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Chapter 15

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Department
Rotman Commerce
Course
RSM100Y1
Professor
John Oesch
Semester
Fall

Description
Understanding Market Processes and Consumer Behaviour [Chapter 15] What is marketing?  Marketing: planning and executing the development, pricing, promotion, and distribution of ides, goods, and services to create exchanges that satisfy both buyers’ and sellers’ objectives  Marketing concept: the idea that the whole firm is directed toward serving present and potential customers at a profit  Four activities that compose the marketing mix: developing, pricing, promoting, placing products Providing value and satisfaction  Value and benefits: value is the relative comparison of a products benefit vs. its costs o Ratio: Value = Benefits / Costs  Value and utility: utility is the ability of a product to satisfy a human want or need ; marketing strives to provide 4 kinds of utility: o Time utility: makes products available when consumers want them o Place utility: it makes products available where customers can conveniently purchase them o Ownership utility: transferring from store to customer o Form utility: turning raw materials into finished ornament Goods, Services, and Ideas  Consumer goods: products purchased by individuals for their personal use  Industrial goods: products purchased by companies to use directly or indirectly to produce other products  Services: intangible products, such as time, expertise, or an activity that can be purchased  Relationship marketing  A type of marketing that emphasizes lasting relationships with customers and suppliers The marketing environment  External environment: outside factors that influence marketing programs by posing opportunities or threats o Marketing plans are strongly influence by this  Political & legal environment o Political activities, both foreign and domestic, have effects on business o Managers try to maintain favourable political and legal environment  Social and cultural environment o Changing social values force companies to develop and promote new products for both individual consumers and industrial customers  Technological environment o New technologies affect marketing in many ways; can create new goods and services  Economic environment o Economic conditions determine spending patterns by consumers, businesses, and governments  Competitive environment o Marketers must convince buyers that they should purchase their product over others o Three types of competition:  Substitute products: a product that is dissimilar form those of competitors but that can fulfill the same need  Brand competition: competitive marketing that appeals to consumer perceptions of similar products  International competition: competitive marketing of domestic against foreign product Strategy: the marketing mix  Marketing managers: managers that are responsible for planning and implementing all the marketing mix activities that result in the transfer of goods or services to customers  Marketing plan: a detailed strategy for gearing the marketing mix to meet consumer needs and wants  Marketing mix: the combination of product, pricing, promotion, and distribution strategies used in marketing a product o Product: a good, service or idea that satisfies buyers’ needs and demands (begins with this)  Product differentiation: the creation of a product or product image that differs enough from existing products to attract consumers o Price: the part of marketing mix concerned with the price for a product to meet the firms profit objectives and buyers’ purchasing objectives o Place (distribution): part of marking mix concerned with getting products from the producer to the buyer, including transportation o Promotion: techniques for communicating information about products  The 4 P’s (product, price, place, promotion) focus on the seller’s perspective  Form the buyer’s perspective – customer solution (product), customer cost (price), customer convenience (place), customer communication (promotion) Target marketing and market segmentation  Target market: any group of people who have similar wants and needs and may be expected to show interest in the same products  Market segmentation: dividing a market into categories according to traits customers have in common Identifying market segments  In identifying market segments, look a geographic demographic, psychographic, and product use variables o Geographic variables: geographical units that may be considered in a segmentation strategy o Demographic variables: characteristics of populations that may be considered in developing a segmentation strategy o Psychographic variables: psychological traits that a group has in common, including motives, attitudes, activities, interests, and opinions o Product use variables: the ways in which consumers use a product, the benefits they expect from it, their reasons for purchasing it, and their loyalty to it Market segmentation: a caution  Has to be done carefully, just because a group of people may share an income level of age group doesn’t mean their spending habits are the same o Spending patterns, values, tastes, and wants are all different Market research  Market research: the systematic study of what buyers need and how best to meet those needs The research process  Five steps in performing market research: o Study the current situation o Select a research method o Collect data  Secondary data: info already available to market researchers as a result of previous research by the firm or other agencie
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