Marketing

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MARKETING
The Art and Science of Satisfying Customers {Chapter 1}
What is Marketing?
Organizations must create utility and customers to survive
Activities must perform to create customers: identifying customer needs; designing products to meet those needs; communicating information
Chart below are the 4 types of utility features;
TYPE
DESCRIPTION
EAMPLES
FUNCTION
Form
Conversion of raw materials & components into finished goods/services
Dinner at Swiss Chalet; iPod; shirt from Mark’s Warehouse
Production
Time
Availability of good/services when consumers want them
Dental appointment; digital photographs; eyeglass guarantee; Canada Post
Marketing
Place
Availability of goods/services at convenient locations
Soft-drink machine outside gas stations; on-site day care; banks in grocery stores
Marketing
Ownership
Ability to transfer title to goods/services from marketer to buyer
Retail sales (exchange for currency or credit card payment)
Marketing

A Definition of Marketing
Marketing: an organizational function & a set of processes for: creating, communicating, and delivering value to customers; managing customer relationships in ways that benefit the organization and its stakeholders

Today’s Global Marketplace
Factors that have extended economic views: increase in international trade agreements; growth of electronic business; interdependence of the world’s economies
Companies seek the most efficient manufacturing sites and most lucrative markets worldwide
Companies are tailoring their marketing efforts to the needs and preferences of local markets
Five Eras in the History of Marketing
Production: ‘a good product will sell itself’ – prior to 1920s
Sales: ‘creative advertising & selling will overcome consumers resistance and persuade them to buy’ – prior to 1950s
Marketing: ‘the consumer rules, find a need and fil it’ – since 1950s
Relationship: ‘long-term with customers, & other partners lead to success’ – since 1990s
Social: ‘connecting to consumers via internet, social media is an effective’ – since 2000s


The Production Era & Sales Era
Production orientation: stressing efficiency in producing a quality product, with the attitude toward marketing that “a good product will sell itself”, production shortages
Sales orientation: customers will resist purchasing nonessential items; personal selling and advertising important

Market Era & Relationship Era
Shift to a buyer’s market creates need for consumer orientation
Emergence of marketing concept: a companywide consumer orientation to achieve long-run success
Relationship marketing: developing long-term, value-added relationships over time with customers & suppliers; strategic alliances and partnerships

Avoiding Marketing Myopia
COMPANY
MYOPIC DESCRIPTION
COMPANY MOTTO
Honda Canada
Automobiles, ATV’s, motorcycles
Power of dreams
MasterCard
Credit card company
Can’t buy everything, but master card is available
Target Canada
Discount retailer
Expect more, pay less
Xerox
Photocopier manufacturer
Document company

Marketing in Not-for-Profit Organizations
Adopt marketing strategies to meet service objectives
Market to multiple audiences
Form alliances with for-profit firms
Focus is to generate revenue to support cause and not on bottom line
Service users have less control over the firm’s future

Non-traditional Marketing
TYPE
DESCRIPTION
EXAMPLES
Person marketing
Designed to cultivate the attention of a target market toward a person
Milos Raonic, Canada’s 2013 male athlete of the year Drake
Place marketing
Designed to attract visitors to an area, improve consumer images of a city or attract new business
PEI, Green Province, Nova Scotia, Land of Living Skies
Cause marketing
Identification of a social issue, cause or idea to selected target markets
“Today a reader, tomorrow a leader”
Event marketing
Sporting, cultural, charitable activities to selected target markets
Grey Cup, Rogers Cup
Organization marketing
Mutual-benefit org. service org., govern. org. – influence others to accept their goals
United Way: change starts here
Transaction-based Marketing to Relationship Marketing
Transaction-based: buyer and seller exchanges characterized by limited communications and little or no ongoing relationships between the parties
Relationship: gives a company new opportunity to gain a competitive edge by moving customers up a loyalty ladder

Interactive & Social Marketing / Partnerships & Alliances
Interactive/social: mobile marketing, interactive marketing, social marketing, buzz
Relationship marketing extends to suppliers, distributors, and customers for strategic advantage: strategic alliances
Social marketing: use of online social media as a communications channel for marketing messages
Buzz marketing: word-of-mouth that bridge the gap between a company and its products

Developing Partnerships & Strategic Alliances
Relationship marketing extends to business to business relationships with suppliers, distributors, and other partners
Strategic alliances: provide firms competitive advantage, types of alliances forms are product development partnerships; vertical alliances

Function of Marketing
Buying: ensuring product offerings are available in sufficient quantities to meet customer demands
Selling: advertising, personal selling & sales promotion to match products to customer needs
Transporting: moving products from their point of production to locations convenient for purchasers
Storing: warehousing products until needed for sale
Standardizing & Grading: ensuring product offerings meet quality & quantity controls of size, weight and other variables
Financing: providing credit for channel members (retailers/wholesalers) and consumers
Risk Taking: dealing with uncertainty about future customer purchases
Securing Marketing info: collecting info about consumers, competitors, & channel members for use in making marketing decisions

Ethics & Social Responsibility
Ethics: moral standards of behavior expected in a society
Social responsibility: marketing philosophies, policies, procedures, actions whose primary objective is to enhance society
Sustainable products: products that can be produced, used, and disposed of with minimal impact on the environment

Strategic Planning in Contemporary Marketing {Chapter 2}
Marketing Planning: Basis for Strategy & Tactics
Planning: process of anticipating future events and conditions and of determining the best way to achieve organizational objectives
Marketing planning: implementing planning activities devoted to achieving marketing objectives
Strategic Planning: determines primary objectives; adopting courses of action to achieve these objectives; long-term focus
Tactical Planning: implements activities specified in the strategic plan; shorter-term focus

Different Managerial Levels
Strategic: top management (board of directors, chief executive officer, chief operating officer, vice president – organization-wide objectives; long-term plans; total budget
Tactical: middle management (general sales manager, director of marketing research – quarterly & semi-annual plans; business unit budgets; divisional polices & procedures
Operational: supervisory management (district sales manager, supervisor) – daily and weekly plans; unit budgets; department rules and procedures

