Textbook Notes (362,858)
Canada (158,079)
RSM250H1 (18)
Min Zhao (3)

RSM250 Textbook Notes

31 Pages
Unlock Document

University of Toronto St. George
Rotman Commerce
Min Zhao

Chapter 1 WHAT IS MARKETING? Marketing: - The managing of profitable customer relationships - The activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large - Goals are to attract new customers by promising superior value and to grow current customers by increasing satisfaction - Satisfying customer needs in a socially responsible and ethical manner Marketing Mix - A set of marketing tools that work together to satisfy customer need and build lasting customer relationships The Marketing Process - Five Simple Steps 1) Understand the marketplace and the customers needs and wants 2) Design a customer driven Market Strategy 3) Construct a marketing program that delivers superior value 4) Build Profitable relationships and create customer delight 5) Capture Value from customers to create profits and customer equity UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS Customer Needs, Wants, and Demands: Needs - States of deprivation - MASLOW's HERIARCHY OF NEEDS Wants: - The form human need takes as shaped by culture and individual personality - A canadian "needs" food to survive but "wants" a breakfast sandwich and a double double Demands - Human wants that are backed by buying power Market Offerings —Products, Services and Experiences: Market Offerings - Some combination of products, services, information or experiences offered to a market to satisfy a need or want 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 Smart marketers orchestrate several services and products to create "Brand Experiences" for customers. Customer Value and Satisfaction: It is important to set the right level of customer expectations. If you set expectations too low then you will saitisfy existing buyers but may not attract new ones. On the other hand if you set them too high, buyers will be disappointed Exchanges and Relationships: Exchange - The act of obtaining a desired object from someone by offering something in return. - Marketing consists of actions taken to build and maintain desirable exchange relationships with their target audiences Markets: Markets - The set of all actual and potential buyers of a product of service - The buyers share a particular need or want that can be satisfied through exchange relationships DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY Marketing Management - The art and science of choosing target markets and building profitable relationships with them - It is essentially customer management and demand management When designing a winning marketing strategy, the marketing manager must answer two important questions: 1) What customers will we serve (who is our target market)? 2) How can we serve these customers best (what's our value propostion)? Selecting Customers to Serve : In order to select who to serve a company will divide the markets in to segments of customers (MARKET SEGMENTATION) and then selecting which segments it will go after (TARGET MARKETING) Demarketing - A process to the reduce the number of customers or to shift their demand either temporarily or permanently (power companies during peak hours) Choosing a Value Proposition: A company's value proposition is the set of benefits or values it promises to deliver to customers to satisfy their need. Some value propositions differentiate one brand from another, answering the question of "why should I buy your brand instead of brand X?" Marketing Management Orientations : There are five alternative concepts under which organizations design and carry out their marketing strategies: 1) The Production Concept - The idea that customers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency 2) The Product Concept - The idea that customers will favour products that offer the most quality, performance, and features and that the organization should therefore devote it's energy to making continuous product improvements 3) The Selling Concept - The idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort 4) The Marketing Concept - The marketing management philosophy that achieving organization goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than the competitors do. 5) The Societal Marketing Concept - The idea that a companies marketing decisions consider consumers wants, the companies requirements, consumers long-run interests and societies long-run interests. - Overlooks possible conflicts between consumer short run wants and long run welfare (bottled water looks ok now but could be fucking the environment in the long run.) PREPARING AN INTERGRATED MARKETING PLAN AND PROGRAM The marketing program builds customer relationships by transforming the marketing strategy into action. It consists of the firms marketing mix which are classified into four broad groups called the 4 P's - Product — To deliver on it's value proposition a firm must create a need- satisfying market offering - Price —Decide on how much it will charge for the offering - Place —How it will make the offering available to customers - Promotion —Communicate with target customers about the offering and persuade them about it's merits The firm must blend all of these marketing mix tools into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers BUILDING CUSTOMER RELATIONS Customer Relationship Management: Customer Relationship Management - The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction - Deals with all aspects of acquiring, keeping, and growing customers - The aim is to not just create customer satisfaction, but customer delight Customer perceived Value - The customer's evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. Customer Satisfaction - The extent to which a product's perceived performance matches a buyers expectations A customer centered firm seeks to deliver high customer satisfaction relative to competitors, it does NOT attempt to maximize customer satisfaction. A company can always increase customer satisfaction by lowering prices but this may result in lower