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Rotman Commerce

Chapter 1 Needs: felt deprivation Wants: form of human need take place as culture & individual needs Demands: wants backed by buying power Market offerings: combination of products, services, information, or experience offered to a market to satisfy a need or want *Marketing myopia: paying more attention to a specific product than the benefits and experiences produced  Omitting brand experiences Exchange: obtaining a desired object from someone by offering something in return Market: set of all actual and potential buyers of a product or service  Profitable Customer relationship Profitable customer relationship 2 categories of demand 1. New customers (traditional) 2. Repeat Customers (modern-retain profitable customers) 3 stages 1. Entrepreneurial marketing (knock on doors) 2. Formulated marketing (marketing department) 3. Interpreneurial marketing (maturing company) Marketing management: choosing target markets & building profitable relationships  Customers & demand management Value preposition: how it will differentiate & position itself in the market place Marketing concept Production concept 优优优优 i. Customers: favour affordable & available product ii. Goals: improve production & distribution efficiency iii. Usefulness: demand>supply, product cost too high iv. Risk: marketing myopia Product concept 优优优优 i. Customers: favour best quality, performances, innovative features ii. Goal: improve product features iii. Usefulness: stable market-no competition iv. Risk: marketing myopia Selling Concept 优优优优 i. Customers: will not buy if no promotion or selling effort ii. Goal: promote product iii. Usefulness: sell unsought product (i.e. insurance) iv. Risk: creates sales but not relationships; dissatisfied customers (Inside-out) *Marketing Concept 优优优优 i. Customers: choose product best satisfy needs and wants ii. Goal:-determine wants and needs of customers -deliver satisfaction more effectively & efficiently than competitors iii. Risk: -overlooks long-term welfare of customers (i.e. fast food) -short term focus w.r.t larger social & ethical issues *Customer driven marketing  When customers do not yet know they need something  Meeting future needs by understanding customers’ needs (Outside-in) Marketing mix tools (4Ps-intergrated marketing program): set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market 1. Product-Consumer solution 2. Price-Consumer cost 3. Place-Convenience 4. Promotion-Communication Customer relationship management (优优优优优优): building & maintaining profitable customer relationships by delivering superior customer value & satisfaction  Acquiring, keeping, growing customers Customer-perceived value优优优优优优优优优: customer evaluation of benefits & cost of a market relative to those of competing offers Customer satisfaction 优优优优优优优: product’s perceived performance matches a buyer’s expectations Customer-generated marketing 优优优优优优优优优: marketing messages, ads, and other brand exchanges created by consumers themselves (invited or uninvited) Partner relationship management 优优优优优优优优优优: other company department & outside company to jointly bring greater value to customers Customer lifetime value 优优优优优优优优: value of entire stream of purchasing that a customer would make over a lifetime of patronage优优优优 Share of customer 优优优优优优: portion of the customer’s purchasing that a company gets in its product categories Chapter2 Strategic Planning: strategic fit btw organization’s goal, capabilities, changing marketing opportunities Mission Statement  Statement of purpose; want to accomplish Requirements  Market oriented (satisfying customer’s needs)  Realistic  Specific  Fit the market environment  Distinct competences  Motivation Set company objectives and goals  Mission turned into detailed supporting objectives and goals for each level of company management Business portfolio: collection of business and products that make up the company Portfolio analysis: management evaluates the products and business that make up the company  Strategic business unit (SBUs)  Classify by growth-share matrix Growth-share matrix  Stars(best): high growth, high share business or products; need heavy investment to finance rapid growth; eventually slow (become cash cows)  Cash cows: low growth, high share business or product; established SBUs; need less investment to hold market share, produces lots of cash  Question mark: high growth, low share business; requires lots of cash to hold share; some question mark become star some not  Dogs(worst): low growth, low market share; generate enough cash to maintain themselves but not large source of cash Product-market expansion grid: identifying company growth opportunities through market penetration, market development, product development, or diversification  New VS existing market  New VS existing product Market penetration: increasing sales of current products to current market segments w/o changing the product (优优优优优优优优优) Market development: identifying & developing new market segments for current company products 优优优优优优优优优优 Product development: offering