Marketing Final Notes 4 Ps of Marketing/ Marketing Mix - Product - Price - Place - Promotion 7 Ps of Service - Product - Price - Place - Promotion

- Process - Physical Environment - People Brand Equity - the dollar amount attributed to the value of the brand, based on all the intangible qualities that create value - a brand that can be bought and sold by companies - Brand Attributes: the qualities associated with a brand (a way for marketers to position a brand) limits a brand from expanding into other product types Competition-Based Pricing (Services) - setting prices relative to those charged by competitors - Price Leadership: when customers see little or no difference between competing offerings, they may just choose what they think is cheapest the firm with the lowest cost per unit of service enjoys a market advantage Consumer Buyer Behaviour - the buying behaviour of consumers individuals who buy goods and services for their own use or consumption - Consumer Market: all individuals in a particular geographic region who are old enough to have their own money and to choose how to spend it

Factors Influencing Consumer Behaviour (fig 6.2) Culture - Culture - Subculture - Social Class Social - Reference groups - Family - Roles and status Personal Psychological Buyer - Age and life-cycle stage - Motivation - Occupation - Perception - Economic situation - Learning - Lifestyle - Beliefs and attitudes - Personality and self-concept

Culture: the set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important institutions Subculture: a group of people with shared value systems based on common life experiences and situations Social Class: a segment of society based on income, education, occupation, and standing in the community Opinion Leader: a person who has the ability to influence the consumer choices of larger numbers of people Reference Group: a group you do not belong to, that serves as a point of comparison or reference in forming your attitudes and consumer choices Aspirational Group: a group you hope one day to belong to Social Network: a virtual online community created by people using social media websites Motivation: a need that is sufficiently pressing to direct one to seek satisfaction Perception: the process by which people select, organize, and interpret information to form a meaningful picture of the world Learning: changes in individuals behaviour arising from experience Belief: a descriptive thought that a person holds about something Attitude: a persons relatively consistent evaluation of, and feeling toward, an object or idea The Consumer Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behaviour Need Recognition: - the buyer starts off by recognizing a problem or a need - need can be triggered by an internal stimuli when one of the persons normal needs (hunger, thirst, sex) rise to a level high enough to become a drive - need can be triggered by an external stimuli (a friend suggesting certain product) Information Search: - a low involvement product (like toothpaste) may require no information search - a high involvement product (like a car) usually requires the customer to spend some time

searching for information (Where can I buy it? How much does it cost? What features does it have? etc.) Evaluation of Alternatives: - recognizing that there are differences between brands and weighing the pros and cons of purchasing a certain brand over another Purchase Decision: - our final decision was a result of all those influences on our behaviour our personal preferences, beliefs, and attitudes; the information we sought and found, and the comparisons we made - we can also be influenced by unexpected and situational factors (such as weather, how easy it is to get to the store, our mood, whether a friend is shopping with us, etc.) Post Purchase Behaviour: - normal post purchase behaviour evaluating what our expectations of the purchase were, and comparing those expectations to how we actually feel now that we own the product (product falls short disappointed; product meets expectations satisfied; product exceeds our expectations delighted) - sometimes, we begin to second-guess ourselves after weve made our purchase decision - the more expensive the product=the more time we spend after thinking about it - Cognitive Dissonance: buyer discomfort caused by post purchase conflict; every purchase involves some compromise, and sometimes we feel uneasy about acquiring the drawbacks Consumerism - the belief that high and constantly increasing consumer spending leads to a healthy economy, and that government policy should encourage this - encourages people to judge themselves and others by what they own rather than by who they are - critics of consumerism have charged that the marketing system in general and advertising in particular urge too much interest in material possessions - they do not view this interest in material things as a natural state of mind but rather as a matter of false wants created by marketing - businesses have advertisers to stimulate peoples desires for goods, and advertisers use the mass media to create materialistic models of the good life - on a deeper level, our wants and values are influences by our family, peer groups, religion, ethnic background, religion, and ethnic background (chapter 6 influences consumer behaviour); if Canadians are too materialistic, these values arose out of basic socialization processes that go much deeper than business and marketing could product