profits, thus the purpose of marketing is to generate customer value profitability. This requires a very delicate balance where the marketer must continue to generate more customer value and satisfaction but not "give away the house" Customer Relationships and tools - Basic Relationships: o Typical of companies with low margin customers o Creates relationships through brand building, advertising, sales promotions and web presence - Full Partnerships o In markets with few customers and high sales margins (PnG dealing with Walmart) - Frequency Marketing Programs o Reward customers who buy frequently or in large amounts (Frequent flyer programs, air miles, hotel upgrades for frequent guests) - Club Marketing Programs o Offers members special benefits and create member communities (Harley Davidson HOG club) Changing Nature o f Customer Relationships: Relating with more carefully selected customers - Selective Relationship Management o When companies target fewer, more profitable customers rather than mass marketing to everyone o Best Buys practice of attracting the "angels" and exercising the "demons" Relating more Deeply and Interactively - The aim is to create a deeper consumer involvement and a sense of community surrounding a brand. To make the brand a meaningful part of consumers conversations and lives - Advances in communication and information technology have both allowed companies to develop closer relationships with their customers but have also empowered customers (more information to make choices, more control of situations and requests of information) thus making it a two way street. - Greater control for consumers means companies can no longer rely on marketing by "Intrusion" ,they must practice marketing by "attraction" which is comprised of creating market offerings and messages that involve consumers rather than interrupt them - Consumer Generated Marketing - Marketing messages, ads, and other brand exchanges created by consumers themselves, both invited and uninvited Partner Relationship Management - Working closely with partners in other company departments and outside the company to jointly bring greater value to consumers - Partners inside the Company o In today's more interactive world every functional area of a company can interact with customers thus making marketing is a part of everyone's department. o Rather than letting each department go it's own way, firms are linking all departments together in the name of creating and improving customer value. - Partners Outside the Company o Most companies today are networked companies, relying heavily on partnerships with other firms (suppliers, retailers etc.) o Marketing channels consists of distributors, retailers, and others who connect the company to its buyers. o Supply Chain  A longer channel, stretching from raw materials, to components to final products that are carried to final buyers  Through supply chain management, many companies are strengthening their relationships with all partners along the supply chain. Success at building customer relationships also rests on how well their entire supply chain performs against their competitors supply chains Creating Customer Loyalty and Retention: Customer Lifetime Value - The value of the entire stream of purchases that a customer would make over a lifetime of patronage - Therefore losing a customer costs you all their lifetime purchases, not just the purchase you lost that day due to dissatisfaction Growing Share o f Customer: Share of Customer - The portion of the customers purchasing that a company gets in it's product categories Building Customer Equity: Customer Equity - The total combined customer lifetime values of all of the company's customers. - May be a better indicator a firms performance than customer satisfaction as satisfaction measures the past and customer equity suggests the future. Building the Right relationships with the right consumers - Butterflies o Good fit between company's offerings and customers needs, high profit potential (High potential profitability, low loyalty) - Strangers o Little fit between company's offerings and a customers needs, lowest profit potential (Low potential profitability, low loyalty) - Barnacles o Limited fit between company's offerings and customers needs, low profit potential (Low Profitability potential, high loyalty) - True Friends o Good fit between company's offerings and customers needs, highest profit potential. 2 X 2 Matrix: CHAPTER 2 Company Strategic Planning: Defining Marketing’s Goal - The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing market opportunities - Steps in Strategic Planning 1) Defining the company's mission statement 2) Setting Company objectives and goals 3) Designing the business portfolio 4) Planning Marketing and other functional strategies Defining a Market-Oriented Strategy: Mission Statement - A statement of the organizations 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 - Firms with a well-crafted mission statement have better organizational and financial performance - Mission statements should be market oriented and defined in terms of satisfying basic customer needs - Should be meaningful and specific while still being motivating - Should not be stated as making more sales or profits Setting Company Objectives and Goals: Company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for meeting them. Designing the Business Portfolio: Business Portfolio - The collection of businesses and products that make up a company - The best kind is the one that best fits a company's strengths and weaknesses - Two steps o Analyze current portfolio and decide which business should receive more, less, or no investment o Shape the future portfolio by developing strategies for growth and downsizing Analyzing the Current Business Portfolio: Portfolio Analysis - The process by which management evaluates the products and businesses that make up the company. A company wants to put more resources into strong businesses and phase down or drop weaker (less profitable) ones. Strategic Business Unit (SBU) - The key businesses that make up a company - Can be a company division, a product line within a division, or sometimes a single product or brand Growth —Share Matrix (Boston Consulting Group) - A portfolio planning method that evaluates a company's strategic business units in terms of it's market growth rate and relative market share. 