modified or new products to current market segments 优优优优优优优优优优 Diversification: starting up or acquiring business outside the company’s current product and markets (优优优优优优优) Downsizing: eliminating products or business units that are not profitable or that no longer fit company’s overall strategy Marketing Strategy: create customer value and achieve profitable customer relationships Market segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristic, or behaviours and who might require separate products or marketing programs Market Segment: group of consumers who respond in a similar way to a given set of marketing efforts  Have uniform response to marketing effort  Segment should be as large as possible w/o sacrificing uniformity of response Market targeting: evaluating each market segment’s attractiveness & selecting one or more to enter  Target segment that can generate the greatest customer value (not profit) Positioni: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers  Require back up of actual product differentiation Differentiation: actually differentiating the market offering to create superior customer value Chapter 5 Customer insights: fresh understandings of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships Marketing information system (MIS): ppl 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  Internal database (优优优优优): electronic collections of consumer and market information obtained from data sources within the company’s network  Can be assed more quickly and cheaply  Problem: incomplete or in wrong form, out of date  Data warehouse make information retrieval faster  Data mining uncover hidden patterns in data  Marketing intelligence (优优优优): the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment  Goal: improve strategic planning, track competitors, provide early warning of threat and opportunities  Sources: customers, employees, competitors, government agencies, reports, websites  Marketing research (优优优优) : the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization  Formal studies of specific situation  E.g.: market potential, market share studies, customer satisfaction, study of pricing, product, distribution and promote activities Marketing environment: target market, marketing channels, competitors, publics, macro-environment forces Marketing research process 1. Define problem and research objectives  Hardest step of process  Manages understand decision to be made best, researcher understands marketing research process and how info is obtained  Objectives o Exploratory research: gather preliminary (优优优) info which helps define the problem better and suggest hypothesis o Descriptive research: describe how things are; e.g. market potential, attitudes of consumers o Casual research: test hypothesis abt cause-and-effect relationships; e.g. 优优优优优优 10%优优优优优优优优优优  Should be formally documented, critical to guide rest of process 2. Develop the research plan for collecting information  Objectives must be translated to concrete information need  Gathering information o Secondary data: information that has ready been collected but usually for some other process • must evaluate to ensure that it is relevant, accurate, current, objective • sources: commercial online database=> computerized collections of information available from online commercial sources or via the internet o Primary data: information collected for the specific purpose at hand • Observation-observe relevant ppl, action, situations • Survey-ask individual directly, most widely used but not much is willing to answer • Experiment-best suited for gathering casual information 3. Implement the plan, collect and analysis data  Collect by own ppl or outsourcing  Data collection is expensive and most subject to error  Data needs to be entered into in a database for further analysis 4. Interpret and report findings  Find meaningful results and report to management, avoid fancy statistical techniques  Interpretation should be done by researcher alone o Manager should check research if carry out properly o Manager should have additional questions after seeing initial results o Manager ultimately decides on how to act on data o Raw data should always be made available to manger or stakeholders ----------------------------------------------------------------------------------------------------------- ---------- Test marketing: the stage of new-product development in which the product and marketing program are tested in realistic market settings  Typically using e.g. a geographically limited test market, a certain city or country  Most appropriate when risk is high, and delay introduction not a problem  Disadvantage: allow competitors to copy product  Advantage: better cost control, better product for consumer Test market types 1) Standard test markets  A small # of representative test cities, full marketing campaign in these cities, store audits, consumer and distributor surveys  Cost high, may take a long time, competitor might monitor or interfere 2) Controlled test markets  Stores agree to carry out product for a fee  E.g. monitor TV viewing and inserted