Textbook Notes (368,317)
Canada (161,798)
MGTA02H3 (363)
Chapter

MGTA04 Notes.docx

17 Pages
85 Views
Unlock Document

Department
Management (MGT)
Course
MGTA02H3
Professor
Bill Mc Conkey
Semester
Winter

Description
Chapter #5: Understanding Marketing  What is marketing? o Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals o Our needs and wants are the forces that drive marketing  Marketing concept: o Idea that the whole firm is directed toward serving present and potential customers at a profit o Must design products and services that meet the specific needs of customers and follow any trends that may capture potential customers – Ex. Change in tastes  Value and Benefits: o Ratio of benefits to cost o Generally involves the price, expenditure of the buyer’s time, and the emotional satisfaction of owning the product  Value and Utility: o Utility is the ability of a product or service to satisfy the needs or wants of a customer o Time utility: availability when required o Place utility: readily available for purchase o Ownership utility: transfer of goods from store to customer o Form utility: turning raw materials into the finished product  Types of goods and services: o Consumer goods: products purchased by individuals for their personal use o Industrial goods: products purchased by companies to use directly or indirectly to produce other products o Services: intangible products, such as time, expertise or any activity that can be purchased  The Marketing Mix Strategy: o Marketing managers: responsible for the planning and implementation of all marketing mix activities o Marketing plan: when a need is identified and action is taken to implement it, a marketing plan is developed to focus a strategy towards meeting such expectations of needs and wants  Product: o Conceiving and developing new products o Consider the changing factors when developing the product: change in tastes, economic conditions, technology, etc. o Product differentiation: often used to add value to a certain product or service through the unique features that it offers in comparison to other similar products  unique selling point  Price: o In a customer’s perspective, the price matters because it is the opportunity cost of money  Ex. Taking money out of their investments to make a purchase; generally thinks about the benefits they will receive from this product (utility) o From the seller’s perspective: must be priced correctly to ensure they cover the operational costs, but can’t be too high that the customers will not want to purchase it. Low/high price strategy varies per business  Place (Distribution): o Placing a product in the proper outlet o Decisions about warehousing, inventory control, warehousing, channel distribution, etc.  Promotion: o Techniques for communicating information about products  Target Marketing and Segmentation o Target market: groups of people who share similar needs and wants o Target segmentation: categorization of common needs of wants, and creating a product or service catered to each segment  Geographic variables: o Geographic factors that may affect the buying patterns and should be considered in a segmentation strategy  Demographic variables: o Characteristics of a population such as age, ethnicity, income, gender, etc. considered to develop the most effective segmentation strategy  Psychographic variables: o Traits such as attitudes, interests, motives and opinions that a marketing strategy could consider to produce an effective strategy  Product-use variables: o Consumer characteristics based on the use of a product, benefits expected from it, reasons for purchasing it and loyalty  Market research: o Study of what buyers need and how best to meet those needs o Stakeholders: consumers, employees, investors, suppliers, local communities o Controllable marketing variables: 4 P’s o Environmental factors: economic, technological, competitive, political, legal, social, and cultural  Research Process: o Current situation – what is being done now? o Select a research method – effectiveness and costs o Collect data – making use of readily available and accessible secondary data or if insufficient, the use of primary data through new research o Analyze data – organization o Report – summary of findings, alternatives, recommendations  Research methods: o Observation: a market research technique involving viewing or otherwise monitoring consumer buying patterns o Surveys: questioning a representative sample of consumers about purchasing attitudes and practices o Focus group: small group of people brought together and allowed to discuss selected issues in depth o Experimentation: reactions of similar people are compared under different circumstances  Consumer behaviour: study of the process by which customers come to purchase and consume a product or service o Psychological: motivations, perceptions, ability to learn, and attitudes o Personal: lifestyle, personality, economic status, and life-cycle stage o Social: family, opinion leaders, reference groups o Cultural: way of living, values, and social class  Consumer buying process: o Problem/Need Recognition o Information Seeking o Evaluation