Conventional Distribution Channel vs. Vertical Marketing System Conventional Distribution Channel Producer Wholesaler Retailer Consumer Vertical Marketing System Producer/Wholesaler/Retailer Consumer - In conventional distribution channels, each distributor, wholesaler, or retailer is a separate business; no channel member has much control over the other members - Vertical Marketing System (VMS): a distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate CRM Strategies (Customer Relationship Management) - the practice of managing customer relationships; perhaps the most important concept of modern marketing - involves managing information about individual customers - managing customers touchpoints (any aspect of the integrated marketing program, including product packaging, advertising, salespeople, and customer-service representatives, that reaches or touches a customer) - CRM is what marketing is all about: building and maintain profitable customer relationships by delivering superior customer value and satisfaction - satisfied customers are more likely to be loyal customers and to give the company a larger share of their business Cycle of Failure, Mediocrity, and Success Cycle of Failure - The Employee Cycle of Failure: begins with a narrow design of jobs for low skill levels - emphasis on rules rather than service, and the use of technology to control quality - low wages are paid, accompanied by little investment in selection and training - bored employees who lack abilities to respond to customer problems - the results for the firm are low service quality - because of low-profit margins, the cycle repeats itself with the hiring of more low-paid employees to work in the same unrewarding manner never ending cycle continues - The Customer Cycle of Failure: begins with repeated emphasis on attracting new customers - since the employees are dissatisfied, the customers become dissatisfied with employee performance - high staff turnover means that customers are always served by new faces no continuity

- because customers fail to become loyal to the supplier, they turn over quickly (like the staff), requiring an ongoing search for new customers to maintain sales volume Cycle of Mediocrity - most likely to be found in large organizations that operate on lots of rules and procedures - service is standardized and the stress is on operational efficiencies and service delivery standards tend to be rules-based - since employees are given very little freedom to do their work in the way they think is necessary or suitable, jobs tend to be boring and repetitive - most positions, however, tend to be well paid, often good benefits are offered, and are highly secure employees are reluctant to leave - customers find such organizations frustrating; many rules, lack of service flexibility; when customers complain to employees who are already unhappy, the poor service attitude becomes worse - customers often remain with the organization as there is nowhere else for them to go (could be because the service holds a monopoly, or all other available players are seen as being equally bad or worse) Cycle of Success - success applies to both customers and employees - better pay and benefits attract good quality staff; with more focused recruitment, intensive training and better wages, employees are likely to be happier in their work and provide higher quality service - lower turnover means that regular customers appreciate the continuity in service relationships and are more likely to remain loyal - with greater customer loyalty, profit margins tend to be higher Differentiation Strategies - the key to winning customers and building profitable relationships: understand their needs better than competitors do and deliver more - Competitive Advantage: an advantage over competitors gained by offering greater value, either through lower prices or by providing more benefits that justify higher prices Types of Differentiation: - Product differentiation - Service differentiation - Channel differentiation

- People differentiation - Brand image differentiation

- A difference is worth establishing to the extent that it satisfies the following criteria: Important - of value and beneficial to consumers Distinctive - obvious and clear; competitors do not offer the difference Superior - better value than competitors Communicable explainable and visible to buyers Pre Emptive - defendable and unique; competitors cannot copy Affordable - buyers can afford to pay for the difference Profitable - company can make money Dimensions of Service Quality - Quality: the degree to which a service satisfies customers by consistently meeting their needs, wants, and expectations Dimensions of Service Quality - Tangibles (appearance of physical elements) - Reliability (dependable and accurate performance) - Responsiveness (promptness and helpfulness) - Assurance (credibility, competence, courtesy, and security) - Empathy (good communications, customer understanding and easy access) Distribution Channels - manufacturers struggle between what is ideal and what is practical - designing a channel system calls for: - analyzing customer service needs - setting channel objectives and constraints - identifying major channel alternatives - evaluating alternatives Environmentalism - an organized movement of concerned citizens, businesses, and government agencies working to protect and improve the natural environment - environmentalists want people and organizations to operate with more care for the environment - they want environmental costs included in both producer and consumer decision making - buying behaviour has changed as sensitivity to environmental issues has grown - Canadian government has undertaken many initiatives to improve the environment - marketers cannot ignore the urgency of environmental issues; all parts of the marketing mix are affected - Environmental Sustainability: a management approach that involves developing strategies that both sustain the environment and product profits for the company - some companies do only the bare minimum to obey new regulations or keep environmentalists