ads, and corresponding buying behaviour in stores in controlled test market  Cost less and take less time 3) Simulated test markets  Simulated shopping environment, ads + shelves, customers have a certain amount of money to spend-reason for purchase or no purchase  Cheap, quick (8 weeks), keep out of competitor’s view; small sample size Chapter 6 Motive (Drive): need that able to direct person to seek satisfaction of the need; take action  Freud’s theory of motivation  Urges repressed when growing up => exhibit later in life  A person doesn’t fully understand his/her motives  Motivation research=> probe to find consumer’s hidden subconscious motivations  Maslow’s theory of motivation  Hierarchy of needs from most to least o Physiological o Safety o Social o Esteem o Self-actualization Perception: process by which ppl select, organize and interpret info to form a meaningful picture of the world  Selective attention: screen out most of info that they are expose to  Selective distortion: interpret info in a way that will support what they already expose to  Selective retention: remember good pts made abt a brand and forget pts made abt competing brands Learning: changes in an individual’s behavior arising from experience  Drive: strong internal stimulus that calls for action  Stimuli: drive become motive  Cues: minor stimuli that determines when, where and how a person responds  Response: influence by all the cues  Reinforcement: the action will repeat when it is rewarding Belief: a descriptive thought that a person holds about something- can be changed Attitude: a person’s consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea  Should fit product into existing attitude and not try to change them Complex buying behaviour: consumer buying behavior in situations characterized by high consumer involvement in a purchase and significant perceived differences among brands (优优优优优优优优优优优优优优优优优优优优)  Expensive, risky, purchased infrequently, or highly self-expressive  Marketers must understand information gathering and evaluation behaviour Dissonance-reducing buying behavior: consumer buying behaviour in situations characterized by high involvement but few significantly perceived brand difference (优优优优优优优优优优优 优优优优优优)  Since no difference in brand; may respond to e.g. price  Customer not sure what is the best choice  Post purchase dissonance (after-sale discomfort)  优优优优优优优优优优优优优优优优优优优优优优优优优优优优优  After sale communication should provide evidence and support to help customer feel good about their choice Habitual buying behaviour: consumer buying behaviour in situations characterized by low consumer involvement and few significantly perceived brand difference (优优优优优优优优优, 优优优优优优优优优优优优优优优优优优优 优优优优优)  Do not search or evaluate excessively, they “recognize” what to buy  Passive information reception  E.g. use ads, visual symbols, logos colour  Should be short and highly repeated=> create brand familiarity  ad based on conditioning theory=> buyers identify product by a symbol repeatedly attached to it Variety-seeking buying behavior: consumer buying behaviour in situations characterized by low consumer involvement but significant perceived brand differences (优优优优优优优优优优优优优优, 优优优优优优优优优优 优优优优优优)  Brand switching for variety-not necessarily due to dissatisfaction Need recognition: the first stage of the buyer decision process, in which the consumer recognizes a problem or need  Internal stimuli=> strong enough to become drive  External stimuli=> e.g. a break from work Information search: consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into an active information search  If drive is intense, may be skipped  If drive is not strong enough, stored in memory to do research  Personal source  Commercial sources  Public sources  Experiential sources Alternative evaluation: consumer uses information to evaluate alternative brands in the choice set  优优优优优优优优优优优优优优优优优优  优优优优优优优优优优优优 Purchase decision: buyer’s decision about which brand to purchase  Attitudes of others (优优优优优优优优优优)  Unexpected situational factors (优优) Post purchase behaviour: consumers take further action after purchase based on their satisfaction or dissatisfaction  Expectation VS perceived performance  Customers wonders pros/cons  Cognitive dissonance=> buyer discomfort caused by post purchase conflict  96% dissatisfied customers don’t tell the company! New product: a good, service, or idea that is perceived by some potential customers as new Adoption process: the mental process through which an individual passes from first hearing about an innovation to final adoption  Awareness: 优优优优优优  Interest: 优优优优优优优优优  Evaluation: 优优优优优优  Trial: 优优优优优优优优优  Adoption: 优优优优优优优优优优 Chapter 8 Market segmentation  Right segment size and right growth rate  Structural factors-competitors and substitutes  Relative power of buyers and suppliers  Note: largest size or growth not necessarily most desirable- a small company might aim for a segment with less absolute size or growth if it has less competitors Geographic segmentation: dividing a market into different geographical units such as nations, regions, provinces, counties, cities, or