of alternatives o Purchase decisions  Rational motives: logical evaluation of product attributes such as cost, quality, usefulness  Emotional motives: non-objective factors o Post-purchase evaluations  Organizational markets: o Industrial: businesses that buy goods to be converted into other products that will be sold to ultimate consumer o Reseller: intermediaries like wholesalers and retailers who buy finished products and resell them o Institutional: non-government organizations such as hospitals, churches, and schools  Differences in buyers – organizational buyers: o Professionals: trained in methods for negotiating purchase terms, reach agreements, arrange for formal contracts o Specialists: specialize in the purchase of various items o Experts: competing products and alternatives Chapter #6: Product  Value package: o Features: qualities, both tangible and intangible, that a company builds into its products o Value package: product marketed as a bundle of value adding attributes, including reasonable cost  Classifying Consumer Products: o Convenience goods/services: consumed rapidly and regularly. They are relatively inexpensive and are purchased frequently and with little expenditure of time and effort o Shopping goods/services: more expensive and purchased less frequently than convenience goods and services o Specialty goods/services: important and expensive purchases – generally accept no substitutes  Classifying Industrial products: o Expense items: materials and services consumed within a year (Ex. Raw materials processed into the final product) o Capital items: like capital assets, they are generally expensive and provide future benefit greater than a year.  The Product Mix: o Is the group of products a company has available for sale o Product line: group of similar products intended for a similar group of buyers who will use them in a similar fashion  Speed to market: strategy of introducing new products to respond quickly to customer and/or market changes – loses 12% of life-time profit potential if delayed for 3 months, 33% in 6 months  7 Step Development process: 1. Product ideas: actively seek out ideas to reward those whose ideas become successful ideas 2. Screening: eliminate all ideas that are unrealistic or would not work with the company’s abilities, expertise or objectives; marketing, engineering, and production must have input at this stage 3. Concept Testing: firms try to gather information on the customer’s opinion of the product to determine the benefits as well as potential pricing for the product 4. Business Analysis: determining the cost-benefit analysis of the product. Does not necessarily determine the exact profit it will earn, but rather the ability to meet minimum profitability goals 5. Prototype development: shaping the ideas and building a model, which can often be expensive as it requires the expertise of hand crating, tooling, development of components – but it can help to identify potential production problems 6. Product testing and test marketing: limited production of the product and is tested internally to see if it meets performance requirements – test marketing allows firm to observe customer’s satisfaction and response 7. Commercialization: mass production and advertisement begins if approved  Variations in the process for services: 1. Service ideas: service package: identification of the tangible and intangible features that define the service. 5. Service process design: service process design (instead of prototype development) – selecting the process, identifying worker requirements, and determining facilities requirements so that the service can be effectively provided  Product life cycle: concept that the profit-producing life of any product goes through a cycle of introduction, growth, maturity (leveling off), and decline  Stages in the Product Life Cycle: o Introduction: marketers bring awareness to potential customers. Generally no cash flow due to extensive promotional and development costs o Growth: if the product is satisfactory and demanded, it will begin to make a profit. Other firms will start to compete by creating a similar version o Maturity: most profit is earned in the beginning stages, but as firms create competitive products, sales start to decline o Decline: sales and profits continue to decline, companies remove or reduce promotional support  Extending Product life: An Alternative to New Products o Product extension: marketed globally instead of domestically o Product adaptation: product modification to have greater appeal in foreign markets o Reintroduction: reviving products that are becoming obsolete in old markets, in newer markets  Identifying Products: o Branding: use of symbols to communicate the qualities of a product made by a particular producer o Brand equity: degree of consumer’s loyalty to and awareness of a brand and its resultant market share o Brand loyalty: customers’ recognition of, preference for, and insistence on buying a product with a certain brand name o Trademarks: exclusive legal right to use a brand name o Patent: protects an invention or idea for a period of 20 years o Copyright: exclusive ownership