1) Stars —High growth, high market share businesses or products, often need heavy investments to finance their rapid growth. Eventually their growth will slow down turning them into cash cows 2) Cash Cows —Low growth, high market share businesses or products. These established and successful SBU's need little financing to hold their market share, thus they produce a lot cash that companies can use to support other SBU's that need investment 3) Question Marks —High growth but low market shares, they require a lot of cash to hold their share, let alone increase it 4) Dogs —Low growth, low share businesses and products, they may produce enough cash to sustain themselves but do not promise to be large sources of cash 2x2 Matrix: Problem with this type of analysis is that it focuses on classifying current businesses, but provides little advice for future planning. Developing Strategies for Growth and Downsizing: The Product/Market Expansion Grid - A portfolio planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification Market Penetration - A strategy for company growth by increasing sales of current products to current market segments without changing the product Market Development - A strategy for company growth by identifying and developing new market segments for current company products Product Development - Offering modified or new products to current market segments Diversification - A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets Downsizing: - Reducing the business portfolio by eliminating products or business units that are no longer profitable or that no longer fit the company's overall strategy MARKETING STRATEGY AND THE MARKETING MIX Marketing Strategy - The marketing logic by which the business unit hopes to create customer value and achieve profitable customer relations Market Segmentation - Dividing a market into distinct groups of buyers who have different needs, characteristics or behaviours and who might require separate products or marketing programs. - Geographic, Demographic, Psychographic and behavioural factors Market Segment - A group of consumers who respond in a similar way to a given set of marketing efforts Market Targeting - The process of evaluating each market segments attractiveness and selecting one or more segments to enter - A company should choose those segments in which it can generate the greatest consumer value and sustain it over time - Companies with limited resources may choose to focus on smaller or "niche" markets Positioning - Arranging for a product to occupy a clear, distinctive, and desirable plae relative to competing products in the minds of target consumers - Why a consumer will pay a little more for your product over Brand X Differentiation - Actually differentiating the market offering to create superior consumer value Developing and Integrated Marketing Mix: Marketing Mix - The set of controllable, tactical marketing tools —product, price, place, promotion —that the firm blends to produce the response it wants in the target market. Product - The goods and services combination the company offers to the target market - Variety, Quality, Design, Features, Brand Name, Packaging, Services Price - The amount of money customers must pay to obtain the product - List price, Discounts, Allowances, Payment Period, Credit Terms - includes company activities that make the product available to target consumers - Channels, coverage, assortments, locations, inventory, transportation , logistics Place Promotion - activities that communicate the merits of the product and persuade target customers to buy it - Advertising, personal selling, sales promotion, public relations. CHAPTER 5 MARKETING INFORMATION AND CUSTOMER INSIGHTS Other Marketing Information Consideration: Marketers don't need more information, they need BETTER information. Customer Insights - Fresh understandings of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships - When gathering and using customer insights companies must be careful not to go too far and become "customer controlled". The idea is not to give the customer everything they ask for, rather to understand customers to the core and give them what they need — to create value for the customers and in turn creating value for the firm. Marketing Information Systems - People and procedures for assessing information needs, developing the needed information and helping decision makers to use the information to generate and validate actionable customer and market insights. ASSESSING MARKET INFORMATION NEEDS MIS primarily serves the company's marketing and other managers, however it may also provide information to external partners, such as suppliers, resellers or marketing service agencies. A good marketing information system balances the information users would "like" to have against what they really "need" and is feasible to offer. DEVELOPING MARKETING INFORMATION Internal Data: Internal Data - Electronic collections of consumer and market information obtained from data services within the company's network - Can be accesses more quickly and cheaply than other information sources - Problems: o Because other departments collect information for other reasons the info may be inadequate or incomplete o Data ages quickly so keeping the database current requires major effort o Large companies produce a LARGE amount of data, so highly sophisticated techniques and equipment must be used to manage it so internal users and find the info quickly and use it effectively Marketing Intelligence: Marketing Intelligence   Marketing Research: Marketing Research                     Defining the Problem and Research Objectives:  Developing The Research Plan: Primary Data - Information collected for the specific purpose at hand Gathering Secondary Data: A company's