neighbourhood Demographic segmentation: based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality Age and life-cycle segmentation: different age and life-cycle groups Gender segmentation: dividing a market into different groups based on gender Income segmentation: different income groups Psychological segmentation: dividing a market into different groups based on social class, lifestyle, or personality characteristic Intermarket segmentation: forming segments of consumers who have similar needs and buying behaviour even though they are located in different county Target market: set of buyer who share common needs or characteristics that the company decides to serve  Undifferentiated marketing=mass marketing  Firm decides to ignore market segment differences and go after the whole market with one offer  Difficult to compete with focus competitors  Differentiated marketing=segmented marketing  Firm decides to target several market segments and designs separate offer for each  Developing a strong position within several segments creates more total sale than undifferentiated marketing  Concentrated marketing=niche marketing  Firm goes after a large share of one or a few segments or niches  Shared marketing mix for all segments  Attractive when resources are limited Micromarketing: practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups-include local marketing and individual marketing  Local marketing: tailoring brands and promotions to the needs and wants of local customers groups-cities, neighbourhoods, and even specific stores  Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers-also labelled “one-to-one marketing”, “mass customization” and “market-of-one marketing” Product positioning: the way the product is defined by consumers on important attributes-the place the product occupies in consumers’ minds relative to competing products 1) Identifying a set of possible competitive advantages to build on  Deliver on promised offering=> needs to differentiate the actual product or service  Think of customer’s entire experience=> potential differentiation  Product:- features, performances, style, design -consistency, durability, reliability, reparability  Service:- speedy, convenient, careful delivery - Installation, repair, customer training or consultation  Channels:- coverage, expertise, performance  People:- Hiring and training ppl better than competitors  Image:- May affect decision when products and decision otherwise look alike - Require creativity and hard work - Must supported by everything company does 2) Choosing the right competitive advantages  Company should develop a unique selling proposition (UPS) for each brand and stick with that  Nowadays companies are trying to broaden  Which differences to promote o Important: the difference delivers a highly valued benefit to target buyers o Distinctive: competitors do not offer the difference, or the company can offer it in a more distinctive way o Superior: the difference is superior to other ways that customers might obtain the same benefit o Communicable: the difference is communicable and visible to buyers o Pre-emptive (优优优优) : competitors cannot easily copy the difference 3) Selecting an overall positioning strategy  Value preposition: full positioning of a brand-full mix of benefits upon which it is positioned  More for more (优优优):- upscale product, high price - Marketing offers high quality, and prestige - Price difference often exceeds actual increment in quality  More for same (优优优优优优优优优优): more value for same price  The same for less (优优优优优优优优优): same brand but have discount  Less for much less (优优优优优优优): settle for cheap good to get cheap price  More for less (优优优优优优优) : many claim to do this; “winning proposition”- often unachievable; long run competitors will force you to make a choice The company must then communicate and deliver the chosen position to the market Positioning statement: a statement that summarizes company or brand positioning ----------------------------------------------------------------------------------------------------------- ---------- After midterm Chapter 9 pg376-279, 281-297 ·Product: anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want a need. A company’s market offering includes both intangible goods and service. · Extreme offer优 pure tangible good eg. Soap, toothpaste, or salt pure service eg doctor’s exam or financial advice · Between these two extremes, however, many goods-and services combinations are possible  Physical object  Services  Events  Persons  Places  Organizations  Ideas  Mixes of these ·Service: any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything Level of product and services 1. Core customer value 2. Actual product: a design, a quality level, a brand name, and packaging. Eg. Blackberry 3. Augmented product: around the core benefit and actual product by offering additional consumer service and benefit. Eg 优优优优 ·Consumer product (4 种): product bought by final consumers for personal consumption  Convenience product: -bought frequently, immediately, minimum of comparison - Usually low