rights granted to creators for the tangible expression of an idea  Packaging Products: o Physical container in which a product is sold, including the label  Labeling Products: o Part of a product’s packaging that identifies the product’s name and contents, sometimes its benefits Chapter #7: Price  Pricing: deciding what the company will receive in exchange for its product  Pricing objectives: goals that producers hope to attain in pricing products for sale  Pricing to maximize profit: o Too low: sell more units, but may lose money on each exchange o Too high: sell less units, may have excess inventory and need to reduce production  Consider: capital resources, materials, labour and marketing costs  Pricing for E-business Objectives: lower costs and prices, greater availability; comparison shopping, joining of other businesses  Market Share Objectives: o Market share: a company’s percentage of the total market sales for a specific product o Other pricing objectives: loss containment and survival  Price-Setting Tools: o Cost-Oriented Pricing: considers the firm’s desire to make a profit and takes into account the need to cover production costs  Markup-percentage: Markup/Sales Price o Break-Even Analysis:  Variable costs: the costs that change with the number of goods or services produced or sold  Fixed costs: those costs unaffected by the number of goods or services produced or sold  Break-even analysis: an assessment of how many units must be sold at a given price before the company begins to make a profit  Total fixed costs / (Price – Variable Cost) = Break-Even point (in units)  Pricing Strategies: o High prices: higher quality goods o Low prices: if they are able to maintain the same level of quality o Price leadership: the dominant firm in the industry establishes produce prices and other companies follow suit  Ex. – structural steel, gasoline, etc. – differ in quality, and use advertising campaigns, personal selling and service to differentiate, not price! o Price Skimming: price a new product as high as possible to earn the maximum profit on each unit sold  Cover developmental costs, and generate a profit o Penetration Pricing: price a new product very low to sell the most units possible and to build customer loyalty  Creates customer interest and stimulate trial purchases  Pricing Tactics: o Price Lining: practice of offering all items in certain categories at a limited number of predetermined price points o Psychological Pricing: practice of setting prices to take advantage of the non-logical reactions of consumers to certain types of prices  Odd-Even pricing: prices are not stated in even dollar amounts o Discounting: any price reduction offered by the seller to persuade customers to purchase a product  Cash discount: customers paying cash rather than credit, pay lower prices  Seasonal discount: lower prices are offered at a time of year when sales are traditionally low  Trade discount: given to firms involved in a product’s distribution  Quantity discount: customers buying large amounts of a product pays lower prices Chapter #8: Promotion  Promotion: any technique designed to sell a product  Information & Exchange Values: o Create customer awareness o Inform customers of the product o Attract customers and display benefits of the product o Encourage action through persuasion  Promotional Objectives: o Communicating information: informing consumers about the product – benefits, availability, etc. o Positioning: establishing a unique image of a product – generally appealing to only a certain market segment o Adding value: added benefits in products o Controlling sales volume: when experiencing slow growth (seasonal fluctuations), offering more promotions can help to smoothen the cycle  Promotional Strategies: o Push Strategy: aggressively pushes its product through wholesalers and retailers which persuade customers to buy it  Industrial products  Personal selling o Pull Strategy: company appeals directly to customers, who demand the product from retailers, which demand the product from wholesalers  Consumer products  Advertising  Promotional Mix: portion of marketing concerned with choosing the best combination of advertising, personal selling, sales promotions and publicity and public relations to sell a product o Advertising, personal selling, sales promotions and publicity & public relations 1. Potential consumers must recognize the need for a product – marketers use advertising to ensure they are aware of their products 2. Consumers would like to learn more about available products – educating 3. Consumers compare products – marketers should use personal selling to demonstrate product quality and performance 4. Consumers choose products to purchase – sales promotion is effective for an incentive to buy – personal selling can help by bringing products to convenient purchase locations 5. Consumers evaluate the product – advertising helps to remind customers of their wise purchases  Advertising Promotions: o Advertising: promotional tool consisting of paid, non-personal communication used by an identified sponsor to inform an audience about a product  Advertising Strategies: o