internal database is a good place to start, although the company can also tap into a wide assortment of external information sources including commercial data services and government sources Commercial Online Databases - Computerized collections of information available from online commercial sources of via the internet Secondary data can usually be obtained more quickly and at a lower cost than primary data. Also secondary sources can sometimes provide data an individual company cannot collect on its own —information that is either not directly available or would be too expensive to collect. Problems - Needed information may not exist, researchers can rarely obtain all the data they need from secondary sources - Even when data is found the information may not be very usable - Researchers need to make sure the information is relevant, accurate, current, and impartial Primary Data Collection: Research Approaches - Observational Research o Gathering primary data by observing relevant people, actions and situations o Can obtain information that people are unwilling or unable to provide. o In contrast some things cannot be observed, such as feelings, attitudes and motives, or private behaviour. Long term and infrequent behaviour is also hard to observe. Observations can also be difficult to interpret . o Because of these limitations, researchers often use observation along with other data collection methods - Ethnographic Research o A form of observational research that involves sending trained observers to watch and interact with consumers in their "natural habitat" - Survey Research o Gathering primary data by asking people questions about their knowledge, attitudes, preferences and buying behaviour o The most widely used method for primary data collection as it is the best approach for gathering descriptive information o Major advantage is its flexibility, it can be used to obtain many different kinds of information in many different situations. o Problems:  People are unable to answer b/c they cannot remember or haven't thought about why they do what they do  People maybe unwilling to respond about things they consider to be private  Respondents may answer even when they don't know the answer in order to appear informed or intelligent  May try to help the interviewer by giving pleasing answers  Busy people may not take the time or may resent the intrusion into their privacy - Experimental research o Gathering primary data by selecting matched groups of subjects, giving them different treatments, controlling other factors and checking for differences in group responses o Tries to explain cause and effect relationships Contact Methods - Mail Questionnaires o Used to collect large amounts of information at a low cost per respondent o People may give more honest and personal answers cause there is no human interviewer asking them (no interviewer or response bias) o Problems  Not very flexible, allow for no follow up questions (everyone answers same questions in same order)  Take longer to complete and response rate is very low  Researcher has very little control over the response sample (it's hard to control WHO fills out a mailed survey)  Can be difficult to understand, people may incorrectly respond b/c they didn't understand the question - Telephone Interviewing o One of the best methods for gathering information quickly o Provides greater flexibility and interviewer can explain questions in greater detail to aid respondents understanding o Response rates tend to be higher and interviewers can speak to people with the desired characteristics and even by name o Problems:  Cost per respondent is higher than with mail questionnaires  People may not want to discuss personal topics with a live interviewer  Introduces Interviewer bias  People constantly hanging up and people are becoming tougher to reach with things like "do not call "lists - Personal Interviewing o Individual Interviewing  Flexible, trained interviewers can guide the topics and explain difficult questions and explore issues as the situations arise.  However personal interviews can cost 3-4 times as much as telephone o Group Interviewing  Six to ten people meet with a trained moderator to talk about a product, service or organization  People are normally paid a fee for their participation  "Focus Group Interviewing"  As described above, the interviewer "focuses" the group discussion on important issues  Problems  Usually small groups in order to keep costs down so it can be hard to generalize results  People are not always open and honest about their behaviour in front of others  Innovations =Volvo hypnotizing, Slow-Sip sessions (loosely structured, informal) - Online Marketing Research o Collecting primary data online through internet surverys, online focus groups, web based experiments or tracking consumers' online behaviour. o Well suited to quantitative research o Internet surveys now account for 80% of online marketing research spending o Speed and low cost are the major advantages o Web based surveys tend to be more interactive and engaging, easier to complete and less intrusive than traditional methods and b/c of this they usually garner higher response rates. o Good mix of people online and good for reaching hard to reach groups like teens, single, affluent and well educated respondents - Primary online QUALITATIVE research approach is online focus Groups o Online Focus Groups  Gathering a small amount of people online with a trained moderator to chat about a product, service or organization and gain qualitative insights about consumer attitudes and behaviour.  Lacks real world things like body language, eye contact, ect Issues facing online research methods are limited access by some sects of the population as well as privacy issues Sampling Plan Sample - A segment of the population selected for marketing research to represent the p
More Less

Related notes for RSM250H1

Log In


Don't have an account?

Join OneClass

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

Sign up

Join to view


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.