quiet; enlightened companies, however, are taking action because it is the right thing to do for both the company and for the planets environmental future Four Categories of Service People Processing - services that involve tangible actions to peoples bodies; directed at the people themselves - include being transported, fed, or made more beautiful - implications of people processing services include: - customers have to be present in the physical location - active cooperation of the customer is needed in the service delivery process - need for managers to think about the process and output from the customers point of view Possession Processing - tangible actions to goods and other physical possessions belonging to customers - implications of possession processing services include: - there is no simultaneous production and consumption - customer involvement tends to be limited to just dropping off or picking up the item Mental Stimulus Processing - intangible actions directed on peoples minds - touch peoples minds and have the power to shape attitudes and influence behaviour - core content of services in this category is information-based - implications of mental stimulus processing services include: - customers do not have to be physically present; only need to be able to take in the information - the service provider must maintain strong ethical standards (because there is a potential for them to be given information that is untrue) - services can be inventoried or consumption at a later date, or even consumed repeatedly Information Processing - information is the most intangible for of service output - can be transformed into more permanent and tangible forms (reports, books, CDs, DVDs) Four Service Focus Strategies - to focus means that firms should not try to appeal to all potential buyers in a market - should focus its efforts on those customers it can serve best Fully Focused: an organization that provides a limited range of services to a narrow and specific market segment - it may provide protection against would-be competitors if a firm has recognized expertise in a

well-defined area - risk is that the market may be too small to get the volume of business needed for financial success Market Focused: company that concentrates on a narrow market segment, but has a wide range of service - before choosing market focused, managers need to be sure that their firms have the operational capability to do an excellent job of delivering the services Service Focused: offer a narrow range of service to a fairly broad market - may require a broader sales effort and greater investment in marketing communication Unfocused: service providers that try to serve broad markets and provide a wide range of services - danger with this strategy is that unfocused firms often are jack of all trades and master of none - firms should not use this method Gaps in Service Design and Delivery - allows us to identify and correct service quality problems - the service quality gap 6 is the most important - to close this gap, the service organization needs to work on closing the other 5 gaps Gap 1 The Knowledge Gap: the difference between what senior management believes customers expect and what customers actually need and expect Gap 2 The Policy Gap: difference between management understands of customers expectations and the service standards they set for service delivery Gap 3 The Delivery Gap: difference between service standards and the service delivery teams actual performance on these standards Gap 4 The Communication Gap: difference between what the company communicates and what it actually delivers to the customer Gap 5 The Perceptions Gap: difference between what is actually delivered and what customers feel they have received because they are unable to accurately judge service quality accurately Gap 6 The Service Quality Gap: difference between what customers expect to receive and their perception of the service that is actually delivered

Good vs. Service Good: anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need 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 - companies are staging, marketing, and delivering memorable customer experiences - companies that market experiences realize that customers are really buying much more than just goods and services; they are buying what those offers will do for them Important vs. Determinant Attributes - consumers usually make their choices between alternative offerings based on the perceived differences between them - the attributes differentiating competing services are not always the most important ones - safety may be considered a very important attribute (i.e. in the choice of airlines) - however, most airlines would be perceived as safe therefore determinate attributes (those that actually determine buyers choices between competing alternatives) are often not on the top of the list of service characteristics that are important for making decisions - convenience of departure, available frequent flyer miles, quality of food and drinks, etc. are examples of determinant attributes Jack Trouts Four Principles of Positioning Positioning: based on establishing and maintaining a unique place in the market for an organization and/or its individual product offerings Four principles of positioning: 1. 2. 3. 4. A company must establish a position in the minds of its target customers The position should have one simple and consistent message The position must set a company apart from its competitors A company cannot be all things to all people it must focus its efforts

Marketing Communications Mix - the specific blend of advertising, sales promotion, public relations, personal selling, and direct marketing tools a company uses to pursue its advertising and marketing objectives - each element of the marketing communication mix requires its own method through which the members of the target market can receive the communications - in addition to the marketing communication mix, the companys entire marketing mix (4 Ps) must be coordinated