Informative advertising: introductory stage of product life cycle – goal is to make potential customers aware of the existence of a product o Persuasive advertising: growth stage of product life cycle – influence customer to buy the firm’s product rather than the similar product of a competitor o Comparative advertising: maturity stage of product life cycle – influence the customer to switch from a competitor’s similar product to the firm’s product by directly comparing the two products o Reminder advertising: latter part of the maturity stage – keep the product’s name in mind  Advertising Media: o Advertising Medium: specific communication device – television, radio, newspapers, direct mail, magazines, billboards – used to carry firm’s advertising message to potential customers  Newspapers: widely used, but emphasis has shifted to the Internet  Television: appealing, however there is much competition and is expensive  Direct mail: printed advertisements such as flyers that are mailed directly to consumers  Radio: relatively inexpensive, and are programmed locally – high degree of customer selectivity  Magazines: allows for detailed product information, tend to have multiple exposures to readers  Outdoor advertising: billboards & signs – relatively inexpensive, effective  Word of mouth: buzz marketing – opinions about the value of products passed among consumers in informal discussions  The Internet: Ecommerce – buying and selling processes that make use of electronic technology; Internet Marketing – promotional efforts of companies to sell their products and services to consumers over the Internet  Advantages: convenience, selection, useful information control, reach, direct distribution, reduced expenses, relationship building, flexibility, feedback, etc.  Disadvantages: profitability for internet marketers, information overload, limited markets, security issues  Personal Selling: o Promotional tool in which a salesperson communicates one-on-one with potential customers o Very costly o Telemarketing: cut costs of personal sales visits  Sales Force Management: o Set goals at top of organization o Set practical objectives for salespeople o Organize sales force to meet objectives o Implement and evaluating success of a sales plan  Personal Selling Situations: o Retail Selling: selling a consumer product for the buyer’s own personal or household use o Industrial Selling: selling products to other businesses, either for manufacturing other products or for resale  Personal Selling Tasks: o Order processing: in personal sales, the receiving and follow-through on handling and delivery of an order by a salesperson o Creative selling: in personal sales, the use of techniques designed to persuade a customer to buy a product when the benefits of the product are not readily apparent or the item is very expensive o Missionary selling: in personal sales, the indirect promotion of a product by offering technical assistance and or promotion the company’s image  The Personal Selling Process: o Prospecting: identifying potential customers o Qualifying: determining whether potential customers have the authority to buy and the ability to pay for a product o Approaching: first few minutes that a salesperson has contact with a qualified prospect – gain credibility o Presenting and demonstrating: present promotional message including information of its features, uses, benefits, match with the user’s needs, should include a demonstration o Handling objections: show the salesperson they are interested but there are some aspects they would like to negotiate on, ex. Price o Closing: asking the customer to purchase the product (usually indirectly) o Following up: fast processing and on-time delivery  Sales Promotion: o Short-term promotional activities designed to stimulate consumer buying or cooperation from distributors and other members of the trade o Coupon: method of sales promotion featuring a certificate the entitles the bearer to stated savings off a product’s regular price o Point-of-purchase Display: method of sales promotion in which a product display is located in a retail store as to encourage consumers to buy the product o Premiums: method of sales promotion which some item is offered free or at a discount to consumers in return for buying a specified product o Trade shows: method of sales promotion which members of a particular industry gather for displays and product demonstrations designed to sell products – generally already well-established audience  Publicity & Public Relations o Publicity: information about a company that is made available to consumers by the news media, not controlled by firms but does not cost money o Public Relations: public-service announcements by the company designed to enhance the company’s image – Ex. Companies sponsoring community events Chapter #9: Place  Distribution Mix: combination of distribution channels a firm selects to get a product to end-users  Intermediaries: any individual or firm other than the producer who participates in a product’s distribution  Wholesalers: intermediaries who sell products to other businesses which in turn resell them to the end- users  