Costs • Differentiated products –cosmetics, detergents, toiletries include promotion and packaging costs that can amount to 40 percent or more of the manufacturer’s price to the retailer.  Excessive Markups • Companies mark up goods excessively, pills costing 5 cents may cost $2 • Deceptive Practices o Marketers are sometimes accused of deveptive practices that lead consumers to believe they will get more value than they actually do. It falls into three groups:  Deceptive Pricing • Includes practices such as falsely advertising ‘factory/wholesale’ prices  Deceptive Promotion • Includes practices as misrepresenting the products features or performance or luring the customers to the store for a bargain that is out of stock  Deceptive Packaging • Includes exaggerating package contents through subtle design, using misleading labeling or describing size in misleading terms. o Competition Bureau acts as a watchdog to prevent such practices. • High-Pressure Selling o Salespeople are sometimes accused of high-pressure selling that persuades people to buy goods they had no intention of buying • Planned Obselence o Products are claimed obsolete before they actually need replacement • Poor Service to Disadvantaged Consumers o Critics claim that the urban poor often have to shop in smaller stores that carry inferior goods and charge higher prices o Major chain retailers are ‘redlining ‘ drawing a red line aroud disadvantaged neighbourhoods and avoiding placing stores there • Too few Social Goods o E.g. Peope sell cars (private goods) and it requires more highways, traffic control and causes air pollution etc. • Cultural Pollution o Our senses are constantly being assaulted by marketing and advertising • Marketing’s Impact on Other Businesses o Companies expand by acquiring competitors rather than by developing their own products. o Patents and heavy promotion spending keep or drive out competitors. o Companies may set their prices below costs to discourage consumers from buying competitors’ products. • Consumer Actions to Promote Sustainable Marketing • 2 Major Movements o Consumerism is an organized movement of citizens and government agencies to improve the rights and powers of buyers in relations to sellers.  3 movements • First consumerism movement was fueled by rising prices in early 1900s • Second was sparked by upturn in consumer prices during the Great Depression and another drug scandal in 1960s • Third was people being unhappy with rising prices as they were better educated and products became more complex and potentially hazardous o Environmentalism is an organized movement of concerned citizens, businesses, and government agencies to protect and improve people’s current and future living environment.  Want to maximize life quality and for people and organizations to operate with more care in the environment. • Environment Sustainability is a management approach that involves developing strategies that both sustain the environment and produce profits for the company. o Crucial but difficult societal goal • Figure 4.2 The environmental sustainability portfolio with Internal and External greeting activities o Product stewardship example is thinking ahead preventing pollution from production throughout the full product cycle  Design for environment / cradle to cradle practices – involve thinking ahead to design products that are easier to recover, reuse, recycle o Most companies focus on new-clean technology • A company’s marketing should support the best long-run performance of the marketing system and should be guided by five sustainable marketing principles: o Customer-Oriented Marketing Company should view and organize its marketing activities from the consumer’s point of view o Customer-Value Marketing Company should put mosts o f its resources into customer-value building marketing investments. o Innovative Marketing Company continuously seek real product and marketing improvements o Sense of mission Marketing means that the company should define its mission in broad social terms rather than narrow product terms  Dove wants to sell more than beauty products, they are on a mission to discover ‘real beauty’ o Societal Marketing Company makes marketing decisions by considering consumers’ wants and interests, the companys requirements, and society’s long run interests. • Figure 4.4 Societal Classifciation of Products o Deficient Products have neither immediate appeal nor long-run benefits such as ineffective medicine o Pleasing Products have high immediate satisfaction but may hurt consumers in long run such as ciggerettes and junk food o Salutary Products have low immediate appeal but may benefit consumers in the long run, bicycle helmets & insurance o Desirable Products give immediate satisfaction and high long run benefits such as tasty nutritious food Chapter 4 Chapter 5 • Marketing Information and Customer Insights o Information can be hard to obtain, information technologies have helped but now we don’t need more information, we need better information o Customer Insights are fresh understandings of customers and the marketplace derived from marketing information that becomes the basis for creating customer value and relationships  Customer insight teams are being created o Costs are expensive, marketers should weigh the costs of getting more information against the benefits resulting from it • Internal Data electronic collections of consumer and market information obtained from data sources within the company’s network o Info can come from many sources including customer transactions, demographics, psychographics, and buying behavior o May not always be reliable as it could have been collected for other purposes • Marketing Intelligence the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment o Techniques range from researching the internet to rooting through rivals trash bins. o Used to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors actions, and providing early warnings of opportunities and threats. • Marketing Research systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization o Used in a wide variety of situations • Explatory Research Marketing research to gather preliminary information that will help define problems and suggest hypotheses • Descriptive Research Marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers. • Casual Research is marketing research to test hypotheses about cause and effect relationship • Research plan should be presented in a written proposal • Primary Data is information collected for the specific purpose at hand • Secondary Data is information that already exists somewhere, having been collected for another purpose (includes compants internal database) o Less costly and easier to obtain o Data may not be relevant, may not be up to date and may be impartial. • Commercial Online Databases computerized collectio
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