price, available in many locations - E.g. soap, candy, newspaper 优优优优  Shopping product: -less frequently purchased, customers compare carefully on suitability, quality, price style, and are ready to spend time and effort in the buying effort - Furniture, clothing, used cars, major appliances, hotel/motel services 优优优优优  Specialty product: -products/services with unique characteristic or brand identification, a significant group of buyer is willing to make a special purchase effort - 优优优  Unsought product: - product that consumers does not know about or normally don’t think about - Most innovation are unsought product until known through ads - Require lots of ads, personal selling, other effort - 种种种种 · Business product: product bought by individuals and organizations for further processing or for use in conducting a business 种 consumer product 种种种种种种种种种种种种  Materials and parts o Raw materials: farm products, natural products o Manufactured materials and parts: component material and component parts iron, wire, tires  Capital items o Installations: buildings, fixed equipment o Accessory equipment: portable factory equipment and tools an office equipment  Supplies and services: operating supplies (paper, nail, brooms) repair service (window cleaning, computer repair) Pg281-297 Product and service decisions (3 levels) 1. Individual product decisions product attributes ·Product quality-one of marketers’ most major positioning tools  Performance quality, consistency in delivering level of performance  Total Quality Management (TQM)-“return on quality approach”, quality as investment ·Product feature  Stripped down model is the starting pt, with no extras  Extras added to create higher level model=> differentiation  High value-to-cost ratio meaning extra should be added ·Product Style and Design  Style=appearance, no effect on performance  Design=goes deeper, to core of product Branding Brand: a name, term, sign, symbol, design, or a combination of these  Benefits: - Help consumer identify product, tell buyer something about quality - Gives the seller advantage, legal protection to unique product features, help seller to segment market  Brand equity: the differential effect that knowing the brand name has on customer response to the product or its marketing  Store Brand: a brand created and owned by a reseller of a product or service  Co-branding: the practice of using the establish brand names of two different companies on the same product  Line extension: extending an existing brand name to new forms, colours, sizes, ingredients, or flavours of an existing product category  Brand extension: extending an existing brand name to new product categories Service intangibility: a major characteristic of services-they cannot be seen, tasted, felt, heard, or smelled before they are bought Service inseparability: a major characteristic of services-they are produced and consumed at the same time and cannot be separated from their providers Service variability: a major characteristic of services-their quality may vary greatly, depending on who provides them and when, where and how Service perishability: a major characteristic of services- they cannot be stored for later sale or use Service-profit chain: The chain that links service firm profits with employee and customer satisfaction Internal marketing: orienting and motivation customer-contact employees and supporting service people to work as a team to provide customer satisfaction Interactive marketing: training service employees in the fine art interacting with customers to satisfy their needs Packaging: activities of designing and producing the container or wrapper of a product  Labeling or printed information  Attract attention on store shelve Process for developing a package  What the packaging should be and do for the product  Specific element of product-size, shape, materials, color, text, brand mark  Must consider product safety and society’s interest Labelling: range from simple tags to complex graphics that are part of the package (part of packaging)  Several functions: - Identities the product or brand - Describes several things-who made it, where and when it was made, contents, how to use - Promote the product through attractive graphics  Recent developments - Unit pricing (price per unit of standard measure) - Open dating (expected shelf life of the product) - Nutritional labeling (nutritional values of the product) Product support services:  Survey customers periodically  Fix problems and ass new service that will both delight customers and yield profits to the company 2. Product line decisions Product line: a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price range 1) Function in a similar manner 2) Are sold to the same customer groups 3) Are marketed through the same type of outlets 4) Fall within given price range Product line length=# of items in the product line Systematically increasing product line length Filling  Adding more products within the current range  Reasons- extra profits, satisfying dealers, using excess capacity, being leading full line manufacturer, plugging holes to keep