Marketing Concept - holds that achieving not only marketing goals, but company goals, depend on knowing the needs and wants of your chosen customers, and delivering the values and satisfactions they need, want, and demand and doing it better than competition - a customer-centred philosophy; less light hunting, and more like gardening - starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers - yields profits by creating long-term customer relationships based on customer satisfaction - customer-driven marketing means understanding customer needs better than customers themselves do and developing market offerings that will meet those needs now and in the future Marketing Environment - all the actors and forces outside the marketing department that affect marketing managements ability to perform its functions - actors and forces include organizations within the company, and outside the company - Microenvironment: the actors and forces close to the company that affect its ability to serve its customers the company, suppliers, marketing intermediaries, customer markets, competitors, and publics - Macroenvironment: actors and forces in society and the world that affect the microenvironment demographic, economic, natural, technological, political, and cultural forces Marketing Intelligence - the systematic collection and analysis of publicly available information about competitors and developments in the marketing environment - the goal is to improve strategic decision making, assess and track competitors actions, and provide early warning of opportunities and threats - good marketing intelligence usually comes from public sources Marketing Research - the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization - differs from marketing intelligence in that it is the formal study of a specific situation - marketing research process has four steps: - defining the problem and the research objectives - develop the research plan - implementing the research plan - interpreting and reporting the findings

Maslows Hierarchy of Needs

Needs/ Wants/ Demands Needs: states of felt deprivation; include basic physical, social, and individual needs Wants: the form needs take as they are shaped by culture and personality; choices we make to fulfill our needs Demands: wants that are backed by buying power; value that we believe will satisfy our wants - it is the responsibility of the marketing department of every company to understand its customers needs, wants, and demands, and the most successful companies are usually the ones that do this the best New Product Development Stage 1: IDEA GENERATION - the systematic search for new product ideas - a company typically has to generate many ideas to find a few good ones Stage 2: IDEA SCREENING - sorting through new product ideas to identify good ideas, and separate them from the not-sogood ideas Stage 3: CONCEPT DEVELOPMENT AND TESTING - developing the new product idea into various alternative forms and testing the concepts with a

group of potential customers - Product concept is a detailed version of the new product idea that can be shown to potential customers Stage 4: MARKETING STRATEGY DEVELOPMENT - designing an initial marketing strategy for a new product based on the product concept - the strategy must answer questions about how, when, where, and to whom the product will be introduced Stage 5: BUSINESS ANALYSIS - the stage of the new product development process in which costs and revenues are estimated Stage 6: PRODUCT DEVELOPMENT AND TESTING - developing the product concept into a real working version of the product and subjecting it to a variety of tests - the product is tested for endurance, wear, breaking points, and usability Stage 7: TEST MARKETING - testing the product and marketing program in real, but limited, market conditions, usually in small geographic areas - if the response to the test marketing is favourable, then the new product will be rolled out to the larger market sections of the country or the entire country over a period of days, weeks, or even months Stage 8: COMMERCIALIZATION - the full-scale introduction of the new product into the market - company will have to expand their manufacturing facilities to accommodate the new product, and they must spend a lot of money for advertising, sales promotion, and other marketing efforts in the first year New Product Pricing What is a price? - sum of all the value that consumers exchange for the benefits of having or using the good or service - typically in the form of money Price vs. Cost: marketers do not make decisions about costs, they make decisions about price Value-Based Pricing: setting price based on buyers perceptions of value rather than on the sellers cost - marketers cannot design a product and marketing program and then set a price; price is considered along with the other marketing mix variables before the marketing program is set

Pricing Strategies: Market Skimming Pricing - high pricing to reap maximum profit from early adopter segments; strategy must be supported by product quality, production costs, and competitors difficulty in entering markets - can only be used for new products Market Penetration Pricing - low price to gain maximum market share, market must be price sensitive, costs must fall with rising volume and price must discourage competition - price starts low and gradually gets higher - the theory is that the initial high sales will result in reduced costs Prestige Pricing - a product that offers the buyer prestige, in exchange for a high price tag - luxury brands Positioning - arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers; the way the product is defined by customers on important attributes; the place the products occupies in customers minds relative to competing products - Positioning Statement: a statement that summarizes company or brand positioning it takes this form: to (target segment and need) our (brand) is (concept) that (point-of-difference) Price Elasticity - a way of measuring how sensitive the market is to price changes - Inelastic: if the demand hardly changes with a small change in price - Elastic: if the demand changes greatly Product Life Cycle - the lifespan of a new product, from its development to its eventual decline - all products will pass through the PLC - difficult to determine how long it takes between stages and how long products will remain in each stage 1. Product Development - company finds and develops a new product idea - no customers, no profits, heavy spending 2. Introduction - period of slow sales growth as the product is introduced in the market