Marketing Planning Process

Organization Mission & Objectives
Mission: essential purpose that differentiates one company from another – sephora: the beauty authority; tim hortons: always fresh
Objectives: guide the development of marketing objectives and plans – add 25 new outlets within the next year; enter the Chinese market by 2015

Accessing Organizational Resources, Evaluating Environmental Risks and Opportunities
Resources: production, marketing, finance, technology, employees
Strengths help planners; set objectives; develop plans; take advantage of marketing opportunities

Formulating, Implementing, Monitoring a Marketing Strategy
Marketing strategy: selecting & satisfying target consumers through the marketing mix elements
Planning process: put the marketing strategy into action, monitor performance to ensure that objectives are achieved

First Mover & Second Mover Strategies
First: company first to offer a product in a marketplace will be the long-term market winner
Second: observing the innovations of first movers then improving on them again to gain advantage in the marketplace

Strategic Window
Limited periods when key requirements of a market & firm’s competencies best fit together
Requires a thorough analysis of current & projected external environmental conditions; current & projected internal company capabilities; when the firm can reconcile environmental conditions and company capabilities

Elements of a Marketing Strategy
Target market: group of people toward whom the firm directs its marketing efforts, merchandise
Marketing mix variable: blending for 4 elements: product, distribution, promotion, pricing

Marketing Environment
Competitive
Political-legal
Economic
Technological
Social-cultural

Business Portfolio Analysis
Strategic business units: key business units within diversified firms; each has its own managers, resources, objectives, and competitors; each pursues its own distinct mission & develop its own marketing plans



Market Penetration: strategy that a company uses when it attempts to build market share by selling existing products to existing customers
~ same products, same markets
Market Development: occurs when a company tries to attract new customers for its existing products
~ same products, new market
Product Development: occurs when a company develops new products that it hopes to sell to existing customers
~ new products, same market
Diversification: most risky, companies attempt to sell new markets – may have little experience
~ new products, new market

The Marketing Environment, Ethics, & Social Responsibility {Chapter 3}
Environmental Scanning & Environmental Management
Scanning: collecting external marketing environment information to identify and interpret potential trends
Management: attainment of organizational objectives by predicting and influencing the external environments
Strategic alliance: partnership when companies combine resources to create competitive advantages

Elements of Marketing Mix within an Environmental Framework
Target Market ~ Pricing, Product, Promotion, Distribution ~ Political-Legal Environment, Competitive Environment, Social-Cultural Environment, Economic Environment, Technological Environment

Competitive Environment
Competition: Monopoly, Oligopoly
Distinguish between direct and indirect competition
Time-based competition: strategy of developing & distributing goods more quickly than competitors

Political-Legal Environment
Competition Act: comprehensive legislation administered by Industry Canada & designed to help consumers and business by promoting a healthy competitive environment
Categorized in 3 areas: pricing, promotion, distribution

Marketing Practices Covered by the Competition Act
Price Issues
Price fixing: sellers collude to set prices higher than they would be in free market
Bid rigging: sellers collude to set prices with respect to one bids or quotations
Discrimination: seller charges different prices for the same quantity and quality of products to 2 customers who are in competition with each other
Predatory pricing: sellers set prices so low they deter competition from entering a market, or with the intention to drive competition from the market
Double ticketing: an item has been ticketed with 2 prices (lowest price must prevail although there are no limits to protect sellers)
Resale price maintenance: manufactures or other channel members try to influence the price at which products are sold to subsequent buyer
Promotion Issues
Misleading advertising: representations, in print or made orally, concerning a product are false or misleading
Referral selling: price reductions or other inducements are offered to a customer for the names of other potential customers
Bait-&-switch selling: sellers attract customers with low prices but then offer another product at a higher price because they are unable to provide the originally promoted item
Tied selling: seller requires a buyer to purchase another product or to refrain from purchasing a product from a specific manufacturer as a condition to getting the product they want
Distribution Issues
Refusal to deal: sellers refuse to sell to legitimate buyers
Exclusive dealing: seller refuses to sell another channel member unless that customer agrees to buy only from that seller
Pyramid selling: salespeople are paid to recruit additional salespeople, and each new salesperson pays to “invest” in the scheme, with some of that investment going to earlier participants in the scheme – not to confused with genuine multi-level marketing plans




Government Regulation
Provincial laws generally focused on protection of buyers & sellers with respect to direct sales contracts; called Consumer Protection Act or Direct Seller’s Act
Government Regulatory Agencies: Canadian Radio-television & telecommunications Commission; National Energy Board

Other Regulatory Forces
Consumer interest organizations; e.g., People for the Ethical Treatment of Animals
Other groups attempt to advance the rights of minorities, senior citizens, and other causes; e.g., Mothers Against Drunk Driving
Self-regulatory groups set guidelines for responsible business conduct; e.g., Advertising Standards Canada
The Economic Environment
Gross domestic product (GDP): sum of all goods, services produced by a nation in a year
Economic environment: factors that influence consumer buying power and marketing strategies
Business cycle: pattern of stages in the level of economic activity (Prosperity, recession, depression, recovery)
Inflation: rising prices caused by some combination of excess consumer demand and increases in the costs of one or more factors of production
Deflation:
Unemployment:
Discretionary income:
Demarketing:

Technological Environment
Application of knowledge based on discoveries in science, inventions, innovation to marketing
Technology leads to new products, improvements in existing products, better customer service, reduced prices

Social-Cultural Environment
Relationship between the marketer, society, and culture
Marketers must be sensitive to demographic shifts and changing values
Increasing importance of cultural diversity

Consumerism
Social force within the environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government
Rights: right to choose freely, to be informed, to be heard, to be safe

Ethical Issues in Marketing
Marketing ethics: marketers’ standards of conduct and moral values
Many companies create ethics programs to train employees to act ethically
Employees’ personal values sometimes conflict with employers’ ethical standards

10 Steps to improve Business Ethics
Appoint a senior-level ethics compliance officer.
Set up an ethics code capable of detecting & preventing misconduct.
Distribute a written code of ethics to employees, subsidiaries, & associated companies & require all business partners to abide by it.
Conduct regular ethics training programs to communicate standards & procedures.
Establish systems to monitor misconduct and report grievances.
Establish consistent punishment guidelines to enforce standards and codes.
Encourage an open-door policy, allowing employees to report cases of misconduct without fear of retaliation.
Prohibit employees with a track record of misconduct from holding positions with substantial discretionary authority.
Promote ethically aware and responsible managers.
Continually monitor effectiveness of all ethics-relation programs.