out competitors  Risk of overdoing- results in cannibalization and customer confusion Stretching  Lengthening of product line beyond its current range (e.g. price)  Stretch onwards-defend higher end products or profit from more market activity in lower price segment  Stretch upwards-add prestige to current products, profit from faster growth rate or margins of higher end segment, position as a full line manufacturer  Stretching in both directions Pattern of uncontrolled product line growth and heavy pruning  Product lines tend to lengthen over time- more complete line to satisfy customers, or manager wants more sales and profits  Top management calls a halt and prunes product line  Product line start to lengthen again 3. Product mix decisions  Width-number of different product lines in the mix  Length-total number of items carried in each product line  Depth-number of versions offered of each product lines are in end use, production requirements, distribution channels, or in some other way Increasing business 1) Add new product lines 2) Lengthen existing product lines 3) Add more versions of each product 4) Pursue more product line consistency Chapter 10 pg314-315, 322-324, 330-337 优优优优 obtain new products 优优优 acquisition种by buying a whole company, a patent, or a licence to produce someone else’s product种 优优优优优 new-product development ·New-product development: The development of original products, product improvements, product modifications, and new brands through the firm’s own product-development effort · New products are important-For companies, new products are a key source of growth -For customers, new products bring new solution and variety to their lives. Innovation can be very expensive and very risky ·Typical failure  Market size overestimated  Poor product design  Incorrect positioning  Price too high  Costs of product development higher than expected  Competitors fight back harder than expected · Test marketing种 The stage of new-product development in which the product and marketing program are tested in realistic market settings ·It lets the company test the product and its entire marketing program— targeting and positioning strategy, advertising, distribution, pricing, branding and packaging and budget levels · Declined recent year · Cost high 种种种种种种种种种种种种 cost 种种种种种种种 · Does not guarantee success 1. Standard test market · find small number of representative test cities · conduct a full marketing campaign in those cities, and uses store audits consumer distributor surveys and other measures to gauge product performance. · The result: forecast national sales and profits, discover potential product problems and fine-tune the marketing program. · Most widely used approach for major in-market testing · However, many companies shift to quicker and cheaper controlled and simulated test marketing methods Drawbacks · very costly · take a long time · competitors can monitor test market results or interfere with them by cutting their prices in test cities, by increasing their promotion, or even by buying up the product being tested · finally, test markets give competitor a look at the company’s new product well before it is introduced nationally. · Thus, competitors may have time to develop defensive strategies, and may even beat the company’s product to the market 2. Controlled test markets Several research firms keep controlled panels of stores that have agreed to carry new products for a fee · cost less · much more quickly than standard · allows companies to evaluate their specific marketing efforts · allows competitors to get a look at the company’s new product. · However, the research firms are experienced in projecting test market results to broader markets and can usually account for bias in the test markets used. 3. Simulated 种种 test market · test new product in a simulated shopping environment · shows ads and promotions for a variety of products, including the new product being tested, to a sample of customers · give customers a small amount of money and invite them to a real or lab store where they may keep the money or use it to buy items. · Provides a measure of trial and the commercial’s effectiveness against competing commercials · Overcome some disadvantages of standard and controlled test markets:  usually cost much less  can be run in eight weeks  keep the new product out of competitor’s view  do not think that simulated test markets are as accurate or reliable as larger, real world tests  优优优优优优优优优优优优优优优优优 优优优优优优优优 Pg330-337 Product life cycle: course of a product’s sales and profits over its lifetime. It involves 5 distinct stages: 1. Product development: company finds and develops a new-product idea - Sales are zero, company investment costs mount 2. Introduction: slow sales growth - Profits non-existence, heavy expenses of introduction 3. Growth: rapid market acceptance - Increasing profit 4. Maturity: slowdown in sales growth - Profit level off or decline, increased marketing outlays to defend against competitors 5. Decline - Sales fall off, profits drop Note: not all
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