- early adopters customers - no profits due to high spending (launch costs) 3. Growth - period of rapid market acceptance and increasing profits - early majority customers - rapid sales, growth, and revenues 4. Maturity - period of slowdown in sales growth because the product has achieved acceptance by most potential buyers - profit levels off or declines - late majority customers 5. Decline - period when sales fall off and profits drop - laggard customers - replaced by new products Push vs. Pull Strategy Push Strategy: a promotion strategy that calls for using the sales force and trade promotion to push the product through channels Pull Strategy: a promotion strategy that calls for using advertising and consumer promotion to build consumer demand Segmentation - dividing a market into distinct groups with distinct needs, characteristics, or behaviours that might require separate products or marketing mixes - divide large markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs - marketer has to try different segment variables, alone and in combination, to find the best way to view the market structure - Target Segmentation: segments selected because their needs and other characteristics fit well with a specific firms goal and capabilities - some market segments provide better sales and profit opportunities than others - firms must also look at whether they can match or exceed competing offerings directed at the same segment - sometimes, research will show that certain market segments are underserved their needs are not well met by existing suppliers

Types of Segmentation: a) Geographic Segmentation: dividing a market into different geographical units such as nations, regions, provinces, countries, cities, or neighbourhoods b) Demographic Segmentation: dividing the market into groups based on demographic variables such as age, gender, family size, family life cycle, income, occupation, education, race, religion, etc. c) Psychographic Segmentation: describing a market segment according to shared attitudes and behaviours, lifestyles, and personality d) Behavioural Segmentation: dividing a market into groups based on consumer knowledge, attitude, use, or response to a product Service Characteristics - the service sector is bigger (in terms of dollar value) than the retail sector (accounts for nearly 70 percent of Canadas GDP) - includes all government services, hospitals, the military, police, fire departments, Canada Post, schools, colleges, universities, etc. as well as not-for-profit organizations such as museums, charities, and churches - 4 characteristics of services: intangibility, inseparability, variability, and Perishability Intangibility - service that cannot be seen, tasted, felt, heard, or smelled before purchased (people who undergo cosmetic surgery cannot see the result before the purchase; airline passengers have nothing but a ticket and the promise that they and their luggage will arrive safely at the intended destination, etc.) Inseparability - the service cannot be separated from their providers, whether the providers are people or machines; if a service employee provides the service, then that employee is a part of the service Variability - the quality of the services depends on who provides them as well as when, where, and how they are provided (a hotel employees service varies according to his or her energy and frame of mind at the time of each customer encounter) Perishability - means that services cannot be stored for later sale or use (dentists charge clients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up) Strategic Business Unit (SBU) - a unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses

- the process of analyzing the business portfolio involves a series of decisions, usually made by senior management, including marketing management Targeting - evaluating each market segments attractiveness and selecting one or more segments to enter - Target Market: a set of buyers sharing common needs or characteristics that the company decides to serve Types of Research Marketing Research: the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization Imagine you are marketing a new product for Pepsi Give product a name What questions do you need to know before launching the product? Whose your market, does it taste good, will people buy it, how much can price be, possibility for expansion Marketing Research is conducted to collect data, but marketing managers must translate that data into information Exploratory Research: Marketing research to gather preliminary information that will help define problems and suggest the hypothesis. Descriptive Research: marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers who buy the product. Causal Research: marketing research to test the hypothesis about cause and effect relationships Primary Data: information collected for the specific purpose at hand Secondary Data: information that already exists somewhere, having been collected for another purpose Value-Based Pricing - setting price based on buyers perceptions of value rather than on the sellers cost - marketers cannot design a product and marketing program and then set a price; price is considered along with the other marketing mix variables before the marketing program is set 4 steps: 1. Access customer needs and value perceptions. 2. Set the target price to match consumer perceived value.

3. Determine the costs that can be incurred. 4. Design product to deliver desired value at target price. Wheel of loyalty - A systematic and integrated approach to targeting, acquiring, developing, and retaining, a valuable customer base; a 3-step process to build and maintain customer loyalty Wholesaler - the company that sells the product to the retailer who, in turn, sells it to the consumer - this type of wholesaler typically buys a number of similar products from different manufacturers then puts together an assortment to offer for sale to the retailer (example would be someone who would buy an assortment of shoes)