Ethics in Marketing Research
Consumers are concerned about privacy
Proliferation of databases
Selling of address lists
Ease with which consumer information can be gathered
Several agencies offer assistance to Internet consumers
Canada has a National Do-Not-Call List to help prevent unwanted telemarketing

Ethics & Social Responsibility
Economic: be profitable – the foundation upon which all others rest
Legal: obey the law – law is society’s codification of right and wrong; play be the rules of the game
Ethical: be ethical – obligation to do what is right, just, and fair; avoid harm
Philanthropic: be a good corporate citizen – contribute resources to the community, improve quality of life

Marketing and Ecology
Ecology: relationship between organisms and their natural environments
Environmental issues influence all areas of marketing decision making
Green marketing: production, promotion, and reclamation of environmentally sensitive products

Digital Marketing & Social Media: Living in the Commercial World {Chapter 4}
E- business
Conducting online transactions with customers by collecting and analyzing business information, carrying out the exchanges, and maintaining online relationships with customers

Digital Marketing
The strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools

B2C Digital Marketing
Selling directly to consumers over the Internet
Interactive marketing
Electronic storefronts
Electronic shopping cart

Challenges in Digital Marketing
Challenge
Description
Solution
Safety of Online Payment
Consumers are concerned about the safety of sending credit card numbers over the internet
Internet browsers contain encryption systems (the process of encoding data for security); secure sockets layer – tech. that secures a website by encrypting info & providing authentication; payment services
Privacy Issues
Collection & use of personal info though the use of cookies or spyware (software that collect data) – hackers take info without the company’s permission
Internet privacy organizations assure consumers they’re into won’t be used without permission; firewalls/electronic barriers between a company’s internal network & internet limit access into and out of a network
Frauds & Scams
Phishing is a high-tech scam that uses authentic-looking email or pop-up messages to get unsuspecting
Most phishing/vishing scams ask the user to update or validate personal info usually for a bank account, internet service provider, best solution to this is the users themselves, no organization like a bank would ask for personal info throughout the market
Site Design & Customer Service
Well-designed websites draw more customers, customers want quick deliveries and easy way to return products
Design sites so that products are easy to find and customer questions can be answered quickly; use three-dimensional photos/videos; allow customers to track a delivery or have products picked up from retail store
Channel Conflicts & Copyright Disputes
If manufacturers sell through their sites, they compete with the stores selling their products – channel conflict, if material written or
Many manufacturers do not sell from their sites to avoid channel conflict, obtaining permission from the owner of material to be placed on the site avoids any copyright issues

Building an Effective Web Presence
An e-business website can:
Broaden customer bases
Provide immediate access to current catalogues
Accept and process orders
Offer personalized customer service
Successful Site Development
Establish goals
Implementation and interest
Pricing and maintenance
Assessing site effectiveness
Social Media
Different forms of electronic communication through which users can create online communities to exchange:
Information
Ideas
Messages
Other content such as videos or music
Categories of Social Media
Social media platform – Type of software or technology that allows users to build, integrate, or facilitate a community, interaction among users, and user-generated content
Social media tool – Enables users to communicate with each other online
Why Should Marketers Turn to Social Media?
Social media is a tool for marketers to:
Build relationships with customers
Strengthen brands
Launch new products
Enter new markets
Boost sales

Social Media Marketing (SMM)
Uses social media portals to create a positive influence on consumers or business customers toward an organization’s:
Brand
Goods and services
Public image
Website

Social Media Marketing Plan
A formal document that includes:
Goals and strategies
Target market
Budget
Implementation methods
Tactics for monitoring, measuring, and managing the SMM effort

Ethical Issues in Social Media Marketing
Workplace ethics
Be honest
Respect privacy
Be accountable



Consumer Behavior {Chapter 5}
Chapter Objectives
Define consumer behavior and describe the role it plays in marketing decnisions
Describe the interpersonal determinants of consumer behavior: cultural, social, family influences
Explain each of the personal determinants of consumer behavior: needs and motives, perceptions, attitudes, learning, and self-concept theory.
Distinguish between high-involvement and low-involvement purchase decisions.
Outline the steps in the consumer decision process.
Differentiate among routinized response behavior, limited problem solving, and extended problem solving by consumers.
Consumer Behavior
Process through which buyers make decisions

Interpersonal Determinants of Consumer Behavior
Cultural influences
Values, beliefs, preferences, taste handed down from one generation to the next
Core Values
Cultural may change but core value does not
Microcultures
Group within a culture that have distinct modes of behavior
Largest groups in Canada: Quebecois consumers, Chinese Canadian consumers, South-Asian consumers
Quebecois Consumers
Often considered a main cultural group
Quebec is the largest French speaking area in North America
Chinese Canadian Consumers
Came from Hong Kong during 1980s
Coming from other areas such as mainland
South-Asian Canadian Consumers
Come from several cultures – Punjabi, Urdu, Tamil
Group is expected to be the largest cultural group by 2031
Other cultural groups: more than 80 cultural groups across the county
Social influences
Everyone belongs to multiple social groups that influence buying decisions
Groups establish norms of behavior
Differences in status & roles within group influence behavior
Asch Phenomenon
theory of psychologist S.E. Asch that individuals conform to majority rule, even thar majority rule goes against their beliefs
Reference groups
People of institutions whose opinions are valued
Influence of reference group depends on 2 conditions – (1) purchased product must be seen and identifiable; (2) purchased product must be conspicuous, something that not everybody owns
Social classes
Six classes: upper-upper, lower-upper, upper-middle, lower-middle, working class, lower class
Income not always a primary factor
Opinion leaders
Trendsetters who purchase new products before others in a group and then influence others in their purchases
Family influences
family structure is changing over the last century due to:
More women and seniors living alone
Women having fewer children
Role of Each Spouse in a Household
Autonomic Role
Husband-dominant Role
Wife-dominant Role
Syncratic Role

Children and Teenagers in Family Purchases
Children and teenagers represent a huge market
They influence what their parents buy, from cereal to cars
Personal Determinants of Consumer Behavior
Needs & Motives
Needs
Imbalance between consumer’s actual and desired states
Motive
Inner state that directs a person toward the goal of satisfying a need
Perception
Meaning that a person attributes to incoming stimuli gathered through 5 sense
Perceptual screens: the mental filtering processes through which all inputs must pass
Attitudes
Person’s enduring favorable or unfavorable evaluations, emotions, or action tendencies toward object or idea
Cognitive
Affective
Behavioral
Learning
Knowledge or skill that is acquired as a result of experience, which changes consumer behavior
Process: drive, cue, response, reinforcement
Self-concept
Person’s multifaceted picture of himself or herself
4 components that influence purchasing decisions

Real self
Self-image
Looking-glass self
Ideal self


Changing Consumer Attitudes
Marketers have two choices for appealing to consumer attitudes:
Attempt to produce consumer attitudes that will motivate purchase of a particular product
Evaluate existing consumer attitudes and then make the product features appeal to them

Modifying the Components of Attitude
Providing evidence of product benefits and correcting misconceptions
Engaging buyers in new behaviour

Applying Learning Theory to Marketing Decisions
Marketers use shaping, the process of applying a series of rewards and reinforcements to permit more complex behavior to evolve

Consumer Decisions
High-involvement purchase decisions
Low-involvement purchase decisions

Problem or Opportunity Recognition
Consumer becomes aware of a significant discrepancy between the existing situation and a desired situation
Search
Consumer gathers information about the attainment of a desired state of affairs
Evoked set
Evaluation of Alternatives
Consumer evaluates the evoked set of options, and as the search progresses, consumer accepts, distorts, or rejects information as it is received
Evaluative criteria
Purchase Decisions and Purchase Act
After evaluating each alternative in the evoked set, the consumer decides where or from whom to make the purchase
Post – Purchase Evaluation
Buyer feels either satisfaction at the removal of the discrepancy between the existing and desired states or dissatisfaction with the purchase
Cognitive dissonance
Classifying Consumer Problem-solving Processes
Marketers recognize 3 categories of problem solving
Routinized response behavior
Limited problem solving
Extended problem solving

Marketing Research, Decision Support Systems, Sales Forecasting {Chapter 8}
Marketing Research
Process of collecting and using information for marketing decision making

Types of Research Firms
Syndicated services
Full-service research suppliers
Limited-service research suppliers

Marketing Research Process
Defining the problem
Conducting the Exploratory Research
Formulating a Hypothesis
Creating a Research Design
Collecting Data
Secondary Data: previously published information
Primary Data: information collected specifically for the investigation at hand
Primary costs more to gather but can be much more valuable
Interpreting and Presenting the Research Information

Sampling Techniques
Sampling: process of selecting survey respondents or research participants
Probability sample: sample that gives every member of the population a chance of being selected
Nonprobability sample: sample that involves personal judgment somewhere in the process
Primary Research Methods
Observation Method: researchers view the overt actions of subjects being studied
Survey & Interview Methods: researchers must ask questions to get information on attitudes, motives, and opinions
Experimental Method: least used method; controlled experiment; and test marketing

Conducting International Marketing Research
Follow same basic steps as for domestic marketing research
Researchers must be aware of cultural and legal environments
May have to adapt research methods to local conditions

Computer Technology in Marketing Research
Marketing Information System (MIS)
Marketing Decision Support Systems (MDSS)

Data Mining
Process of searching through computerized data files to detect patterns
Focuses on identifying relationships that are not obvious to marketers
Business Intelligence
Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations

Competitive Intelligence
Form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and supplies in the industry, and other sources

Marketing Segmentation, Targeting, and Positioning {Chapter 9}
Introduction
Market: group of people with enough purchasing power, authority, and willingness to buy
Target market: group of people to whom firm decides to direct its marketing efforts and ultimately its goods and services

Types of Markets
Consumer products: products bought by ultimate consumers for personal use
Business products: goods and services purchased for use either directly or indirectly in the production of other goods and services for resale

Role of Market Segmentation
Division of the total market into smaller; relatively homogenous groups

Criteria for Effective Segmentation
The segment must have measurable size and purchasing power
Marketers must find a way to effectively promote and serve the market segment
Segment must be sufficiently large to offer good profit potential
Firm must aim for segments that match its marketing capabilities

Segmenting Consumer Markets
Geographic: division of an overall market into homogenous groups based on their locations
Demographic: division of an overall market into homogenous groups based on variables such as gender, age, income, occupation, education, sexual orientation, household size, and stage in the family life cycle ~ socioeconomic segmentation
Psychographic: division of a population into groups that have similar attitudes, values, and lifestyles
Product-related: division of a population into homogeneous groups based on their relationships to the product


Market Segmentation Process

Develop a relevant profile for segment
Forecast market potential
Forecast probable market share
Select specific market segments


Strategies for Reaching Target Markets

Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Micromarketing


Selecting & Executing a Strategy

Company resources
Product homogeneity
Stage in the product lifestyle
Competitors’ strategies


Positioning
Placing a product at a certain point or location within a market in the minds of prospective buyers

Product & Service Strategies {Chapter 10}
Marketing Mix
Blending of 4 strategy to fit the needs & preferences of a specific target market

Product
Distribution
Promotion
Price


Product Deletion Decisions
Marketers prune product lines and eliminate marginal products to preserve limited resources

Goods & Services
Services: intangible tasks that satisfy the needs of consumer and business users
Goods: tangible products that customers can see, hear, smell, taste, or touch

Consumer & Business Products
Consumer (B2C) product: product destined for use by ultimate consumers
Business (B2B) product: product that contributes directly or indirectly to the output of other products for resale

Classification of Business Products
Categories emphasize product use rather than consumer buying behaviour
Installations: airplane, office tower, oil drilling rig, regional shopping centre
Business Services: oil rig services, trucking, security service, railroad
MRO: staples, scotch tape, copy paper, duct tape
Raw Materials: sugar, crude oil, milk, iron ore
Accessory Equipment: electric grinders, smartphone, computer
Components: fabric, computer chips, diesel engines for trucks, motors for lawn mowers

Quality – Product Strategy
Key component to a firm’s success
Product: bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs
People buy want satisfaction, not objects
Development of Product Lines
Product line: series of related products offered by one company
Marketing entire product lines can help company grow, economize company resources, and exploit product life cycles

Product Mix
Assortment of product lines and individual product offerings that the company sells
Product mix width: number of product lines a firm offers
Product mix length: number of different products a firm sells
Product mix depth: variations in each product that the firm markets in its mix
Product Life Cycle
Progression of a product through introduction, growth, maturity, and decline stages
Extending the cycle

Increasing frequency of use
Increasing the of users
Finding new uses
Changing package sizes, labels, or product quality



Developing/Managing Brand, & Product Strategies {Chapter 11}
Managing Brands for Competitive Advantage
Brand: name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s

Brand Loyalty
Brand Recognition
Brand Preference
Brand Insistence

Types of Brands
Generic products
Manufacturer’s brand
Private brands
Captive brands
Family brands
Individual brands

Brand Equity
Added value that a respected, well-known brand name gives to a product in the marketplace

Role of Category & Brand Management
Brand management: traditionally, companies have assigned the task of managing a brand’s marketing strategies to a brand manager
Category management: product management system in which a category manager—with profit and loss responsibility—oversees a product line

Product Identification
Brand names
Category marks

Trademarks
Trademark: brand for which the owner claims exclusive legal protection
Protecting trademarks
Trade dress

Packaging
Protection against damage, spoilage, and pilferage
Assistance in marketing the product
Cost-effective packaging

Labelling
Labels are both promotional and informational
Universal Product Code (UPC)
Radio-frequency identification (RFID) tags

Brand Extensions
Strategy of attaching a popular brand name to a new product in an unrelated product category

Brand Licensing
Authorizing other companies to use a firm’s brand name

New Product Planning: Product Development Strategies


Stages in the Consumer Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption/Rejection

Categories of Adopters Based on Relative Times of Adoption


Steps in New Product Development Prices




Business-to-Business (B2B) {Chapter 6}
Comparing Business-to-Business & Consumer Marketing


Business-to-Business
Consumer Marketing
Product
Relatively technical in nature, exact form often variable, accompanying services very important
Standardized form, service important but less than for business products
Promotion
Emphasis on personal selling
Emphasis on advertising
Distribution
Relatively short, direct channels to market
Product passes through a number of intermediate links a route to consumer
Customer Relations
Relatively enduring and complex
Comparatively infrequent contact, relationship of relatively short duration
Decision-making
Diverse group of organization members makes decision
Individual or household unit makes decision
Price
Competitive bidding for unique items, list prices for standard items
List prices

Components of the Business Market
Commercial market: individuals and firms that acquire products to support, directly or indirectly, production
Trade industries: retailers or wholesalers that purchase for resale

Government
Institutions (public/private)


Segmenting B2B Markets
Segmentation by demographic characteristics
Customer-based segmentation
North American Industry Classification System (NAICS)
Segmentation by end-use application
Segmentation by purchase categories

Characteristics of the B2B Market
More concentrated than the consumer market
Fewer but larger customers
Purchase process more formal and complex; longer time-frame
Relationship marketing more important
Evaluating International Business Markets
Business purchasing patterns differ from country to country
Global sourcing – Purchasing goods and services from suppliers worldwide
Can bring significant cost savings but requires adjustments

Make, Buy or Lease Decision
Firms acquiring finished goods have three options: make, buy, or lease
Offshoring – Movement of high-wage jobs from one country to lower-cost overseas locations
Nearshoring – Moving jobs to vendors in countries close to the business’s home country
Outsourcing – Using outside vendors to provide goods and services formerly produced in-house

Problems with Offshoring & Outsourcing
Cost savings are less than expected
Can raise security concerns over proprietary technology or customer data
Can reduce company’s ability to respond quickly to marketplace
Can create conflicts between nonunion outside workers and in-house union employees
Can negatively affect employee morale and loyalty

Business Buying Process
Environmental factors
Organizational factors
Interpersonal influences
The role of the professional buyer:
Merchandisers
Category advisor or category captain

Classifying Business Buying Situations
Straight rebuy
Modified rebuy
New task buy
Reciprocity
Analysis tools
Value analysis – Systematic study of the components of a purchase
Vendor analysis – Assessment of supplier performance

Buying Centre Concept
Buying center – Participants in an organizational buying action
Buying center roles

Users
Gatekeepers
Influencers
Deciders
Buyer

Developing Effective Business-to-Business Marketing Strategies
Challenges of government markets
The government buys products under two basic types of contracts:
Fixed-price contracts
Cost-reimbursement contracts
Purchasing procedures largely determined by size of purchase
MERX online e-tendering service widely used

Challenges of Institutional Markets
Schools, hospitals, libraries, foundations, clinics, churches, and not-for-profit agencies
Widely diverse buying practices
Multiple buying influences can affect buying decisions
Group purchasing is an important factor

Challenges of International Markets
Marketers must consider buyers’ attitudes and cultural patterns
Local industries, economic conditions, geographic characteristics, and legal restrictions must be considered
Remanufacturing – Efforts to restore older products to like-new condition
Foreign governments are an important business market

Serving Global Markets {Chapter 7}
Benefits of Going Global
Additional revenue
New insights into customer behavior
Alternative distribution strategies
Advance notice of new products
Exposure to new marketing techniques

International Marketing Environment
International economic environment
National factors
Infrastructure
Exchange rate
International social-cultural environment
Before entering a market, firms need to study all aspects of a nation’s culture, including language, education, religious attitudes, and social values
Language plays an important role in international marketing
International technological environment
Internet technologies connect large and small firms to world markets
Technology presents some challenges for global marketers
International political-legal environment
Political Risk Assessment
Laws
Trade barriers
Dumping

Trade Barriers
Tariffs
Revenue and protective tariffs
Other trade barriers
Import quotas, embargo, subsidy, exchange control
Dumping

Multinational Economic Integration
Free trade area
Customs union
Common market

GATT & World Trade Organization
General Agreement on Tariffs and Trade (GATT)
International trade accord that has helped reduce world tariffs
World Trade Organization (WTO) replaced GATT; oversees GATT agreements, mediates disputes, and works to further reduce trade barriers

Free Trade
North American Free Trade Agreement (NAFTA)
The Free Trade Area of the Americas
The European Union

Going Global
Globalization of customers and competitors
New customers in emerging markets
Reduced trade barriers
Advances in technology
Enhanced customer responsiveness

Strategies for Entering International Markets

From Multinational Corporation to Global Marketer
Multinational corporation: has significant operations and marketing activities outside its home country

Developing an International Marketing Strategy
Global marketing strategy
Standard marketing mix with minimal modification in all foreign markets
Multi-domestic marketing strategy
Customization of marketing strategies to effectively reach individual markets

International Product & Promotional Strategies


International Distribution Strategy
Set up proper channels and anticipate potential problems
Decide on the methods of entering a foreign market

Pricing Strategy
Competitive, economic, political, and legal factors can limit pricing decisions
Adaptation to local markets

Canada as Target for International Marketers
Foreign marketers regard Canada as an inviting target
High level of discretionary income
Relative political and economic stability
Favorable attitude toward foreign investment

Marketing Channels & Supply Chain Management {Chapter 12}
Basic Information
Marketing (distribution) channel – System of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to customer
Logistics – Coordinating the flow of information, goods, and services among members of the distribution channel
Supply-chain management – Control of the activities of purchasing, processing, and delivery through which raw materials are transformed into products and made available to final consumers
The Role of Marketing Channels in Marketing Strategy
Four functions of marketing channels:
Facilitating the exchange process by reducing the number of marketplace contacts necessary to make a sale
Adjusting for discrepancies in the market’s assortment of goods and services via sorting
Standardizing exchange transactions by setting expectations for products
Facilitating searches by both buyers and sellers

Types of Marketing Channels


Direct Selling
Direct channel – Carries goods directly from a producer to the business purchaser or ultimate user
Direct selling – Strategy designed to establish direct sales contact between producer and final user
Important option for goods that require extensive demonstrations in persuading customers to buy
Plays an important role in both B2B and B2C markets
The Internet and direct mail are important tools for direct selling

Dual Distribution
Dual distribution – Movement of products through more than one channel to reach the firm’s target market
Used to maximize the firm’s coverage in the marketplace or to increase the cost-effectiveness of the firm’s marketing effort
Reverse channels – Channels designed to return goods to their producers
Growing in importance

Channel Strategy Decisions


Determining Distribution Intensity
Intensive distribution – Distribution of a product through all available channels
Selective distribution – Distribution of a product through a limited number of channels
Exclusive distribution – Distribution of a product through a single wholesaler or retailer in a specific geographic region

Channel Conflict
Horizontal conflict – Disagreements among channel members at the same level, such as two competing discount stores
Vertical conflict – Occurs among members at different levels of the channel
The grey market – Goods produced for overseas markets that re-enter the Canadian market and compete against domestic versions

Vertical Marketing Systems
Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain
Rely on forward or backward integration
Forward integration – Firm attempts to control downstream distribution
Backward integration – Manufacturer attempts to gain greater control over inputs to production process

Corporate, Administered, and Contractual Systems
Corporate marketing system – A single owner operates the entire marketing channel
Administered marketing system – A dominant channel member exercises power to achieve channel coordination
Contractual system – Coordinates channel activities through formal agreements among channel members (wholesaler-sponsored voluntary chain; retail cooperative; franchise)

Logistics and Supply Chain Management
Supply chain – Complete sequence of suppliers and activities that contribute to the creation and delivery of merchandise
Begins with raw-material inputs for production
Ends with the movement of final product to customers
Takes place in two directions: upstream and downstream

Logistics and Supply Chain Management


Logistical Cost Control
The distribution function accounts for half of a firm’s total marketing costs
Businesses are re-examining each link of their supply chains to identify activities that do not add value for customers.
Third-party logistics firms – Specialize in handling logistical activity

Physical Distribution
A physical distribution system contains these elements:

Customer service
Transportation
Inventory control
Protective packaging and materials handling
Order processing
Warehousing


The Problem of Suboptimization
Results when the managers of individual physical distribution functions attempt to minimize costs, but the impact of one task on the others leads to less-than-optimal results
Effective management of physical distribution requires cost trade-offs

Major Transportation Modes


Freight Forwarders and Elemental Carriers
Act as transportation intermediaries that consolidate shipments to gain lower rates for their customers
Intermodal coordination increasingly important
Piggyback
Birdyback
Fishyback

Inventory Control Systems
Companies must balance maintaining enough inventory to meet customer demand with incurring unneeded costs for carrying excess inventory
To manage cost, firms use:
Just-in-time (JIT)
RFID technology
Vendor-managed inventory (VMI)

Protective Packaging and Materials Handling
Materials handling system – Activities for moving products within plants, warehouses, and transportation terminals
Unitizing – Combining as many packages as possible into each load that moves within or outside a facility
Containerization – Combining several unitized loads into a single, well-protected load for shipment

Retailers, Wholesalers & Direct Marketers {Chapter 13}
Evolution of Retailing
Retailing – Activities involved in selling merchandise to ultimate consumers
Wheel of retailing – Hypothesis that each new type of retailer gains a competitive foothold by offering lower prices than current suppliers charge; the result of reducing or eliminating services

Retailing Strategy
Selecting a Target Market
Consider size and profit potential of the market and the level of competition
Example: Walmart draws customers away from traditional department stores with trendy but affordable lines of clothing

Merchandising Strategy
Guides retailer’s decisions on the items it will offer
While developing the merchandise mix, retailers should consider:
Needs and preferences of its target market
Competitive environment influencing choices
Overall profitability of each product line and category

The Battle for Shelf Space
Major retailers increasingly make demands from manufacturers—such as pricing and promotional concessions—in exchange for shelf space
Slotting allowances – Nonrefundable fees grocery retailers receive from manufacturers to secure shelf space for new products

Customer-Service Strategy
Heightened customer service is one possible retailing strategy
The goal is to attract and retain target customers to increase sales and profits
Some services that retailers could provide:
Enhanced comfort through lounges, complimentary coffee, convenient restrooms
Child-care services for customers
Virtual assistance programs

Markups and Markdowns
Markup – Amount a retailer adds to the cost of a product to determine its selling price
Markup is influenced by two factors:
Services performed by the retailer
Inventory turnover rate
Markdown – Amount by which a retailer reduces the original selling price of a product

Locations in Planned Shopping Centres
Planned shopping centre – Group of retail stores planned, coordinated, and marketed as a unit. Includes five main types:
Neighbourhood shopping centre
Community shopping centre
Regional shopping centre
Power centre
Lifestyle centre

Store Atmospherics
Atmospherics – Combination of physical characteristics and amenities that contribute to a store’s image
Atmospherics includes exterior and interior décor:
Exterior should help identify the retailer and attract target market shoppers
Interior should compliment retailer’s image, respond to customers’ interests, and induce shoppers to buy

Types of Retailers


Retail Convergence and Scrambled Merchandising
Retail convergence – Situation in which similar merchandise is available from multiple retail outlets, resulting in the blurring of distinctions between type of retailer and merchandise offered
Scrambled merchandising – Retailing practice of combining dissimilar product lines to boost sales volume



Wholesaling Intermediaries


Types of Wholesaling Intermediaries


Direct Marketing and Other Nonstore Retailing
Direct marketing – Direct communications, other than personal sales contacts, between buyer and seller, designed to generate sales, information requests, or store or website visits
Direct mail
Direct selling
Direct-response retailing
Telemarketing

Internet Retailing
Selling directly to consumers via Web storefronts
Internet-based retailers keep little or no inventory
Fill customer orders directly from vendors
Some traditional brick-and-mortar stores have successfully extended their presence to the Internet
Examples: Costco, Canadian Tire

Automatic Merchandising
Primarily used to sell food items, lottery tickets in Canada
Other countries use vending machines to offer a wider variety of goods
As technology advances, high-end products are being sold in vending machines

Integrated Marketing. Advertising & Digital Communication {Chapter 14}
Promotion & Marketing Mix
Promotion
Marketing Communications
Integrated Marketing Communication – IMC

The Communication Process
Sender encodes a message
Receiver decodes, or interprets, the message, and sends feedback
Throughout, noise can interfere with the transmission of the message over the channel
AIDA Concept

Personal Selling
Refers to a seller’s promotional presentation conducted on a person-to-person basis with the buyer

Nonpersonal Selling
Includes advertising, product placement, sales promotion, direct marketing, public relations, and guerrilla marketing

Types of Advertising
Product advertising
Institutional advertising

Objectives of Advertising
Informative advertising
Persuasive advertising
Reminder advertising

Advertising Strategies
Comparative Advertising
Celebrity Testimonials
Retail Advertising
Interactive Advertising
Cross Promotion

Advertising Appeals
Fear appeals
Humour in advertising messages
Ads based on sex

Media Selection and Scheduling
Television
Radio
Newspapers

Media Selection and Scheduling
Magazines
Direct mail
Outdoor advertising

Media Selection and Scheduling
Interactive Media
Other Advertising Media

Media Scheduling
After selecting media, marketers determine the most effective timing and sequence for a series of advertisements
Influenced by a variety of factors
Seasonal sales patterns
Repurchase cycles
Competitors activities

Public Relations
Marketing public relations
Nonmarketing public relations
Publicity

Cross Promotion
A technique in which marketing partners share the cost of a promotional campaign that meets their mutual needs

Ethics and Promotional Strategies
Advertising to children
Insertion of product messages in media programs without full disclosure
Use of cookies in online advertising

Promotional Mix Effectiveness
Nature of the market
Market’s target audience, type of customer
Nature of the product
Highly standardized products usually depend less on personal selling
Consumer product sellers rely more on advertising than business products
Stages in the product life cycle
Personal selling in introductory stage
Advertising in growth and maturity stages
Differentiation when competitors enter the market
Price
Advertising for low-unit-value products
Funds available for promotion
Size of the budget influences promotional mix

Evaluating Promotional Effectiveness
Direct sales results test
Indirect evaluation

Personal Selling and Sales Promotion {Chapter 15}
The Evolution of Personal Selling
Personal selling – Interpersonal influence process involving a seller’s promotional presentation conducted on a person-to-person basis with the buyer
Selling is an activity that is thousands of years old

The Evolution of Personal Selling

Integrating the Various Selling Channels

Trends in Personal Selling
Relationship selling – Regular contacts between sales representatives and customers over an extended period to establish a sustained buyer-seller relationship
Consultative selling – Meeting customer needs by listening to them, understanding their problems, paying attention to details, and following through after the sale
Team selling – A salesperson joins with specialists from other functional areas of the firm to complete the selling process

Sales Tasks
Order processing – Selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders
Creative selling – Personal selling in which a considerable degree of analytical decision making on the buyer’s part results in the need for skillful proposals of solutions for the customer’s needs
Missionary selling – Indirect selling method in which salespeople promote goodwill for the firm by educating customers and providing technical or operational assistance

The Sales Process


Managing the Sales Effort
Recruitment and selection
Training
Organization
Supervision
Motivation
Compensation
Evaluation and control

Organization
May be based on geography, products, types of customers, or some combination of these factors
National accounts organization – Assigning senior sales personnel or sales teams to major accounts in each market to strengthen relationships with the biggest customers

Compensation
Commission – Compensation tied directly to the sales or profits the salesperson achieves
Salary – Fixed payment made periodically to an employee
Many firms combine the features of both commission and salary in their compensation programs
Compensation packages vary according to industry

Ethical Issues in Sales
Long-term success requires a strong code of ethics
Honesty and ethical behaviour is encouraged when:
Employees understand what is expected of them
Open communication is encouraged
Managers lead by example

Consumer-Oriented Sales Promotion
Coupons and refunds
Samples, bonus packs, and premiums
Contests and sweepstakes
Specialty advertising

Trade-Oriented Promotions
Trade allowances
Point-of-purchase (POP) advertising
Trade shows
Dealer incentives, contests, and training programs

Pricing Concepts & Strategies {Chapter 16}
Pricing Objectives & Marketing Mix
Profitability Objectives: profit maximation, target return ~ ex. Samsung’s initially high price for the Blu-ray disc player
Volume Objectives: sales maximation, market share ~ ex. Comwave’s home phone plan; 6 months & all features free then Canada-wide unlimited calling for one low monthly fee
Meeting Competition Objectives: value pricing ~ ex. Walmart’s lower prices on private house brands
Prestige Objectives: lifestyle image ~ ex. high-priced luxury autos such as Lexus and stereo equipment by Bose
Not-for-profit Objectives: profit maximation, cost recovery, market incentives, market suppression ~ ex. reduced or zero tolls for high-occupancy vehicles to encourage carpooling

Profit Impact of Market Studies (PIMS)
Discovered a strong positive relationship between market share and product quality and a firm’s return on investment
Firms with market share more than 40 percent have average return on investment of 32 percent
Firms with large shares accumulate greater operating experience and lower overall costs relative to competitors with smaller market shares

Methods for Determining Price
Prices are traditionally determined in two basic ways:

Supply and demand
Cost-oriented analyses

Four market structures:

Pure competition
Monopolistic competition
Oligopoly
Monopoly


Characteristics
Pure Competition
Monopolistic Competition
Oligopoly
Monopoly
of competitors
Many
Few to many
Few
No direct competitors
Ease of entry into industry by new firms
Easy
Somewhat difficult
Difficult
Regulated by government
Similarity of goods/services offered by competing firms
Similar
Different
Can be either similar or different
No directly competing goods/services
Control over prices by individual firms
None
Some
Some
Considerable
Demand curves facing individual firms
Totally elastic
Can be either elastic or inelastic
Kinked; inelastic below kink; more elastic above
Can be either elastic or inelastic
EXAMPLES
Alberta beef farm
Best buy stores
Air Canada
Liquor control board of ON

Concept of Elasticity in Pricing Strategy
Elasticity: measure of responsiveness of purchasers and suppliers to a change in price
Determinants of elasticity:
Availability of substitutes or complements
Number of online business transactions
Whether product is a necessity or luxury
Portion of a person’s budget spent on an item
Demand shows less elasticity in the short run than in the long run
Elasticity & Revenue
Elasticity has a strong influence on revenue
Price cuts will increase revenues for products with elastic demand
Price increases will increase revenue for products with inelastic demand

Practical Problems of Price Theory
Many firms do not attempt to maximize profits
Demand curves are difficult to estimate

Target Returns
Most managers include a targeted profit in their analyses:

Yield Management
Pricing strategy that allows marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same
Examples: airfares, lodging, and auto rentals

Pricing Strategy
Skimming pricing strategy
Penetration pricing strategy
Everyday low pricing (EDLP)
Competitive pricing strategy
Opening price point

Price Quotations
List price
Market price
Cash discount
Trade discount
Quantity discount – cumulative & non-cumulative
Allowances & rebates

Geographic Considerations

FOB pricing
Uniform delivered pricing
Zone pricing
Base-point pricing


Pricing Polices
Psychological pricing
Odd pricing
Unit pricing
Price flexibility
Product-line pricing
Promotional pricing
Loss leaders and leader pricing
Price-quality relationships

Some Special Topics in Pricing: Competitive Bidding & Negotiated Prices
Competitive bidding: inviting potential suppliers to quote prices on proposed purchases or contracts
Detailed specifications of products often used
Sometimes negotiated contracts are used with preferred suppliers

Pricing in Global Markets

Global pricing objectives:
Profitability
Volume
Meeting competition
Prestige
Price stability




Transfer Pricing Dilemma
Transfer price : the price for moving goods between profit centers
Profit centers: any part of the organization to which revenue and controllable costs can be assigned
Governments monitor transfer pricing because it can be used by companies to avoid paying taxes on profits

Online Pricing Considerations
Many people see the Internet as one big auction site
Search programs that act as comparison shopping agents; also called bots
Force online marketers to keep prices low
Brand image and customer service may outweigh price for certain purchases

Cannibalization Dilemma
Cannibalization: loss of sales of an existing product due to competition from a new product in the same line
Many companies price the same products differently online; this practice runs the risk of cannibalization

Bundle Pricing
Offering two or more complementary products and selling them for a single price
Prevalent in the telecommunications industry
Consumers may resist the practice of bundling claiming they are being forced to pay for products they don’t want
Example: Cable television industry, which resists selling channels individually
Pricing & Law
Federal, provincial and territorial, and municipal laws all influence pricing decisions
Tariffs levied on imported goods and services can help firms protect local markets
Countries impose them to protect domestic suppliers

The Competition Act
Tries to foster a fair competitive environment
Focuses on several pricing-related factors:

Price discrimination
Price fixing
Bid rigging
Predatory pricing
False or misleading price representations

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