Retailers: intermediaries who sell products to end-users  Distribution channel: path a product follows from the producer to the end user o Direct distribution of consumer products: product travels from the producer to the consumer without intermediaries (direct channel) o Retail distribution of consumer products: producers distribute products through retailers o Wholesale distribution of consumer products: wholesalers store merchandise and restock it frequently o Distribution through Sales Agents or Brokers: used to represent producers to sell to retails/wholesalers, receiving commission  Non-Direct Distribution: o Advantages: added value through time saving information, available quantities, o Disadvantages: high markups per distribution channel added  Distribution Strategies: o Intensive distribution: product is distributed in nearly every possible outlet, using many channels and channel members o Exclusive distribution: product’s distribution is limited to only one wholesaler or retailer in a given geographic area o Selective distribution: falls between intensive and exclusive – calling for the use of a limited number of outlets for a product  Wholesalers: o Merchant Wholesalers: buy and takes legal possession of goods before selling them to customers  Usually providing storage and means of delivery  Full service: provides credit, marketing and merchandising services o Agents & Brokers: they do not own the merchandise, but receive commission on what they sell  Use of their knowledge of markets and merchandising expertise  Keep them neatly arranged and attractively displayed  Retailing: o Product Line Retailers:  Department Stores: large retail stores that offer a wide variety of high-quality items divided into specialized departments – offer services such as generous return policies, credit plans and delivery  Supermarkets: large retail stores that offer a variety of food and food-related items divided into specialized departments – low prices, self-service and wide selection  Specialty Stores: small retail stores that carry one line of related products o Bargain Retailers:  Retail outlets that emphasize low prices as a means of attracting customers  Discount houses: bargain retail stores that offer major items such as TVs and large appliances at a discount  Catalogue Showroom: customers place orders or items described in a catalogue and pickup those items from an on-premises warehouse  Factory Outlets: owned by the manufacturers whose products they sell  Wholesale Club: huge, membership only, combined retail-wholesale operations that sell brand-name merchandise  Convenience Stores: offer high accessibility, extended hours, and fast service on selected items  Non-Store and Electronic Retailing o Non-store Retailing:  Direct-response: firms make direct contact with customers both to inform them about products and to receive sales orders  Direct selling: non-store retailing typified by door-to-door sales  Mail order: customers place orders for merchandise shown in catalogues and receive their orders via mail  Telemarketing: use of the telephone to sell directly to consumers o Electronic Retailing: information about the seller’s products and services is provided over the Internet, allowing consumers to receive the information and purchase the products at home  Internet-based stores: growing business – easier distribution and accessibility  Warehousing Operations: o Physical distribution: those activities needed to move a product from the manufacturer to the end consumer o Warehousing: part of the distribution process concerned with storing goods o Private warehouse: warehouse owned and used by just one company o Public warehouse: an independently owned and operate warehouse that stores the goods of many firms o Storage warehouse: warehouse used to provide storage of goods for extended periods of time o Distribution center: warehouse used to provide storage of goods for only short periods before they are shipped to retail stores o Inventory control: part of warehouse operations that keeps track of what is on hand and ensures adequate supplies of products in stock at all times o Materials handling: transportation and arrangement of goods within a warehouse and orderly retrieval of goods from inventory  Transportation Operations: o Truck, air and rail are the most common types of transportation o Trucks: flexibility, fast service and dependability – generally used for expensive items, short distances o Planes: most expensive, but fastest o Railroads: used to be the backbone, but is now used to transport heavy, bulky items o Water Carriers: least expensive, but slowest o Pipelines: slow, but provide a constant flow of product, unaffected by weather conditions  Changes in Transportation Operations: o Intermodal transportation: combined use of different modes of transportation o Containerization: the use of standardized heavy-duty containers in which many items are sealed at the point of shipment and opened only at the final destination o Order-fulfillment: all activities involved in completing a sales tr
More Less

Related notes for MGTA02H3

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit