MARKETING INTRODUCTION

PART 1 – MARKETING PLANNING

SESSION 1/CHAPTER 1: MARKETING APPROACH

A very brief history of marketing

o A number of studies have found evidence of advertising, branding, packaging and labelling in antiquity
o Aristotle believed that every persuasive argument relied on three pillars: ethos (credibility), pathos
(emotions) and logos (logic and reason) 
Why we brand? video

1900s: “Market”-ing, a branch of economics. Marketing textbooks and books first appeared Before, only price was
thought to affect demand

Marketing is… The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large. -American Marketing Association (2013)

Why is marketing important:

o Identify and understand the appropriate consumers

o Discover what products, services or ideas these consumers want
o Report back to the production division on what it needs to produce, and in what quantity, format, etc.
o Try to sell the clients the product manufactured by the firm
o Contribute to reach growth, sales and profitability and effectiveness objectives

Marketing: creating, consuming goods that have a value

Also, “Marketing is the generous act  of helping others become who they seek to become.” Marketing is the generous
act of helping someone solve a problem. Their problem.” Seth Godin

Marketing is… Bringing producers and customers together. (avocados)

The marketing function

The marketing function contributes to attaining the company’s growth, sales and profitability

Components or functions of marketing

o Marketing research
o Product development
o Marketing communication (brand and branding management)
o Selling
o Advertising
o Etc.

Does marketing create needs? no

Marketing: Customer want someone to listen to their needs and treat them as though they were important.
It is much easier and less costly to keep an existing client than to try to gain a new one

Milestones in the development of marketing:

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 1) Production orientation
This orientation focuses on production efficiency that will lead to high quality products. (industrial rev and
WW2) Standardization and specialisation in the assembly line of ford cars. Improves productivity. Greater
demand than supply.
2) Product orientation
Some sellers think that consumers will always buy a good product at a reasonable price, so a business only has
to make the best product to automatically reap financial success. But people are not rational and not well
informed about everything available on the market when they buy stuff. However, if no mouse problem won’t
buy a mousetrap even if it’s the best one in the world. Product development is a primary concern of businesses.
3) Marketing orientation
Satisfy the customer while keeping the company’s goals in mind. Focus on the consumer rather than the
business. It represents a shift from a seller’s market (shortage of products or services) to a buyer’s market
(abundance of products or services). Marketing orientation is found in all organizations whose objective id to
succeed over the short and medium terms. Facilitating transactions. Now, modern marketing

Basic marketing concepts

It is the role of the marketing function to identify the appropriate consumers and try to sell them the product
manufactured by the firm. The marketing function also discovers what products these consumers want, and then
reports back to the production division on what it needs to produce, and in what quantity, format, etc.

Marketing is not advertising, it includes research but also so much more (we only see the top of the iceberg)

Needs and desires

Marketing tries to identify needs and meet them by creating the appropriate product. (Maslow’s pyramid). Buy potato
chips cuz associated with relaxing (doesn’t meet nourishment needs). Cars can be symbol of prestige, power and style. A
consumer is not buying a simple piece of clothing but a reflection of their personality.
Need: is a state of lacking something (being hungry)
 State of lacking something (hungry, affection)
 Expressed or latent (unaware of)
 Essential to market success;
 Organized in sequence;
 Met by a desired object;

Want: Psychological wants are often contrasted with physiological needs that make life more enjoyable, but are not
essential for existence. Corresponds to a way to meet this need (choosing Italian restaurant instead of fast food
restaurant). Backed by purchasing power, a want is transformed in into demand. Marketing creates wants but may
satisfy a need. Marketing can stimulate/ wake up a want.

The marketer’s job is to identify the needs and wants of customers and to try to meet them
with the right offer.

AMA has a code of ethics to avoid ppl being manipulated in ads.

Demand
The quantity of a good or service that economic agents buy in a given market.
 Volume (quantity unit)
 Value (monetary unit)
Example tourism.

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Consumer: all economic agents (industry, government, etc), not just an individual making a purchase.
Customer: the person or entity making the purchasing decision.
Current dollar: not adjusted to inflation
Constant dollar: eliminated inflation

Company demand and market demand

Company demand: transaction carried out to buy a product or service from a specific company (in volume or dollars)
Market demand: the sum of individual company demand
Sometimes several businesses or actors join forces to stimulate total market demand, (ex: ads for milk but not naming
any brand so d for milk goes up and all the industry benefits from it).

Market share: in marketing refers not to the share of consumers who buy the company’s product, but to the company’s
share of demand (share of demand). It is the % of a market’s total sales earned by a company

The significance of market share: Market share is a measure of the

consumers' preference for a product over other similar products. A
higher market share usually means greater sales, lesser effort to sell
more and a strong barrier to entry for other competitors.

The different types of demand

o Actual demand: The company’s actual sales or business volume at a specific point in time. Can be in the current
period or a previous one.
o Potential demand: The maximum level that demand for a product can reach in a given context. (people who do
not use a product but might do so are potential consumers). (past or present)
o Demand projection: every demand has a ceiling, and this ceiling depends as much on consumers’ financial
means as on their tastes, interests, receptivity to a marketing strategy and environment. The marketing
managers’ task is then to estimate the maximum level that market demand could reach at a given time, which is
the potential market demand. (future demand)
o When actual demand=potential demand: the market can be considered to have reached its saturation level,
which generally corresponds to the maturity stage in the product lifecycle.

The market and its components

Market: set of consumers, individuals or businesses that express wants and needs by buying products, services or even
ideas.

Different types of markets:

o Consumer goods market: (business to consumer or B2C) is a vast market that offers enormous potential.
o Its all the individuals who purchase products or services to meet their personal needs
o Business market: (or business to business market or B2B) Organizations that buy products and services in order
to use them to make other goods, or to meet their internal needs. They may be the industrial suppliers of a
consumer goods manufacturer, or any firm that sells to other businesses municipalities or public organizations.
Doesn’t include individual consumers. (like processing companies, farm producers, construction industries,
extraction industries and services companies). Different marketing from B2C, more focused on price, product,
sales and after-sale service.

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 o Distribution intermediaries market: Individuals and organizations situated between the producer and the
consumer. Buys products and services with the intention of reselling them. Main intermediaries are retailers,
wholesalers, manufacturers’ agents and dealers.
o Government market: (business to government or B2G) The gov can become the main customer of some
businesses. Usually will take the least expensive, price is usually the priority among the decision making criteria.
o International markets: exporting products (in Canada mostly to US)

Exchange

All definitions of marketing have one thing in common: the concept of exchange. This concept rests on four elements:

o The customer’s need

o The satisfaction of this need
o A relationship btwn the business and the consumer
o And the optimization of business profits

The goal of marketing is to optimize the relationship of exchange between the business and the customer and to
maximize their satisfaction.

Usually concluded with a transaction

Basics of customer relationship and customer service

Value, quality, satisfaction et fidelity.

Value: benefits received minus monetary and non monetary cost. economic, social, and experiential levels

Customer service: everything that customers experience when doing business with a company. Company relationship
with its customers. Growing importance rn.

Customer lifetime value: The sum total of the present values (1$ is not worth the same now and in 5 yrs) of all the
profits that can be made from a particular customer over that person’s lifetime. Proves more profitable to take care of
its customers than to seek new ones. Costs 5 times more to attract new customer than to retain an existing one.

The result of the exchange process

Consumers care about:

Value (the benefits received minus the monetary and non-monetary costs), quality, satisfaction, loyalty (how long
consumer have been dealing with this brand, the longer the more loyal; how much the consumer buys of that brand,
trying to maintain or increase the consumer share of the brand or company.

(satisfaction is not equal loyal and vice-versa but still a strong link)

INTEGRATED MARKETING MODEL

The marketing model: p.22

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Marketing is central to the relationship btwn the organization and the market

The elements of the marketing mix are considered controllable variables

The internal marketing management process

o Analysis
Analyse the market, objectives and resources to make the marketing plan
o Planning
Strategic aspects of the process (key concepts; segmentation, positioning and targeting)
o Implementation
Of the marketing plan, requires coordination
o Control
Success or failure of the operation via the marketing information system (MIS)

The future of marketing

Society has become more demanding of businesses (want them to operate ethically and reduce its impact of the
environment. 4 Rs of construction (Reduce, reuse, recycle, rethink)
o Globalization: the globalization of competition has opened the world to consumers. Increases competition but
more potential buyers. Export/import
o Technology affects all industries (technological advancements)

Marketing…
 Globalization of markets
 Technological advancements
 Sustainable development, social responsibility
 Consumer purchasing power

SESSION 2/CHAPTER 2: MARKETING PROCESS

Forever 21 in bankruptcy bcuz of ecommerce (and amazon)

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How marketing contributes to a company’s mission

The marketing function must be linked to the company’s mission before the concepts of marketing planning and control
are even considered.

Mission: general and specific objectives that form the basis of other strategies.

Marketing: A strategic contribution to a company

Business strategy: the foundation

Marketing in business

o Marketing strategies goal is to attain the company’s growth, sales and profitability
o Marketing strategies contribute to success of business strategy
o Aligned to company’s mission objectives and resources.
Need to understand the business strategy for marketing

A strategy is different from a tactic because it follows an overall vision of the means used to achieve a final objective.

A tactic is a temporary adjustment of an element of the strategy, the how-to.

Strategy: follows an overall vision of the means used to achieve a final objective. (river)

Tactic: a temporary adjustment of an element of the strategy at a given time (rebate coupons) (boat)

A marketing strategy is often defined according to one variable of the marketing mix

Business strategies

o Moves and the how a business gets to meet its objectives. This can relate to competition driven objectives
or development driven
o Business strategies influence marketing strategies

2 types of business strategies; Competitive strategies & development strategies (depends on objective of the company)

1)Competitive strategies (strategy to meet competition driven objectives)

o Leader strategies: A leader (company with dominant position in a given market and is recognized as a leader by
its competitors) is a point of reference that rival companies strive to attack, imitate or avoid. Sets the pace of the
market
o Challenger strategies: A challenger (company considered the main rival of the leader and seeks a dominant
position) openly uses offensive strategies intended to make it the market leader. Must predict the leader’s
potential reactions
o Follower strategies: Rather than trying to take first place, a follower (a competitor with a small market share
that adapts its actions to its competitors) develops strategies aimed primarily at retaining its market share
instead of attempting to increase it considerably. (mostly in oligopolistic markets, few companies)
o Specialist (or nicher) strategies: A market specialist focuses on a relatively distinctive market segment.
Strategies developed to seek a niche that distinguishes the company from its competitors and then focus
exclusively on that niche.

1. Leader (highest market share, innovator): be the first and continue to be the first
2. Challenger (flight for market share)
3. Follower (smaller)

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 4. Specialist (niche) no interest to be the leader

Walt Disney is a leader because in the mission statement they say that they want to be “the most creative, innovative”
etc.
Burger king is a challenger (attacking mcdonalds). Why eat with a clown when you can dine with the king
Hertz and avis; avis assuming its 2nd position
Uniprix avec option +, a follower imitating the products

Video: amazon to stay a leader you need to have a passion for innovation (courage to say that this could fail but those
small things could become big)
Big things start small

2)Development strategies (increase sale, profit, market share, size of business)

Strategy used to identify, evaluate and meet development objectives driven by sales increase, profit, market share…
2 strategic planning tools to help with future growth
- Ansoff model
- BCG matrix
The Ansoff matrix:
Existing products New products
Existing market Market penetration strategy Product development strategy
New market Market development strategy Diversification strategy
Promo of chicken nuggets: penetration
Big mac in Japan: market development
Creation of angus burger: product development
Mccafé: diversification

o Market penetration: increase the sales of its existing products in existing markets by using different methods.
Company remains in the same market niche and keeps its product intact. (least risky, familiar territory)
o Market development: increase its sales by introducing existing products on new markets. Same product to new
groups
o Product development: increase sales by using its existing markets to launch entirely new products, or “new”
products developed by modifying existing ones.
o Diversification: increase its sales by developing new products for new markets. Riskier 2 new things (product
and market)
o The newer the product or market, the higher the business risk

BCG matrix: Analysis of strategic market positioning: analyse market and help make strategic decisions
The BCG (stands for consulting firm who came up with this) matrix to help with long term strategic planning, help a
business consider growth opportunities by reviewing product portfolio.
Based on market growth rate and relative market share. (market share relative to the market leader)
Developmental strategy

Relative market share

HIGH LOW
Market growth HIGH Stars Question Marks
LOW Cash cows Dogs
Remember: Market share
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The company’s share of demand. It is the % of a market’s total sales earned by a company
Market share= company demand/market demand

Cash cows: high relative market share 40%,

o “Milk” these products (large market share) in a slow-growing market
o It can cost way too much to keep product alive
Dogs: pen for white board 10%: small share of market, often liquidated
o Difficult to survive, market with weak growth potential
o It can cost way too much to keep product alive
o Divest/remove?
Stars: on its way up
o High relative market share in a growing market
o Requires investments to develop its growth
Question mark: little profit but in growing market, could become cash cow or dog
o Product has strong competition in a market space that is growing but is not generating enough profits
o They can become stars or dogs
o It requires investment to ensure its growth to star
o Can risk becoming a dog
o To develop!
o Must remove it if market share is not expected to improve
Support the stars, invest selectively in the question marks, maximise the returns of its cash cows and abandon its dogs
this matrix doesn’t include competition & attractiveness, includes only growth

MARKETING PLANNING: where it all starts

Marketing management process

o To meet business objectives, marketing process involving planning and control
o Planning: defining end point
o Control cycle: helps guide the process and indicates the extent to which objectives were achieved. Compare
results with objectives.
Marketing strategies are influenced by business strategies

The marketing plan (p.43)

o Marketing planning process leads to the marketing plan
o An analytical framework that features three general elements: a situation analysis, a set of strategies and an
action program. These 3 elements can be broken down in 7 parts:

1) Situation analysis
2) Setting objectives
3) Resource allocation
4) Defining the marketing strategy
5) Deciding on the marketing mix
6) Implementation
7) Control

Marketing planning process

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Align with the vision, mission, objectives and resources of the company. Set of questions relating to past, present and
future.

The marketing plan

1) Situation analysis:
o Where are we right now?
o Where are we going? (if don’t change anything)
A marketing management team must examine the companies;
Markets: has the profile of consumers or organizational customers changed, if demand and segments have
changed and evolved
Competition and environment: examine environnemental trends
Company: mission and objectives, strengths and weaknesses, advantage
2) Setting objectives:
o Where do we want to go?
S(specific)M(measurable)A(attainable)R(relevant)T(time based): objective needs to answer these
3) Resource allocation:
o What efforts to invest in? (ex: software) (means that will be used to achieve objective. Need to make
sure the company has enough resources to attain objectives & strategies)
Budget, human resources & technical resources
4) Defining the marketing strategy:
o How do we want to be perceived?
o Whom do we want to target?
Targeting, positioning, differentiation and innovation
5) Deciding on the marketing mix:
o What to do to get there?
Product – Price – Distribution – Marketing communication (before called 4Ps) Helps you get to the goal (a tactic,
its specific actions)
6) Implementation:
o What do we do?
Statement of activities for each marketing mix, team responsibilities (defining the objectives & responsibilities of
each member of the marketing unit), establishing a schedule of activities that has clear deadlines

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 Use the business resources to achieve objective that reflects the strategy. Decide how social media will be used,
points of sale, etc. (V important for success)
7) Control:
o Are we going in the right direction?
Measure progress made towards achieving company objective.
Description of the means of control, contingency plan (plan B)(possible solutions to deal with unforeseen
events), scorecard (to facilitate follow-up, guide the process and monitor the progress of marketing activities)

Control
Control cycle
o Examining all, or some, of the result of a marketing action derived from the plan (to assess its performance and
make the necessary adjustments)
o Making adjustments if there is a gap between actual and forecast results (objectives, marketing actions, requires
planning)
o Internal data and external data from business information system are both important. Who comes? Families,
couples, etc. what is the average bill? What are the competitors doing?

Control cycle:
1) Objectives
2) Means of action (correspond to)
3) Standards (criterion that lead to…)
4) Performance measures (see difference between actual and forecast check cause of difference)
5) Root cause analysis
6) Correctives actions (arrow to objective and means of action)

Marketing audit (to provide objective examination of the matter. Done by a department outside of the marketing
department) see page 48-50 for checklist
Comprehensive, systematic and periodic critical examination of a company’s main marketing orientations and its
implementation of them. Goal is to solve the current problems in marketing activities, but done on regular basis to
examine all the marketing activities (not just the problematic ones)
o Situation analysis (market, company)
o Analysis of marketing plan
o Forecasts
o Recommendations

To know if met marketing objectives can look at

Marketing units objectives expressed in:
o Sales levels (by comparing sales records with the objective set in the marketing plan)
o Market share
o Profits

Marketing managers check whether the objectives were reached and asses the effectiveness of the methods used (the
4ps)
Organizational structure (not seen in class)
o Functional structure
 Especially appropriate for a business with a fairly limited or homogeneous product mix & business
activities are simple. Several ppl work under the authority of the marketing VP
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 o Product or brand structure
 Business undergoing intensive growth or diversification, market several products; organise marketing
activities by product; a product manager per product that set marketing objectives for a product, sales
projections, budgets, marketing plan
o Market or region structure
 Specialized in particular markets
 Market managers are responsible for developing a market
o Matrix structure
 Combination of functional and the market or product management organizations
 Work under 2 superiors

Ethics in marketing
 AMA (American Marketing Association) created a code of conduct for its members
 Advertisers have also adopted a code of ethics administered by the Advertising Standards Canada (ASC)

SESSION 3/ CHAPTER 5 & 6 (P.145-159)

Heinz, pour bottle project in Toronto, label is sideways, attract ppl attention
Birds eating—eating a market share with different market leaders each bird is taking a different share. Leader is the one
who took the most, then challenger; competition, followers, leaders, market share

Analysis and marketing planning: The power of analysis

The importance of analysis:
Need to analyse before planning and executing a marketing strategy
The company must use its strengths to seize opportunities in its external environment and must overcome its
weaknesses to protect itself from threats that may hinder its performance and jeopardize its sustainability.

A model for analysis:

SWOT (Strengths, Weaknesses, Opportunities, Threats; can act as a break or a springboard for an organization)
Helps process information gathered internally as well as external data (internal & external environment)
Helpful/ harmful: How it will impact the company’s operation and performance (positive vs negative impact on the
organization)

Helpful (to achieve the objective) Harmful (to achieve the objective)
Internal origin (organizational) Strengths Weaknesses
External origin (environment) Opportunities Threats

SWOT model, a simple tool

Provides an internal framework of analysis for an entire organization or one of its strategic business areas (HR,
marketing, accounting…)
o Helps to detect opportunities and threats within the strategic business area and make decisions accordingly
o Helps define winning strategies and effective actions
o Always be proactive, can be used for anything not only marketing

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Use the TOWS (p.113) (alternative and improved version of the SWOT that some say is too simple) to integrate the
information of the SWOT and transform it into strategic orientations, a strategic planning tool.
Use the results to formulate their marketing plan and determine the commercial mix. For entrepreneurs to know if it’s
the right time to enter a market

A strategic choice can be made using the SWOT analytical framework or the TOWS

All organisations decide on their strategy and actions by considering their internal environment along with their context
(external environment)
Internal environment
Doing introspection
The internal environment of an organization is made up of its resources, competencies, achievements, current offer,
performance in its sector and all of the other key factors that represent obstacles or that may act as springboards to
allow the organisation to fulfill its objective and mission.
Analysing the internal environment can shed light on the strengths that contribute to the company’s success and the
weaknesses that may hinder its performance and sustainability.
It is controllable if the organization has sufficient resources and capacities to act on its components
Strength
o An important characteristic that an organization uses to attain its objectives, seize opportunities in its
environment and protect itself from threats
Weakness
o A factor that can harm the organization by limiting its ability to achieve its objectives, either because it
cannot seize opportunities that arise, or because it makes the company vulnerable to potential threats.
o Harm so more vulnerable to threats

Methods of analysis of internal environment

To understand strengths and weaknesses of a company
1) Objective and mission (for analysis of internal and external environment)
2) Components of the internal environment (analysing each of the components of the internal
environment and seeing how the organization is positioned relative to each of these components)
3) The value chain (tool)
4) Benchmarking (tool)

1) Objective and mission

Analysis of:
o Mission (summary of objectives) in mission state main activities and competitive advantage.
o Vision (projection of future?)
o Values (what is important?)
o Competitive advantage (difference, what makes us stand out) A distinction is only a competitive advantage
or strength if consumers & partners perceive its importance.
2) Components of the internal environment
Gain information on organization status or situation
It includes the following which can help shed light…
o Resources and core competencies (HR, finance, information resources, resources linked to purchasing)
o Current offer (products, services, image…)
o Past performance (results, sales, previous marketing actions…) (can shed light on strengths and
weaknesses)
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 o Relations with business partners (ex: suppliers, retailers…) (B2B) good relationships
o Key factors of failure or success (notoriety, innovation…)
3) The value chain (tool) p.120 image
o The steps an organization follows to develop, produce and deliver its products, goods or services
o Recognize which activities are most valuable and which to improve on
o Each step represents an opportunity to gain a cost advantage or competitive advantage.
o When the value chain is used as a framework of internal analysis, it can identify the strengths and
weaknesses of the company

The value chain -Primary activities or basic activities (activities relating to creation, production and marketing of
products and services)
Here are the 5 primary activities according to Porter;
o Inbound logistics
Reception, storage and procurements logistics, management of inputs to produce the good
o Operations
Transformation of inputs into products (production, packaging…)
o Outbound logistics
All aspects of distribution (storage of finished products all the way to delivery)
o Marketing and sales
Activities liked to segmentation, targeting, positioning and marketing mix (4ps)
o Service (after-sale service)
Installation, repair, return management and claim

H&M stands out because of inbound logistics (send pic of fashion show and then in production)
Amazon outbound, can ship to 72% of US population in a day. Strong outbound logistics
Smores on shark tank; outbound logistics is a weakness cuz very expensive to ship
Audible; 1 year to exchange

The value chain -support activities (activities that ensure that basic activities are executed as efficiently as
possible) 4 support activities:
o Firm infrastructure 
Services required for the organization to function, such as administration, financial management,
strategic planning, and quality control
o Human resource management
Capability to retain and attract talents
o Technology 
Company’s ability to innovate quickly implement product development
o Procurement
Decrease procurement costs

4) Benchmarking (tool)
o An ongoing process of research and analysis to compare performance of products, services and
processes with the best practices, and improve them accordingly. (identify existing best practice
compare to see what worked)
o Identify internal opportunities
o May cover all components of internal environment, so all the primary and support activities that make
up the value chain
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 o It doesn’t only identify strengths and weaknesses it also provides orientations that drive improvement.
o Benchmarking based on analysis of the value chain is called: strategic priority advantages p.123 shows
the matrix

External environment
Less within our control. Can be analysed at two levels: micro and macro
Opportunity
o External factor that the company may be able to exploit to its advantage. Favorable impact on activities and
profitability.
Threat
o Current and emerging external factor that may challenge the company’s performance and unfavourably impact
its activities and profitability.

The analysis of the environment depends on objective and mission of the organization, along with the market and
sector.

The organization and its environment

External environment analysis

Microenvironment
o Forces affecting directly the drive of business
activities

Macroenvironment
o More indirect forces, more distant from daily
business activities

The microenvironment
Where does the analysis of the external analysis start?
Start with the microenvironment because it is the competition that defines the market and the sector.
o Also known as competitive environment. Set of actors in direct contact with the organization. Established and
potential competitors, substitute products, customers (buyers on the business and consumer markets) and
suppliers of the organization.
o A passive organisation are reactive organizations that have no control over their environment, but companies
that track the evolution of their environment and anticipate are proactive organizations and they are less
vulnerable to threats posed by the microenvironment.

Market and sector

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Analyzing the microenvironment involves defining market and sector (the most challenging task of microenvironment
analysis). Important to know who the competitors are. (ex: redbull can be in the market of energy drinks or sport drinks)

A market can be defined based on supply groups of similar organizations operating in the same industry or sector.
Market is also defined by sector.
A market can be defined based on supply and demand. Defining a market as a sector is not always sufficient because the
market may include actors belonging to other industries

Sector is like the industry. The definition of the market, hence of the competition, takes into consideration both supply
and demand. Helps set the frontiers of the market.
Competition is also btwn products that respond to the same need (restaurant vs watch Netflix on a Saturday night)
“Competition is the result of the interaction between organizations that offer products and services intended to satisfy
the same need or want.” - Kotler. (Adding substitutes)
The analysis of the microenvironment may quickly become complicated and difficult to manage if the market is defined
too broadly, the market may be determined by the nature of the decisions to be made.
Market is not fixed, can include many things. It will depend on the decision you need to take

The microenvironment
Competition may come from actual direct competitors. But it can also come from potential new entrants or
newcommers, or substitute products… and it takes into consideration other actors that influence the dynamics in the
industry such as customers and suppliers.

The microenvironment and its 5 components (Porter model of competitive strengths of five forces) p.127
Set of actors that are in direct contact with the organization. They can impact business strategy, business decisions and
performance. Microenvironment also known as the competitive environment.
Components:
1) Competition within industry
2) (Threat of) substitute products and services
3) Customers (bargaining power in book)
4) Suppliers (bargaining power)
5) (Threat of) potential or new entrants

Porter’s model of competitive strengths Of five forces

o Five forces analysis for competitive strengths within
an industry. Allows managers to analyse the
interactions between organizations and its microenvironment.
o The Five Forces determine the competitive structure of an industry, and its profitability.
o Analyzing the Five Forces can help companies anticipate shifts in competition, shape how industry structure
evolves, and find better strategic positions within the industry. 
o Once the actors in the market are identified, their interactions are analyzed. The objective is to identify the main
challenges and the best opportunities that may arise in the market. Can use Porter’s model to do so.
o The balance of power and the competition resulting from interactions between the organization and all the
other actors in its microenvironment depend on the 5 competitive strengths of porter:

1) The competition
The intensity of the rivalry depends on:

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o Growth rate of the industry
o Number of competitors in the industry
o Level of product differentiation (for similar products, need to retain your customers so they don’t buy your
rival’s product)
ex: rivalry is high when there are a lot of competitors that are roughly equal in size and power
Price war intended to attract consumers who are the most price-sensitive and least loyal (together with
increased investments in advertising, new product launches and acquisitions of businesses) are all ways that
companies respond to competition. Try to make bigger presence on market, differentiate your products. Need
to focus on competitive advantage/ strength.

2) Substitutes
o Satisfy the same needs among the target
o More efficient alternative solution (price or performance)
o Variety
o Price advantage
o Switching cost
Example: cellphone companies (cost a lot to switch if break contract)
High switching cost, less likely to switch

“Switching costs are the costs that a consumer incurs as a result of changing brands, suppliers, or products.
Although most prevalent switching costs are monetary in nature, there are also psychological, effort-based,
and timebased switching costs."

Customer and supplier

Bargaining power or influence they can have on… Ability to exert pressure to ex: drive down prices, or
increase the required quality expected

3) The customers
Customers can impact change in marketing strategies and actions of a business
The bargaining power of customers is higher:
o Low product differentiation
o Price sensibility
o Availability of substitute product
o Availability of information

4) The suppliers
The intensity of an organization’s dependence on its suppliers has a direct impact on the sharing of power.
When is bargaining power of suppliers low/weak?
o Switching costs of buyers are low
o Threat of forward integration is low
o Large number of suppliers relative to buyers
o High dependence of a supplier’s sale on a particular buyer
o Switching costs of suppliers are high
o Substitutes are available

5) The potential new entrants or newcomers p.132 examples + def

Attracted by the potential growth of an industry
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 Entry barriers for new entrants:
o Differentiation (notoriety, brand awareness, price…)
o Economies of scale (large scale production, lower unit production cost)
o Capital requirements (higher capital, less new entrant)
o Advantages linked to costs (ability to procure top quality, patents)
o Government policies (laws and regulations)
o Access to distribution (ex: retail shelves)

Porter vs SWOT
Porter’s 5 forces model: analyze the competitive environment within an industry
Outside
SWOT: analysis within an organization to analyze its internal potential. ...
Inside

SWOT activity (on ppt)

1. strength
2. opportunity
3. strength
4. opportunity; it’s a trend
5. weakness
6. threat
7. strength
8. opportunity
9. strength
10. threat
11. strength
12. weakness
13. weakness

Macroenvironment (PESTEL)
Includes all factors of the external environment that the organization cannot control, but that may affect supply and
demand in a market. It can impact business now and in the future.
In technology companies if didn’t pay attention to changes in macroenvironment, go out of business. Internet, now
everything digital. Taxi/ uber. Kodak didn’t survive against digital cameras
Uncontrollable but they can monitor trends and anticipate the effects of these trends on their activities
Consider each factor in isolation but they are all interrelated. All changes to one factor may induce major changes in the
others. Some industries are more vulnerable to change in particular factors. The impact of microenvironmental
factor differs depending on the industry
The main macroenvironmental factors that can influence markets (PESTEL):
1. Political
2. Economic
3. Social
4. Technological
5. Ecological
6. Legal

17
These factors can simultaneously affect consumers’ habits and behaviours, compagnies’ operations and the actions of
governments and their institutions. Can help find opportunities

1. Political environment
The political situation of the country directly influences the organization
o In-place government
o Political stability
o Electoral process
Ex: efforts to reduce greenhouse gas with Harper vs the liberals. Harped withdrawal from Kyoto was positive for oil
companies, but bad for sustainable energy companies. Incentives by the gov for electric cars

2. Economic environment
o Prosperity of the economy
o Purchasing power
o Economic conditions
 debts
 import-export (tariffs CETA France and canada, US CHINA tariffs)
 exchange rates

o The economy is now global. Economic environment is very volatile

o Can use consumer confidence index to know how the eco is going (confidence about the economy)
ex : a favorable economic climate, good time to launch a new product

3. Social environment
o Demographics (multicultural)
o Age, gender, composition of the population, etc.
o Attitudes toward customer service (now good customer service is a norm)
o Population growth (takes into account fertility rate, mortality rate and immigration)
o Health consciousness (mcdo selling salads)

4. Technological environment
Great influence on for instance;
o Consumption habits (2 people next to each other watching different shows)
o Many things
Ex: “uberization” based on connected devices and geolocation
Webrooming: looking for info on products online before purchasing in store or showrooming (opposite; info in store and
buy online)

5. Ecological environment
o (ecological and environmental)
o Includes all factors related to the environment that may affect supply and demand
 Natural resources
 Pressure groups
IGA will accept reusable containers
Boycotts, ban plastic bags, cruelty-free cosmetics
Need to follow the trends and adapt to integrate them

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6. Legal environment
Legal factors are those which have become law and regulations.
Uber or pharmaceutical companies
o Set of laws and regulations that govern company’s market activities

Must distinguish factors based on the duration of the effect of the factor. Structural changes have long-term impact vs
one-time or short term trends that tend to fade or disappear. Ex: Mtl hosting the Olympics, construction of
many facilities not used after + increase in tourism (long-term).

CHAPTER 6 (p.145-159): MARKETING RESEARCH

Marketing information system (MIS)
A system that analyzes and assesses marketing information, gathered continuously from sources inside and outside an
organization. It provides basis for decisions.
Primary (ex: surveys) and secondary data (consulting existing and achieved data) represents the basic ingredients of a
MIS.
Used to make better decision about strategies and the marketing mix. MIS collects data and analyzez it continuously and
systematically. Always useful not only in planning and execution, also in control

Main components used for integrated data collection and analysis within the MIS:
The internal data analysis system; data gathered by the company internally
o part of the accounting system, records transactions made
Marketing intelligence: use data from external environment (micro & macro), secondary data
o creates reports to inform managers of the evolution of the environment, detect trends so threats or
opportunities. Systematic and continuous collection and analysis of external secondary data.
Marketing research: use data from external environment, primary data
o to answer specific managerial problems or to explore business opportunities
Goal of last 2: supply marketing managers with useful info to make their decision process more effective (planning,
execution and control)
MIS must be pertinent and useful for addressing a marketing problem, reliable and valid

Primary data: original data collected according to a methodology designed by the analyst. To meet managers’ specific
information needs. Usually quite costly to collect so always check if secondary data is available. Primary data collection is
justified only when secondary data do not provide sufficient info to answer the research question. p.153
Secondary data: data collected by a third party ( ex: government, associations, private firms…) according to a
methodology not controlled by the analyst, but that they can use for research. Already available and easily and quickly
accessed by analysts. No guarantee that it is accurate or reliable, ask yourself questions before using it. (who collected
the data? Why? What? When? How? Consistent with other data?

Marketing research is the function that links the consumer, customer, and public to the marketer through information--
information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing
actions; monitor marketing performance; and improve understanding of marketing as a process. Helps detect threats
and opportunities. To guide decisions on elements of marketing mix. Mostly based on primary data, but also use
secondary
Marketing research consists of planning, collecting and analyzing data, and communicating the results of this analysis to
managers and decision-makers in the organization. Rigorous approach

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Marketing research data can provide insights into trends, consumers’ profiles, preferences, attitudes and opinions,
behaviours and reactions to the commercial actions that the organization implements.

Types of marketing research projects:

o Exploratory research
 To understand a situation (ex: declining sales), when crucial issues, when seek new business
opportunities
 Secondary data, observation and qualitative research
 Exploratory research
o Descriptive research
 A study for specific purposes. Describe a situation (customer satisfaction)
 More structured data collection instruments
o Causal research
 Investigation of cause-and-effect relationship btwn variables
 Use experimentation

A marketing research approach can transform info in new opportunities, competitive advantages and informed decisions

CHAPTER 7: CONSUMER BEHAVIOUR

Project;
How to identify competition
o What do consumers want?
o What will meet their needs?
From perspective of a consumer, mcdo less healthy, not expensive
Strong brand is far from all the other brands
See slide 15; put 2 variables and see where your company is (healthy vs not healthy; price $$$ vs price $)
Positioning is knowing where you stand and what makes you stand out

Secondary research

The study of consumer behaviour

9/20 reasons for startup failed and 5/10 were related to customers- not meeting their needs, not listening to or even
ignoring them.
#1 reason for startups fail; no market need, no customer, not solving a market problem
Consumer need is very important. Need to understand the person you sell to. NO consumer no business
Managers need to understand their target consumers

The importance of acquiring in depth knowledge of consumers

To allow marketing to answer needs
To guide marketing strategy
o Understanding the consumer is crucial (study their wants and needs, purchasing experience, communication
with the consumer, etc.)

The consumer:
o An individual to whom a business makes a commercial offer.
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Consumer behaviour
o The set of processes that individuals or groups use when selected, securing (purchasing), using or disposing of
products, services, experiences or ideas to satisfy their needs and wants
o Not only the purchase itself, also steps before and experience after
o Consumption process: all decisions, emotions and actions that precede and follow the purchase
o Important to adapt marketing strategy accordingly

Integrated model of consumer behaviour

Consumers are influenced by various factors as they complete the steps of the decision process
Internal influences (central psychological processes ex : motivation, and psychographic ones ex : identity, self-concept)
External influences: more or less direct and explicit influence on consumer
 Internal and external are fairly stable over time and evolve slowly
Situational influences: the particular situation in which they make a specific purchase
Marketing influences: consumers react to the overall marketing mix proposed

Environment; lights no light, casinos

Candies in Japan, too crowded, hard to choose, a bunch of influences

Level of effort and involvement in the decision: p.191

o The level of effort and involvement in the decision varies (buying a car vs cereal). Every day decisions: little or no
conscious effort. Often buy same brand out of habit and convenience, that’s not brand loyalty.
o Low involvement: low cost, low risk. High involvement: wedding grown cuz perceived as important and highly
visible to others; costly or related to consumer’s identity. Invest time and energy. Ex research
o Situation may also affect involvement: usually don’t take time to choose wine, but this time for a special
occasion/ gift so will take time to choose.
o Return policies or satisfaction guarantees reduces the perceived risk of the purchase. Impulse buy by of candies
next to cash.
o Low effort decision: inertia purchasing
o The level of effort invested in the decision will also determine the probability that a compensatory or non-
compensatory model will be adopted.
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Cognitive and emotional decisions:
o Some decisions are guided by the heart and emotions: subjective feelings that the product or the brand evokes
in the individual may outweigh an objective and rational evaluation of the product attributes. Decisions include
cognitive and emotional components. Aesthetic, design, color also influences the choice. If a decision is more
cognitive or emotional depends on the product, situation and the individual.
o Product characteristics: Utilitarian need (washing machine, etc)  cognitive decision process. Need for self-
expression (fashion accessories)  emotional
o Characteristics of the situation: the context of use of a product can dictate more or less emotional or cognitive
processing of the purchasing decision
o Individual characteristics: Individuals differ in their tendency to approach a decision cognitively or emotionally, a
distinction that can also be described as cerebral vs instinctive
o To prompt emotional decisions: message should emphasize feelings associated with the product (ex:happy)
o Cognitive decisions: message to show this product is superior to its competition

2 types of consumers: maximiser (choose best option, surprising they rely less on info acquired during previous
decisions, minimize negative experiences) vs satisficer (satisfactory solution even if its not the best)

Three important factors affecting decisions

1. Individual
2. Product
3. Situation

The decision process steps:

1. Recognition of a problem
2. Information search
3. Evaluation of options
4. Purchasing decision
5. Post-purchase behaviour

1. Recognition of a problem (need)

o Can be given rise by internal or external factors
o Gap between an ideal or desired state and an actual state
o There’s a want, a need, need to realize that
o After deterioration or loss of an object; or when want to change iphone to new one although the old
one still works

2. Information search
A need so will search for a specific product category
Will ask advice, search on google, pay attention to adds, etc
Characteristics impacting this step of the process:
o Level of effort and implication
o Type of products
o Situation (time)
o Emotional factor
o Risks perceived
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 This will impact level of involvement (involvement: amount of importance that we place on object according to
needs, values and interests)
Ex: which gym will you go to? The one far but prefer the people
Tattoo, research cuz on you forever
Wedding, need to be sure, reflexion
In the airport don’t have time to shop around, you will just buy kind of regardless of price
Depending on the product, risk factor, etc, will impact how much research
Type of perceived risks: The perceived risk associated with a purchase also increases the search intensity. P.196
Types of risks: Monetary, physical, functional, psychological, social
Purchases more prone to risk: House, car; medication, food, tourism; electronics; tattoos, clothing; car, jewelry

3. Evaluation of options
o The consideration set includes brands already known of the consumer, and those that emerge from the
external information search, that are evaluated before a purchase. This OR this, what decision will you
make. Which brands are considered, seen as an option. Options that consumer seriously consider.
Important for managers to understand why someone might not include their brand in their options.

4. Purchasing decision
Now need to choose an option in the consideration set. Pay particular attention to determinant attributes
(aspects of a product that differentiate it from the other products).
o Adoption of a decision model (compensatory or non-compensatory) (choice is based on the amount of
information to process and effort required). Filters available on websites. Ex on expedia can remove all
flights with a connection (non-compensatory model). A brand can seek to influence the type of decision
that gives it the greatest advantage (focus on one attribute or all attributes)
The 2 main decision models that consumers adopt are the compensatory model and the non-compensatory
model:
a. Compensatory model (takes all determinant attributed into account) pricier but known brand, trendy
but low quality, will buy it anyways. When only a few results are left, usually evaluate at all the
determinants to make the decision
i. Ex: bookings, give a lot of info to help people find what they want
b. Non-compensatory model (consider the most important attribute to make a decision). If perceived
performance of this attribute does not meet a minimum acceptable level, reject it even though it could
be compensated for by the excellent performance of another attribute. Travellers that eliminate flights
with a connection to only have direct options, even though they are more expensive. Useful when the
consideration set includes a large number of options, eliminates options that don’t have that one
attribute you are looking for
Decision-making unit (DMU): to consider!
It’s all the people who participate in a buyer’s decision process. Several ppl often participate in the steps of the
decision process. Marketers must determine who does what in the process to successfully influence the right person at
each key step.
o Initiator
o Informant
o Buyer
o User
Video; kid in grocery store buying marshmallows, he’s not the one paying but will eat them
The way things are positioned is important (took marshmallows bcuz on bottom shelf)
o May be particularly sensible to contextual variables

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 o Mood
o Time available (line too long, won’t buy it after all; but at schwartz will wait in line doesn’t matter)
o Physical environment (lighting and people around); décor, odour, temperature
User can influence the buyer (kid asking for candies)

Purchasing decision (act)

o May be particularly sensible to contextual/ situational variables/ influences: factors that are not stable
 Mood of the consumer at that time. In a good mood will evaluate product favourably. Can be
affected by store ambiance, aggressive salespeople, weather condition…
 Time available: time spend on purchase depends on their involvement, among other factors
 Physical environment (lighting and people around- shopping alone or with someone else, the
sales person)

5. Post-purchase behaviour
If it meets the need that initiated the whole decision process, if
the client is satisfied or dissatisfied: satisfaction occurs when
the performance of a product or service exceeds the
customer’s expectations.
o Expectation disconfirmation theory
Consumers form an opinion on a brand based on their past experience and on all the forms of
communication (adds, word-of mouth, expert opinion, etc) to which they are exposed. Before using the
product, they have some expectations about the quality. Consumers will be satisfied only if the
performance exceeds their expectations.
o Expectation management
The company must convey attractive but realistic expectations, or they risk disappointing users in the
post-purchase phase. (ex: warning that the fabric may stretch). Understanding the customer goes
beyond the purchase act.
o Loyalty
Satisfied so will be loyal and motivated to buy the product again. Spread positive word-of-mouth about
the product / recommend to others. Dissatisfied, will not but it again and might spread a negative
impression about the product (ex: bad review online, “desire for vengeance”)
Waited in line at schwartz, was it good and you satisfied? Worth it?

Cognitive dissonance
Theory that states that ppl faced with inconsistency btwn their attitude and behaviour try to resolve this
unpleasant psychological state of dissonance by changing their attitude or behaviour.
Post-purchase information distortion: buy A hear that B is the best one ever, will question the credibility of the
review of B, find sources that say that A is rly good
Buy something but then doubts it. New iphone is too
expensive but still buys it
Buy shoes online they arrive they don’t look like the image, too
much of a hassle to return it; decrease value of rejected option
(don’t want to refund)
Extra drink at a bar, whatever, not a bad decision

Schwartz, was 20$ but worth it, had to taste it

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Activity on the decision process 7 questions
Activity in class why chose hec, semi-structured
o Bilingual program attracting people
What was your last meal in a restaurant
o Poutine maiz
o Been there before, internal
People around us influence our consumer behaviour

The purchasing decision process is fundamental to the study of consumer behavior. However, it cannot be considered in
isolation as internal and external influences impact its speed, steps, or even its stakeholders. So, it comes down to
considering the study of consumer behavior as a whole, which, although complex, does have exciting ramifications. The
following exercise paves the way for understanding it.

Sources of influence
Sources of influence on consumer behaviour:
1. Internal
2. External
3. Marketing mix
4. Contextual (situational)

Consumer behaviour is the result of the interactions among internal psychological influences, external social and cultural
influences, and situational influences on individuals. Managers must be aware of these three sources of influence to be
able to adapt the marketing mix variables accordingly.

Internal influences
o Central psychological processes (part of the mental “mechanics” of all consumers, shape consumers’ behaviour
and decisions)
•Motivation
•Perception
•Knowledge
•Emotions
•Attitude
o Psychographic variables (description of consumers based on their psychological and behavioural characteristics.
Understand psychological drivers of their customers. Much more in depth than sociodemographic characteristics
like age, sex, income..)
•Identity and self-concept
•Values
•Lifestyles

Motivation
A state of internal stimulation that provides the energy required to satisfy a need
 Determine the level of effort (that an individual is ready to deploy when making a decision – decision-making
and information processing)
 Utility needs versus hedonic and symbolic needs

25
  Utilitarian need: motivate the search for products and services that solve a consumption problem (tools,
home appliances, etc). tangible characteristics of the product are important. Mostly cognitive (not very
emotional). Good for health
 Hedonic and symbolic needs: linked to the search for pleasure and to the self-concept (pleasure when
eat food, prestige or uniqueness when you buy luxury brands)
 The types of needs (Maslow’s pyramid) that can stimulate motivation in consumers fall into different categories
 Maslow’s hierarchy of needs: 5 categories p.8 bottom needs to be fully satisfied to activate the needs at the top;
criticized: western vision, not true for everyone, not everyone prioritizes
these main types of needs in the same order

Needs and wants

NEED
o State of lacking something (hungry, affection)
o Expressed or latent (unaware of)
o Essential to market success;
o Organized in sequence;
o Met by a desired object;
o
WANT
Psychological wants are often contrasted with physiological needs that make life more enjoyable, but are not essential
for existence

Perception
Central psychological processes
Process of selecting, organizing and interpreting information received by the five senses
(music, colors, smell, etc), marketing stimuli
The stimuli captures by our sensory receptors are processed in three steps:
o Exposure
The process whereby a consumers comes into contact with a stimulus
Selective exposure: consumers deliberately select the marketing stimuli to which they
want to be exposed. Add block, skip ads, etc.
o Attention
Pay attention to a stimulus, dedicating mental activity to process it
The attention that consumers devote to marketing stimuli is selective. Need to buy a new car, will start to look at
car ads.
There exists many tactics to capture consumers’ attention. Something unexpected, humour, popular
personalities, etc.
o Interpretation
Assigning a meaning to a sensory stimulus. Integrates all of the knowledge and beliefs that they have
accumulated in their memory. Marketing managers must take in to account what their target audience know
when designing a message. People mobilize the mental associations they have established with brand when
they taste their product (coke vs pepsi with/without a blindfold)

Marketers must use marketing stimuli that exceed consumers’ sensory threshold to ensure that they perceive the
message (writing on billboard must be large enough for ppl to read it, music and ambient perfume in store must be
perceptible)

26
Marketing managers need to understand the nature of each of these steps to ensure that their message will be decoded
properly.

Knowledge
Central psychological processes
o Mental associations (with the brand, it influences the interpretation of stimuli generated by the brand)
Two other aspects of consumer knowledge that can influence the decision process:
• Inferences : conclusions that consumers can draw based on marketing stimuli. Belief that lead consumers to
use an observable characteristic of a product (ex: price) to deduce an unobservable characteristic (its quality).
Country where product was produced to infer the quality
Heuristic: mental shortcut that lefts people simplify the decision process. Judge quality based on price and
country of origin instead of looking for info online
• Mental categorization: Organization of knowledge based on similarities btwn objects. Ex for wine at first: red
rosé or white, then grape variety, then region… then expect a certain price, aroma, etc. In SAQ organized by red,
white rosé and by region.

Emotions
Central psychological processes
o Critical aspect of consumer psychology
o Decision process is not guided by reason alone
o Emotional connection to a brand
o Negative emotion can be an effective communication tool: guilt to encourage ppl to give money to charity

Attitude
Central psychological processes
An enduring evaluation of a person, object or subject. Important as
determinant of purchase intention.
It includes a:
o Cognitive dimension (beliefs about the object)
Communication od documented facts on a product’s
performance aims to improve attitude by appealing to
people’s cognitive dimension.
o Emotional dimension (affective reaction to the object)
Associating positive emotions with a brand through ads like celebrity or eye-catching packaging
o Behavioural dimension (the individual’s action intention toward the object)

Attitude
Central psychological processes
o Cognitive dissonance theory
• People faced with inconsistency between their attitude and behaviour will change their behaviour or attitude.
Attitude determines a behavioural intention, yet many obstacles may later hinder the actual behaviour. Like brand A but
didn’t buy it. Social pressure or desire to conform to a given norm can interfere with the realization of an attitude

Self-concept
Psychographic variables
Self-concept: The way one perceives and evaluates one’s characteristics (physical and mental), may be biased
o Positively or negatively
27
 o More or less, intense, consistent through time and precise
o Real me versus ideal me, affects self-esteem
o Personality has less of an impact on our actions than our own self concept
o Self concept is developed through:
‣ Observing our own behaviour
‣ How others act towards us
‣ Comparisons with others
‣ What others say to us directly
o We tend to act and consume in ways coherent with who we are
o The products and brands that we consume help build our self-concept. Search for a match btwn image of the
brand and self-concept

Values
Psychographic variables
Abstract, lasting beliefs about what is good or bad, acceptable or unacceptable, and preferable or not.
Largely shaped by culture where we were raised or lived for a long time.
o Family
o Ecology
o Professional success
o Education
o Equality
o Etc.
Brands can transmit values through ads. Show values of the product

Lifestyle
Psychographic variables
o Activities and pastimes to which individuals dedicate their spare time.
• Involves time and spending/ these choices of how to allocate one’s budget and time often reflect individuals’
values
• Richness of information (so do segmentation based on lifestyle)
• Its how we express to ourselves and others our values and personality
Lulu offering yoga classes around the brand

External influence (needs are influenced by our social and cultural environment)
o Subcultures
o Culture
o Reference groups

Culture
Transmits a set of values to its members and represent the accumulation of:
 Shared significations
 Rituals
 Norms (expectations and rules)
 Traditions
It shapes consumer behaviour
Essential to understand the cultural lens through which consumers perceive a product offering
Importance of individual vs group (collectivist)
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Share customs, habits and ritual. Food behaviour, holiday traditions, celebration of milestones…
Marketing managers must nonetheless find a subtle balance btwn standardizing an offer and adapting the offer to local
cultures

Subcultures
A smaller group of people within culture, whose members share beliefs and experiences that differentiate them from
other groups. A subculture may surround a hobby, art movement, music scene, fashion sense, philosophy…
Examples of subcultures:
 Generations (ex: use social media/ influencers to reach millennials)
 Ethnic groups (can adapt marketing strategies in response to the specific values and preferences of an ethnic
group, specific flavor, translating, spokesperson of that ethnic group)
 Regional subcultures (segmentation by geographical location, QC vs BC)
 Social classes (includes income, family origins, education and profession) refers to ppl lifestyle, sense of
belonging to a certain social class
 Music groups
Some marketing managers fine-tune their strategies to entice members of these particular groups

Reference groups
Real or imaginary individuals or groups that influence a person’s evaluations, aspirations and behaviour. (like family,
friends, colleagues…)
They influence our judgements and choices
o Can be one individual (fashion blogger), can take a from that is institutionalized (fellow uni students) or more
informal (fans of K pop)
o An individual does not need to belong to a reference group to be influenced by it. Some reference groups are
aspirational (NBA players, singers, etc)
o We are also influenced by dissociative groups because of a desire not to resemble then or be associated with
them.
o Influencers posting about a product

3 main type of influence on consumers by reference groups:

o Informational influence: seek information (from family, friends, online forums) (ex:wom)
These groups are valuable sources of information on brands, products. Play important role in the information
search preceding a purchase.
o Normative influence: norms and conduct (group that exerts pressure for them to conform with the norm, how
to dress depending on where you work)
o Comparative influence: how one compares to reference group (to evaluate performance or conduct).

PART 2 – STRATEGIC MARKETING 1

CHAPTER 3: MARKETING STRATEGIES: SEGMENTATION AND TARGETING, P.55-70
chocolate next to cash: situational
Kid: the user can influence the buyer
Metro: marketing mix (4ps)
Plant dying: if you don’t know what the real need is, won’t make it
Fifa 20: went to buy it as soon as it came out, got an app on their phone

29
Diesel: enjoy before returning. People buy it wardrobing: wear it with the tag and then returning it. Free publicity to
have the tag showing. Might end up forgetting to return it, end up liking it so don’t bring it back. Sometimes can’t return
but can exchange for something else. Different ad, people will remember.
Diesel used wardrobing as an opportunity, it’s a trend. Viewed as a threat in the retail world

Marketing strategy according to AMA

o A statement, implicit or explicit, of how a brand or product line will achieve its objectives
o The strategy provides decisions and directions regarding variables such as the segmentation of the market,
identification of the target market, positioning and marketing mix elements.
(the river)
o A marketing strategy is usually an integral part of a business strategy that provides board direction to all
functions.

Segmentation: Who is my market?

Let’s remember… the importance of marketing
o Identify and understand the appropriate consumers;
o Discover what products, services or ideas these consumers want;
o Report back to the production division on what it needs to produce, and in what quantity, format, etc.;
o Try to sell the clients the product manufactured by the firm;
o Contribute to reach growth, sales and profitability objectives.

Segmentation exo in class: who bikes to come to school, own a bike, similar need but use it in different ways (for
exercise or to get somewhere)

Segmentation definition
o Dividing the market into submarkets, that is, homogeneous groups of consumers, users, or customers who have
similar needs and behave in the same way; however each group is different from the others.
o *related to the buying behaviour, needs and expectations of the customer in the market in question.
o * aspects of segmentation must affect their demand for the products or services
o Eg: eye colour is not segmentation for magazine consumers
o Need to understand the variables affecting the nature and level of demand to select the right segmentation

Segmentation needs to be
o Relevant
o Profitable
o Stable
o Measurable
o Validated

Segmentation
o Choose the motivation the most fit with your organization
o Add information to better describe (refine) the segment chosen
o Who lives in MTL and uses a bike, use the bike for what? Exercise
or to get to school

Segmentation on consumer markets

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 o 8 descriptive variables (who, what, how, and when) or related to the benefits sought (why) make it possible to
define consumer market segmentation p.58

80-20 rule: 20% of their clients bring 80% of income

People don’t buy what you do, but why you do it

Sociodemographic variables
 Consumers demographic, economic and social caracteristics that affect their demand for products and services
 Marital status and family structure important (young single female vs widow retiree)
 Relatively easy to define and measure
1. ad de boire du lait car aide ton système imunitaire; about education
2. amazon student : sociodemographic (students)
3. coach : sociodemographic (networth) or lifestyle (it is included in sociodemographic)
4. Ikea: sociodemographic. Parents divorced, kid can have the same environment in 2 places, and affordable
(family structure, talking about divorced parents talking about kids having 2 homes)

it is not very efficient to rely solely on this simple variable to segment a market.

Geographic variables
 Related to consumers’ geographic location & type of physical environment (large city, village, rural,…)
 Ex in tourism: consumers place of origin to know expectations about vacation
 Ppl with similar sociodemographic characteristics live in the same neighbourhoods; segmentation called
geomarketing
Act local think global
1. Mcdo adapte ses menus dans chaque pays

Psychographic variables
 Typically combines them with geographic and sociodemographic variable  lifestyles
1. People doing yoga or boxing is 2 different people
2. La belle et la bœuf sans plastique, values of no plastic so will go there
o Les styles de vie, sum of all (Amalgam of sociodemographic geographic and psychographic segmentation)
Lifestyles

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  Classify consumers into a number of universal categories based on their psychographic, demographic and
geographic characteristics, with catchy names (ex: gastrosexual)

Behavioural variables
 Behavioural : directly concerns their needs and expectations and behaviours
 depends on consumer’s situation (go eat in a fast food alone vs family restaurant with friends)
 ex: renovation tools for amateurs and professionals (not same need and behaviour)
 to be successful, marketing mix components must be adapted
1. Tide to go that people put in their purse, not to use at home, to use on the go
2. Diesel ad

Volume and profitability

 Not a specific characteristic, but on the amount of customers purchases or the profit that they generate for the
company
 Classified in categories depending on : purchase volume (potential customer and actual customers, including
large, average and small customers) or their profitability (highly, moderately, not profitable or unprofitable
customers)
 Then categories studied to find similarities in terms of needs, expectations, buying behaviour, situation, usage
and characteristics (socio, geographic, psychographic)
 To know who to target (large and profitable customers)

Variables specific to a market

 Age of building will influence the type and quantity of products and services that will be needed (in renovation)

Combination of variables
 Usually more than one tool to segment the market
 Guide for selection of segmentation variables is the nature of the target market
 Not all categories above apply to all markets
 Depends on the nature of the variables for which the company already has data or can obtain data at a
reasonable cost

Consumer markets
Which type of segmentation?
o Space pens, you can write everywhere, used by nasa: behavioural

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Business market segmentation
o Same categories of segmentation variables as those that target consumer markets, except for sociodemographic
(instead economic variables such as business customers size, industry…) and psychographic variables (replaced
by variables related to organizational culture and business customers’ procurement policy

Market: expert of doors and windows

Ex: behavioural variable: product life cycle curve (time/sales) graph on the right

Dragons’ den: We Love: Probiotic drinks and bars. Only 3g of sugar in bars, a lot of probiotic,
vegan, gluten free…. Innovative and original: First bar of probiotic in the market.
Product as a marketing variable stands out through attributes
Psychographic segmentation: attitude with food, values (good for gut health)

Exercise 1: Pregnancy tests au Jean Coutu

1) Only a few brands but with different products. Often there is a known brand next to the generic brand.
2) Generic cheaper that known brands, a lot of reduction mostly on generic brands
One with a baby on it more expensive maybe cuz intentional pregnancy,excited for the baby
3) Similar packaging, same colors, format
4) The products at eye level sell more. In one section for women, one stop, all in the same isle
Pregnancy tests
Top shelf, pregnancy tests for people wanting a baby, picture of baby will take more time to choose
The shelf below for accidents, go there take it quickly and leave
Intention and situation and need makes the segmentation behavioural, based on the needs

SEE SLIDE 25 ppt 5

Exercise part 2: Uniprix option+ pregnancy tests

1) The pink one is for hopefull women who want one. Looks less cheap. (hopeful)
2) Period is late so want to know as soon as possible and easy if pregnant (fearful)
Both were placed in different positions, not speaking at the same segment

Synthesis
The context of using a product can be considered as a behavioral variable in the segmentation process.

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Targeting: who are we aiming for?
o Targeting a market segment or clientele basically means selecting
exactly where the business wants to compete (usually where you have
a competitive advantage)
o Targeting decisions must take into account the company itself, its
background and its current and future resources
Definition:
o A marketing strategy that consists of selecting segments, markets or
customers that a business wants to win over and retain.
Which segment should we target?
o Choosing those that offer more in terms of profitability (affected by the segment size, growth, accessibility,
competitive situation, adaptation cost (diff situations diff costs)) def each p.66
o Segment’s accessibility must be taken into consideration (although it might be a promising segment, might not
have an affordable distribution channel)
Mid-size consumers are the most profitable. Largest customers have bargaining power so supplier has a slim profit
margin, small customers good profit margin but small sale volume

4 types of targeting: (based on the number of segments targeted by the business)

1. Mass marketing: target the entire population, one marketing mix for all; coca cola, every product seen on the
super bowl, everyone watches, not segmented, everyone, walmart
Product or service designed to satisfy average needs at a low or average price
Hard for them to compete with companies that have adopted the other 3 types (the other ones are narrower so
can adapt to the needs, improve satisfaction and gain their loyalty)
2. Segment: Mix is adapted to each segment; H&M segment of boys and girls, women, men
3. Niche: space pen; one segment (no more than 10% usually) : not trying to be all things to all people can help
you establish a stronger business reputation, company’s specialization, expertise. One small niche can be
insufficient to make profits in a national scale but largely sufficient on the international scale
4. Personalized (a price per person), Nike personalizing option; marketing mix one person

Retargeting or changing targets

Target modification because of
o Fierce competition (ex: major firms entering the market)
o Own development (Can let go of clients that are not profitable, let go of a segment)
o Situation
Ex clients: omf surgeons, dental implants, wisdom teeth removal… Did primary research (how did you hear about us)

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 People that come to them heard that they need to remove their wisdom teeth through their dentists and ortho, so
did 4@7 with dentists and them so then after the dentists can recommend them to their clients

Persona
Once you have a target, do a fiche visuelle to know segment
o Profile of the person (name, photo, personality…)
o How they get to product or how they use it
o Role occupied by product
o Challenges and expectations

CHAPTER 3: MARKETING STRATEGIES(SUITE): POSITIONING

AND DIFFERENTIATION
4 marketing strategies: Segmentation; Targeting; Positioning; Differentiation
Fig were the sweet tooth treats. Rare so binge on them (and you get them all instead of someone else): bcuz of
competition
In 4 ps marketing communication = positionning

Strategy according to AMA

o Goal: meet an objective
o A statement, implicit or explicit, of how a brand or product line will achieve its objectives
o The strategy provides decisions and directions regarding variables such as the segmentation of the market,
identification of the target market, positioning and marketing mix elements.

5 key competencies
o Innovate
o Segment
o Target
o Position and differentiate

Let’s remember… The importance of marketing

Marketing does not create needs
Selling is not marketing but marketing includes selling
Business can’t live without consumers (B2B or B2C) and needs money transactions
o Identify and understand the appropriate consumers;
o Discover what products, services or ideas these consumers want;
o Report back to the production division on what it needs to produce, and in what quantity, format, etc.;
o Try to sell the clients the product manufactured by the firm;
o Contribute to reach growth, sales and profitability objectives.

Positioning: It’s all in your head

o Refers to the place that the brand or business occupies, or wishes to occupy emotionally and cognitively,
namely, in the hearts and minds of customers in relation to competing brands or businesses.
o It pertains to the identity, personality and image that marketing managers want their brand or business to have.
o Awareness of a brand is the first condition to be satisfied for successful positioning

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 - Say hospitals for children: the first brand that comes to mind, energy drinks, electric cars
- Grandma wont say redbull for energy drink cuz shes not targeted by energy drinks
The image, impression that gets stuck on our brain (coke happiness)

Brand video: Emotional not rational

- Great brand have a focus: stand for something; cant please everyone, not everyone is your customer (enery
drinks not for everyone)
- Starbucks: serving people not coffee
- Keep brand healthy by: be different, be vigilant, be relevant (keep up with changes)
- Brands owned by the people: people give the brand value, on stock market (conversation, to know what
consumers want), respect them and earn their trust. Company owns the logo
- Brand what people think of you in an emotional level
- Brand=reputation. Reputation increases, stock goes up, et vice-versa
- Not doing it for you doing it for the people (ardene not for the creator but for the girls)
- Brand is very valued. Be different

Positioning of a new brand

o Study target customers and existing brands. In most cases, the most advantageous positioning requires a degree
of differentiation relative to competing brands
o Home depot: according to its market study, best chances to obtain a competitive advantage is with good
customer service (competitors seen as lacking a good customer service)

Positioning of an existing brand

o Actual positioning is not necessarily identical to desired positioning. If it is =, they will try to reinforce it. If theres
a gap business will take measures so they match
o Renaming as a repositioning tool. Molson repositioning itself in the young adult segment
o Not always possible to reposition an existing brand at an affordable cost and in a reasonable timeframe
o Easy to reposition a high-end brand as a mid-range one, but hard to reposition a well-known mid-range brand as
a high-end brand.

Ensuring successful positioning

o The brand must represent something specific and relevant for the targets set (if they try to please a too large
variety of customers, target customers will become confused and will no longer know exactly what the brand
stands for)
o Positioning must represent value for the customer (tangible or symbolic)
o Coke, happiness. Survey shows that music and friends is what makes the youth the happiest. Music, youth and
happiness in DNA of the brand.
o Consistency over time is important. To position a brand effectively, the message must be hammered in for a long
time.

Positioning

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 - Apple is emotional (liking to waiting in line for the new iphone) have a strong community

Positioning
o Brand identity (the inside, the bottom of the ocean)
o Brand personality: if this was a human what personality traits would it have communication
o Brand image: what we see, what we perceive (Visual identity is the logo)
- Goal is to close the gap btwn what the brand thinks they are and how people see the brand; with
communication
- Show it with actions (enthousiastic shown through actions, often communication.
- Not possible that brand identity is exactly the brand image because brand image is subjective (not everyone
thinks the same things about the same brand)
- Its about them not you (clients choosing her picture for the website

Aaker brand personality model: sincerity (personal letter) , excitement (daring), competence (spaceships, HEC),
sophistication (pub parfum), ruggedness (old spice).
Personality: magical=Disney
Matter to have a strong identity and personality so people remember your brand

Successful positioning
o Consistent with the target
o Clear
o Communicated without confusion
o Consistent over time
o Represent value for the customer

Statement of positioning
o For [target segment], [brand] is a [concept] that [distinguishing characteristic] and its [justification/actions we
do].
o To ensure that the segmentation, targeting and positioning strategies are coherent. Validate the differentiation
Lacking focus, good at everything but not 1 speciality
Brand building is on the long-run, advertisement (short-run)

Takis: very spicy chips, different shape, fun personality, not regular chips
Telling people not to eat takis, to be different. Tell ppl not to do something and they will do it. Target is young ppl
Telecommunication companies: videotron mise sur best consumer service/ experience
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Factual or symbolic
Factual : attributes/ benefits
 Cheaper
 Variety and choice
 100% vegan
 …
Symbolic : Values / aspiration
 Fulfilment
 Beer for celebration
 Magic sophistication
 For women
 …

Walmart  : they have everything and cheap. Ikea: variety at a cheap price
TOMS: buy a pair they give a pair. Selling hope, a better future. Standing for a humanitarian cause, supports ppl in need
Mcdo developing healthy options, but not standing as a healthy brand (like copper branch)
An action to support something vs living and breathing for that cause

Fruits et legumes moche: intermarché. 30% cheaper et évite gaspillage. Cause : gaspillage. Makes them stand out. They
turned the product image in something ppl want. Developmental (new product and customer to grow)
For grocery shoppers looking for fruits & vegetables, les produits et fruits moche is a new/testing concept that reduces
waste and its selling those unwanted products at cheaper price and making soups

Differentiation: world apart

o Consists of a brand or company standing out from the others by getting the target customers to perceive it as
different from the competition, in a positive sense, based on one or more significant attributes.
- Can stand out on any of the marketing mix components (product, price, distribution, marketing communication)
- Can stand out on any products (kinder offering toys inside)
- Can stand out bcuz of price: Walmart, Dollarama
o Closely tied to positioning (often difficult to distinguish btwn positioning and differentiation)
o Without differentiation, a brand can compete with others solely based on price (ppl usually buy the cheapest if
identical): that’s why companies try to differentiate themselves
o Gives customers a reason to choose them over the competitors

Bases of differentiation: (how they can differentiate themselves, choose attributes that make them look different and
more desirable)
Based on what is important for the target. Differentiation must concern an aspect that counts for customers, or that
they can be convinced is important to them (real or symbolic advantage); an advantage that the competitors do not
offer and cannot easily imitate
Ideally, differentiation must be:
 Visible
 Significant
 Real
 Distinctive from competing products (what can you do differently that no one else can)

Differentiation can address any or all of the four marketing mix components
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 1. Price: billing and payment terms, volume discounts, …
2. Product: product or service offered, quality, technology, after-sale service, …
3. Place (distribution): geographical coverage, business hours, …
4. Promotion (marketing communication): image transmitted by advertisements, loyalty programs, …
Businesses want to find the zone where the product satisfies consumers’ needs and stands out from the competition,
figure 3.2, p.78

How many elements of differentiation should there be for the same brand? One singe point of difference (max 2 or 3)
for the message to be understood & consistency over time

Perceptual map as a way for businesses to optimize differentiation

o Assessment of a company’s position on the market vs competition
o Based on target’s axes of comparison
 Visualizing the position of the business and competitors can reveal gaps in
the market and potential opportunities.
 Clarifies current positioning of a business & helps us identify direct
competitors
 Important to avoid following a perceptual map blindly: may ignore an axis
that is important for a market segment
 From consumer perspective, competition is about perception (not market share)
Activity pizza restaurants near HEC, making our positionning statement

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SESSION 8: CHAPTER 4 AND 8: OFFERING AND INNOVATION

The innovation process: innovate or die

Creativity= imagination, thinking outside the box, do what nobody has done before, art, changing habits, new
techniques, new team strategies, new training strategies
Creativity:
 The production of novel, useful, and appropriate ideas in any realm of human activity. The valid ideas are related
to the objectives set by an individual or a small group of individuals working together. Creativity is not so much a
talent as a process consisting of innovation.

The creativity potential

 Allows differentiation
 Allows foreseeing and meeting customer needs (customer needs evolve constantly)
 Ends up in finding appropriate solutions
- Creativity and innovation reflects the state of mind of executives and the business culture. Can influence the
value chain

Innovation
 The successful implementation of new and creative ideas within an organization. Innovation prompts action, and
uses new and appropriate solutions that must be applied at certain steps of the process.
 Creativity leads to innovation
- Innovation is proposing new progressive solutions to customers that represent an improvement compared with
the existing situation
- Innovation is a necessity, not a luxury. Companies must adapt to evolution and constantly renew themselves.
Even if everything is going well now, need innovation so thing will go well in the future. Proposing something
new is a growing necessity in most markets. Can’t achieve long-term success if it doesn’t strive to innovate
- What technical experts see as an innovation may not be perceived as an innovation by customers (vice-versa)
- In marketing, an innovation is defined mainly in relation to customers’ perception, thus from the market point of
view. It must correspond to a market need, and market must be willing to pay a price high enough to make the
product profitable. (rely on the vision and perception of customers. It its an innovation from the creators’ values
and perceptions, more likely to fail than innovation based on the market
- One group may welcome the innovation while another group finds it pointless or harmful
- Must innovate at least as quickly as their competitors is not they will lose their market share and may perish

“Most innovations fail. And companies that don’t innovate die” 7/10 products die
Blockbusters vs Netflix (didn’t go online, and didn’t listen to the environment)

Products, services and value: Innovate or die

But before all things…
 Product: a basket of benefits offered to consumers (set of attributes, functions and uses proposed by the
company
- A product may be tangible (a good) or intangible (a service)
 Services: actions or efforts offered by one party to another (80% of jobs in Canada are in the service sector)

Characteristics of services
o Intangibility: A service cannot be touched, seen before the decision to purchase (ex: a concert)
o Variability: The quality of the service depends on who offers it and how, when and where it is offered

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 o Inseparability: The production of a service is often accompanied by its consumption (production tied to
consumption, and this consumption is often linked to a particular provider) (education)
o Perishability: A service cannot be stored while waiting for its demand
- Variability and perishability of a service raises major logistics challenges

Service marketing has 3 approach: (p.223)

 external marketing: relationships that the organization maintains with its consumers
 internal marketing: ensure that employees are well trained and supported in their service daily
 interactive marketing: includes activities like provision of service and sales

Dimensions of the product (book)

Product dimensions
o Benefits: Reasons for which consumers buy and use the product. It’s what drives value. Value: gap btwn benefits
and cost (and this is a crucial aspect of pricing). The core of a product is the benefits it offers (they drive
consumption behaviour and the value that the consumer perceives
o Core product: What is concretely offered to the customer (to provide the benefits they seek). Communicated
around design, packaging, quality and brand. People want the benefits. We want knowledge, better professional
future, not exams and lessons…
Attributes ≠ benefits associated with that product. Attributes are the products characteristics that satisfy
consumers’ needs “ppl don’t want to buy a ¼ inch drill, they want a ¼ inch hole”. Will buy the drill bcuz if offers
the benefits they seek
Key elements of the core product:
o Design: result of the tension btwn function (utilitary perspective, attributes to be considered useful by
the consumer) and form (makes the functional component of the design concrete; ex: Air Jordan shows
the air-filled cushions)
o Packaging: technical and communication function. Concept of packaging includes the function and form
of the container that holds the product. 1st role: protect the product before consumption. Packaging also
actives the brand and the logo of a product. First contact btwn the consumer and the product in a store
(7 secs to build your first impression)
o Product quality: product quality (performance, reliability, durability)… But also perceived quality
(expectations and qualities observed). Quality of a product may be defined from 2 angles: technical and
perceptual. Technical: performance, reliability (how many times can use the product before it fails,
likelihood that the product will fail), conformity (capacity to meet the product design specifications),
durability. Perceptual: perceived of high quality if it satisfies consumers expectations, perceived quality

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 is the gap btwn consumers expectations and the qualities they observe (can be based on technical
dimension & attributes such as reputation, brand, ads, prior experience with the product). Importance
and performance analysis of dimensions of product quality (to know if spend time on the right things).
Quality is often used as a competitive advantage
Growing importance of related services associated with products and with the service industry in
general. SERVQUAL to evaluate the quality of a service in order to manage it more effectively. 5
dimensions in evaluating the quality of a service (reliability, responsiveness (willingness to help),
assurance (trust), empathy (individualized attention to customers), tangibles (appearance of physical
facilities, equip, etc)).
o Brand: all material signs that allow a product, business or organization to differentiate its offer from that
of the competition (a name, design element, symbol, logo, colour…) A brand can also attract or retain
talent within the company
o Related services: This includes warranties, installation, after-sale services, delivery etc. Essential for the creation
of a consumption experience. Related services, especially delivery, may be provided by a third party. For free or
not depending on if seen as an integral part of the core business (directly attached to the benefits associated
with the product) Hyundai longer guarantee than its competitors to show its good quality
In B2B very important: offer solutions (which are personalized offers that integrate a combination of tangible
products, services and info to solve a consumer’s problem) service to repare
Ex: Tropicana: changed the package but ppl didn’t recognise it.
If want to change the logo: do it slowly, evolution
Ads to show that its gonna change
Lab experiment to see what happens when people are put in a room and need to choose an orange juice and have the
choice btwn Tropicana old and new package

Future: virtual shopping carts: faster, maps, gives you suggestions, weights the items, you can pay automatically on the
cart. Differentiation, innovating and knowing the consumers needs

What is the main tool to drive innovation and creativity? Commercial or marketing research
Through research you can understand how to respond to consumers needs
Research is a tool and source of innovation
- Research lets marketers detect and better understand market trends, and more importantly, explore ways to
pinpoint customers’ needs and expectations
- Research also lets businesses act ahead of these needs and stand out in a saturated market
- Inspiration is the source of innovation. Emerges from an understanding of the needs, values, social context

The role of research: Explore and innovate

Serial Investor (+10 companies)
List of 70 ideas
What can we do better?
What clients don’t like or want?
What service providers dont like or want?
How can I do the opposite?
Meets people…
Has a lot of ideas, tries to find people to implement his ideas
Questions to find ideas
Different business cards depending on whos his talking too
Delegate your weaknesses

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Marketing research and innovation (how to do research)
o Trends
o Needs
o Values perceived
o Expectations
o Capacities
o Etc.

Value creation: value proposition matrix (2015)

 How to approach innovation related to positioning in relation to the target. It is important to clearly understand
customers’ behaviours, needs, and difficulties along with the solutions a company presents.
 Helps build a value proposition.
 Step 1: understand the customer and know their problems, the benefits they look for, and pains trying to avoid
- Sometimes focus so much on the product that forget the people u need to serve (remind urself u do business for
people, consumer at the center of innovation)
- Consumers don’t care about 7/10 products added to the market
- Customer profile: Gains, pains and jobs
- Value map: products and services, pain relievers and how they are gain creators
- Need a fit btwn both
- Relieve pain, create gain: that’s marketing
To generate profits and achieve sustainability, companies must consider their target clientele, positioning and value
proposition. Companies want to provide their customers with solutions and try to satisfy their needs
Value proposition matrix: marketing strategy p.95
How to approach innovation related to positioning in relation to a target clientele
On the left the business on the right the employees

Design thinking
- Popular approach nowadays
- This method presumes that innovation is based on a deep understanding, gained from direct observation, of
what people want in life, and what they like or dislike in the way products are produced, marketed, sold and
supported. (understand customers needs and wants)
- This method helps rethink products, services, processes and strategies
- Can be used to develop new products
- Human-centred process, user’s needs
Trying to find the problem to solve
5 steps;
1: Empathize

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 - Gain insight into users and their needs
- Interviews/ observing to know what ppl care about, what they want, their difficulties, their experiences
and motivation. Gathering information
- understand for whom the innovation is developed (and their needs and the problems that may hinder
product development
2: Define the problem
- based on the info gathered, analyze and synthesize to define the core problems identified
- use words used by the people explaining their problems; like a users viewpoint
- formulate a problem statement (should focus on the human aspect)
3: Ideate/ idea generation
- generate as many solutions to the problem as possible
- brainstorming, focus groups, many techniques to generate ideas.
- Sketch up your best ideas to get feed back
- Many ideas will then be eliminated bcuz of technical questions of feasibility or doesn’t fit with what the
market wants
4: Prototype
- Transform ideas into a concrete form
- Experimental phase: Let ppl experiment and interact with the product
- how does it fit in the people’s actual life, connect to dots to find the solution
- goal is to find the best possible solution to the problem
- one by one the solutions are investigated and either accepted, improved, re-examined or rejected based
on the users’ experiences
5: Test
- try the prototype with actual users, if problems make the changes
- don’t commercialize right away, test first
The value chain:
- stimulates creativity and innovation (a framework for internal analysis to detect the strengths and weaknesses
of the organization)
- can serve as an analytical framework to identify sources of innovation
- identify important sources of value creation and differentiation
- know strengths and weaknesses of its workforce (contributes to innovation)
- Innovating people are: 1. Technically competent in their field; 2. Creative skills like independence, risk-taking,
changing environment; 3. Motivation is a fundamental condition for innovation
- The most creative teams are: the ones with individual differences that can cause friction; diverse thoughts or
perspectives

The business model: p.93 for the business matrix (bottom p.92 for explanation of the matrix)
- Must also innovate by differentiating its business model
- Innovation regarding the business model to stand out from their competitors by offering their customers a
distinctive value proposition
- Each one of the elements of this matrix lets a company sand out from its competitors
- Business model innovation consists of changing or developing one of these variables
- Internet playing an important role (no longer limited to written content. Can add technological components to
differentiate itself. The media are trying to attract more internet users by creating their own communities.

The development and introduction process consists of 3 main phases: idea generation, test and launch
The role of research:

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Innovation emphasis on:
o Packaging: Pasta in hair packages, stands out, different, innovation, simple and effective (all focused on
packaging)
o Quality: Sonos: app to control speakers in your house (focus on quality)
o Spa balnea: emphasis on design
o Brand: nike

In marketing, innovation is not only launching new products, it can be manifested in other marketing mix variables. Can
stand out by innovating with regard to all of the elements of the marketing mix
Innovation and the marketing mix: The operationlization
Innovation and the marketing mix:
- The chosen tactics must align with the company’s defined marketing strategy. Must also consider its target and
postitioning
o Price: Dollarshaveclub.com (1$ for a new razor every month, strong personality focused on low pricing),
Dollorama, Payless shoes
- Pricing strategies to differentiate their brand
o Marketing communication innovation: IGA: un million de $ à gagner when you buy complement (IGA brand),
part of a big family, can win something if you buy their house brand (instead of their competitors)
No Name ad: (Loblaws brand) if simple check is on it, it means that the product doesn’t include 10 ingredients
(like synthetic colours, artificial flavors, etc. healthier) (largest brand campaign since 1970s)
- Possible to innovate when defining the key message and in the use of each of the means of marketing
communication (ads, public relations and media relations, social media
o Product: Ketchup: heinz purple and green bottles EZ squirt, like drawing: green like green tomatoes (added
vitamins so moms would choose this although less healthy cuz of food coloring 60% of Heinz market share at
one point. 2 yrs later to come up with other colors. Novelty, short time span (novelty doesn’t last)
o Bumble like tinder but the women talks first (global empowerment brand, date, but also business and friends, to
meet people you don’t know. So if u find a boyfriend still use the app after. Keep innovating and listening to
consumers. Diversifying (human relationship app), a certain power/ edge the first female empowering app. CEO
very focused on the brand and on what makes them different (competition doesn’t affect them that much nor
the lawsuit). The more you look at competitors, the less you are yourself. Serena Williams ad, u already have the
power
o Distribution: amazon
- Internet, order online
- Aim to make customer’s lives simpler

2.Product portfolio management

- Product portfolio: all products offered by a company
 Product range: set of products of the same category that meet the same type of need. Range is made of product
lines.
A range is described in terms of its;
- width (number of lines that make up the range)
- depth (number of models per line)
- length (total number of products in the range)
 Product line: Group of products intended for a specific market or that solves a specific problem for the
consumer. Low end products & high-end products
- Several ways to organize a portfolio ex: Gap is by target segment (men, women, etc). Nike: type of use (running,
golf, etc). L’Oréal: distribution network
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 - Can use BCG matric to analyse the balance of a product portfolio (market growth rate and relative market
share). If it’s the leader, relative market share is larger than 1 (star, ?, cash cow, dog). Advantage derived from
market share depends on the maturity of the market. This tool has limits, ex: niche players, high-end brands

Cannibalization: The drop in sales of current product caused by sales of a new product launched by the same company
Can occur during the intro of incremental innovations or line extension, because sales shift from one product to the
next, so not a real gain for the company (ex: coca cola, zero, light, life). This fear can be a major deterrent to introduce
radical innovations

3.Brand management
Brands
 Helps be identified
 Helps differentiate from competitors
 Can set premium price
- Positive, strong and unique associations reinforce the brand image (burberry & England)
- Private label/ generic brand: type of brand that became very prominent in recent decades: a brand developed
by and marketed for a retailer, and distributed in that retailer’s stores exclusively. Save on distribution,
development and promotion cost. Ex; Loblaws: No Name, president choice

Brand equity
o Is the added value that a brand gives a product. Value expressed by brand loyalty, brand awareness, perceived
quality… (this added value eventually translates into financial gains)
o Three approaches can be used to measure brand equity;
 Consumer-based approach: surveys to directly evaluate loyaltu, awareness (spontaneous and assisted
awareness), perceived quality and the set of brand associations. A brand with good assisted awareness
will be considered in the consideration set
 Price differential approach: price differential associated with a specific brand. If place more value on a
brand, will pay more for a product of that brand. Price = brand+attributes (hedonic regression) Can
calculate the value of each brand by statistically controlling the attributes of each product. Only
comparing the price of the product of the brand with its general brand is biased (diff costs)
 Income-based approach: determining the proportion of the company’s future income attributable to
the brand

Functions of brands
Identify products
 Identification
 Symbol of belonging
 Promises to respond to expectations

Strategic branding decisions

1. Organization of brand within a product portfolio (can be managed according to 2 approaches:)
a. Umbrella brand: a single parent. brand whose name and signs appear on all products marketed by a
particular company
Advantage: brand is visible, unified and clear
Disadvantage: more difficult to adapt the brand of a subsidiary, range or product line to the specific
needs of a market or a segment. If there’s a scandal, spreads on the whole brand. Integration is more

46
 delicate, may lose equity. New brands should be integrated gradually (slowly change the visuals to the
umbrella brand logo
b. House of brands: each brand in the portfolio is treated independently. Each brand has a distinct
positioning and may compete with each other. Dove et Axe within the same house. Brand is adding to
the existing offer. The brand equity acquired is thus preserved

2. Brand extension and launches

Brand strategic options
Strategies for new product launches:

Companies deploy several of these strategies depending on its objectives (like multinationals, Starbucks)
New product is downward extension: brand equity may be diluted, risk of cannibalization
In a new product category, when the company considers that the brand associations can allow an extension, it
can simply launch a new brand. (ex: Starbucks is rly associated to coffee so launched Teavana for teas)
Line extension: Same brand and category
Brand extension: Existing brand, new product
Multibrand approach: Introduction to a new brand under the same category
New brand: Launching an all new brand

3. Brand alliances
o Sign a new product, line or range using 2 brand names (cobranding)
o Seen as particular case of extension
o Product, range or line.
o Complementary to eachother is when it works the best
- When one of the brands is a barely visible element of the product: ingredient brand strategy (presence of this
ingredient is emphasized. Intel inside message on PC

4.Product lifecycle management: The beginning to the end

Product/ service life-cycle
 To describe how product management conditions change over time. It can be for a product or product class.
 Innovation involves brining a product, idea or service to market that is perceived as substantially different from
any products, ideas or services already on the market. Characterized by their degree of continuity:
o Continuous innovations: new characteristics that do not necessarily call for redefining the product category (ex:
new flavour of colgate toothpaste)
o Discontinuous innovations: radically new products, ideas or services, which disrupt
established habits or create an entirely new product category (fairly rare, like
computers, electric light bulb)
Phases of a life cycle:

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Diffusion of innovation
New products follow the same process spreading throughout a market over time (regardless of if continuous or
discontinuous) p.99 the graph, p.101 characteristics of the segment of adopters
It seeks to explain how, why, and at what rate new ideas and technology spread
- Use a different language to get the early and late majority (what can the product do for them) to buy than the
innovators or early adopters (what is new about the product)
- The late majority does not adopt an innovation until it has proven itself
- When laggards buy, it has become classic

Life-cycle
Introduction phase: Innovators: those that buy the product soon after its arrival on the market. Ppl that are less
dogmatic, more empathetic and have a higher tolerance of risk and uncertainty. Well educated and prosperous. Many of
them are opinion leaders. These traits tend to decline systematically along the spectrum from innovators to leggards

Growth phase: two objectives: 1. want to defend its territory by improving its product offering (clear competitive
advantage and the market is homogeneous) 2. If the market is fragmented the company will want to expand its range
and deepen its product lines

Maturity phase: some competitors leave due to declining profits. Objective is to optimize the product portfolio by
actively managing the width and depth of the range. Shrinking margins. May be harmed by product proliferation (offer
too vast and complex relative to the market needs) Increase in sales in each extension of the line or range  product
proliferation. May cannibalize the sales of the initial product overtime. Vicious cycle

Decline phase: most difficult to manage. Hard to stay motivated cuz sales going down. To deter employees from leaving,
companies must provide key managers who implement strategies during this phase with advantageous conditions
4 possible options:
1. Try to be the sole profitable survivor (if the company has a clear competitive advantage in terms of cost
management)
2. Try to boost its profits by investing as little as possible in the products (BCG matric)
3. Shrink its ranges to serve a more worthwhile niche. Even tough the market may be declining globally, one
segment may remain attractive
4. Decide to withdraw from the market by selling a brand (strategy more profitable at the end of the maturity
phase). Important to end product marketing in a structured and organized way (otherwise loyal customers may
feel betrayed)
- Shouldn’t apply the life-cycle curve too literally. The adoption curve may vary in shape. Hard to discern a passing
dip from a steady decline. Life-cycle depends on company’s decisions (promotion and development, without
those it will for sure perish). The downturn is attributable not to major market trends, but rather to the
company’s choices

Product life-cycle
Marketing strategies must be adapted to each phase of the product life cycle
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Biggest fails: Pepsi AM, for breakfast cola drinkers, lasted 1 year
Causes of failure include:
o Overestimation of the market
o Flawed design
o Poor positioning
o Pricing errors
o Competition
o Product orientation rather than customer orientation
o Ill-designed sales communication

Diffusion of innovations
New products follow the same process spreading throughout a market over time.
Adoption factors (facilitating or hindering adoption)
 Relative advantage
 Compatibility
 Triability
 Observability
 Complexity

1. Relative advantage
- Facilitator
- The bigger the product’s advantage, the faster it will be adopted by consumers in general
- Early majority buy the product if perceived as offering tangible benefits
2. Compatibility
- Compatibility with the usual way of doing things is the second factor that potentially facilitates the
adoption of innovations
3. Triability
- How easily the innovation can be tried out favours the adoption of new products
- Buying a new product is a risk for buyers (financial, social, physical, etc)
- By testing the product, consumers can greatly reduce the perceived risk of adoption (ex: samples, free
trials)
4. Observability of the innovation
- Observability of innovation facilitates their diffusion
- Ads to show the difference, power of the new computer model, making it observable with the ads thus
adopted more quickly
5. Perceived complexity
- Perceived complexity of the innovation can be a barrier to its adoption
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 - If seems complicated it discourages potential users

At the launch of a product, what to remember?

Factors of adoption
 Relative advantages
 Compatibility with the values
 Complexity
 Trials, …
 Observable qualities

Product lifecycle
Keep in mind
 Importance to consider the balance or equilibrium of the portefeuille
 Conceptual guide
 Exceptions
 Lifecycle of a couple ; product - market

GUEST SPEAKER
Babies and bows: ecom business of baby accessories. She did everything on her own in the beginning (use budget like its
ur own money): cant find cute accessories so did the business. Specific niche, in 80 stores
30$ on a headband, but 20$ for a top (can wear the headband more)
In 3 months opening it, gave birth 3 days before the launch. She believed in it (did research
Came up with the idea  research (when go in stores and ask for accessories, theres no cute/ fashionable ones)
Its about who knows you (not who u know) keep good relationships
Buying the brand (that’s why ready to pay more than just a dollorama brand)
People replicated the concept
She was the difference (willing to work 24/7 on it, like her 3 rd baby, she was passionate about it)
95% female clients
She did exactly what winners wanted her to do
Buying something not
90% through social media to get customers, and 10% on google and word search. All digital
2$ headband turned into 30$ as a retail price
Always new styles (every month more innovation)
Innovate or die in todays market, fashion changes quickly, need to be quick
Tips: don’t sit on inventory (inventory is the worst)
Spend the money like its ur own money (dissect the yearly budget into quarters (ex:more for holidays and campains)
Always look at comparable (benchmarking) look at previous year

Studying marketing to sell. That’s why people invest in marketing ppl

Advertise what sells the most
Bikini village: trying to use influencers
Marketing is trying things out (but don’t want to waste too much time and energy on that)
Put overstock in sale section, but then ppl get hooked on it. Only shop in that store if its on sale, if not on sale goes to
another store, so less brand loyalty so like a vicious cycle.
Chanel will buy the purse now cuz know it will never go on sale. If it starts going on sale it affects the luxury market.
Want to show that can buy something that doesn’t go on sale. She works at Birks

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What she learned at school is not what she now uses (now all digital)
Buy a domain name
Amazon is untouchable so just try to get ur products on their website
Creative ideas: association of 2 ideas
Trust issue au début, don’t hire people u do it better yourself, spend the money on ads instead on someone
Baby and bow, makes her do everything not told what to do

SESSION 10: PRICE AND DISTRIBUTION: CHAPTER 11 & 12: p. 351-367

- Auctions: demand makes the price higher; competition btwn consumers makes the price go up; the impact of
scarcity on the value; price is a perception. Business chose prices based on the value the consumers put on the
item, consumers have different values for the object
- Some ppl will want a emotional connection with the object vs fitting in your house
- Price impacts perception: will be more careful with a montblanc pencil than a cheap one
- Buy fennel seed in bulk vs in a nice little container; depends on your perception
- Buy 5$ pizza 2 min away vs 0.5$ pizza 10 min away: take the cost of time and the cost in consideration
- Baton rouge: hard to keep people

Product pricing: innovate or die

- Need to adapt and keep changing; needs to understand the changes
- Competition will innovate before you do

Price: Consumers perspective

The amount spent plus the time and psychological cost incurred to obtain a product or service
Ex: ikea bookshelf 70$ but agree to put time and effort to transport and assemble the bookshelf

Price: Company’s perspective

A way to cover its expanses and make a profit

About the pricing variable

 Price has a decisive influence on customer purchase probability.
 It also impacts sales volume, market share, and company profitability.
 Pricing must be coherent with the marketing mix variables
- If cheap sometimes think the quality will also be cheap

Value?
 Value is the set of benefits derived from product or services minus the price associated
 If price exceeds value of benefits? Usually will say its too expensive and wont buy the product
 Different segments, different perceptions of value

Environmental influences
Environmental influences on pricing
To know which price to charge
- Pricing practices are shaped by diverse environmental influences
- Price is determined not only according to what the customer is willing to pay, it is also limited by what
competitors charge and by the presence of substitution products on the market

51
Economic environment
 Economic cycle
o Price perception (economic cycles affect the way consumers perceive prices)
o Level of confidence in the economy
- Economy is going well, more likely to buy the product, demand increases, price increase are more accepted
- Recession, less ppl buy starbucks but more ppl buy mcdonalds

Government and the legal environment

 Gov influences prices (ex: milk quotas, subsidies)
 Objective is to protect consumers while making sure that companies earn a fair return on investment
 Laws for competition, consumer protection, consumer packaging and labelling (fine line btwn vigorous
competitive practice and an unfair practice)

Pricing objectives
Need to know where we are going with the prices
 The prices objectives must be consistent with and subordinate to the company’s global objectives and marketing
strategies
 Bcuz of its fundamental strategic importance, price is often used as a reference point when marketing and
business objectives are defined
 Low prices are central to Walmart for eg

Profit oriented objectives

 Profit maximisation is the objective: higher revenue (short-term vision)
 Acceptable profit is sometimes the targeted profit: ensures survival (satisficing) (short-term or long term)
 Target return on investments: acceptable profit margin (ex: objective of earning 25% return on invested capital)
(long-term) Useful for managers in charge of launching new products, easier to compare, orient go/ no-go
decisions
Could say 5M of revenue (but cost may go up), but also profit margin of 10%

Customers perception related objectives

52
  Consumer’s perceptions
o Price signals product positioning to consumers
o Price can project desired image of the product
o Ex: Vuitton (exclusive and want to stay exclusive, so put a price perceived as high, never on sale) vs
Winners (accessible so affordable price)
o To understand the message conveyed by price, consumer behaviour must be determined based on
product attributes they consider important, their capacity to properly judge these attributes and their
attitude toward risk

Distribution intermediary related objectives

 Distribution intermediaries influence pricing (ex: Walmart can impose a price in line with its own positioning to
manufacturers)
 Short run dependence: maintain or increase market share and sales
 Long term: may lead to loss of control on pricing or positioning of product
- Guest speaker: was with winners, dependence is good in the short-run but in the long run its a weakness

Sales related objectives

 About market share motives
 Easily quantifiable
 Used to achieve short term results (may be disconnected from a general objective of increasing profitability or
market share)
 Fast acquisition of market share but doesn’t mean profitable
 Good for production over capacity, considerate inventory to liquidate
 Need to make sure expenses don’t move up with sales, and are maintained or even decreased in order to make
profits

Competition oriented objectives

 Maintaining or increasing market share (easier to estimate a market share that to verify if the profit is rly
maximized) (popular for dynamic companies that want to dominate the market)
 Can achieve economies of scale if it has a large market share
 Monitor competitors, solid knowledge of their resources etc.
 For mature markets or if few competitors : maintain status quo, not make much changes, keep things in balance
 Balance production capacity, sales volume and profitability
 Bigger market share does not always mean higher profit
 If newcomer threat: sharp price cut and sign long contracts
 Good policy for company with a long term vision when the market is growing
Price war can be bad cuz cost for all the companies is not the same, not the way u make the most profits. Can be good in
the short run but not in the long run
When company’s have a good market share, they often just want to stay stable

Pricing strategy: How to reach objectives?

Strategy: how we get there: means to meet the objectives: more concrete and detailed
than an objective
Changing the price is a tactic, it’s a mean to achieve a strategy
Price of a product/ service has an influence on consumer purchase probability, sales
volume, market share and company profitability

53
1% increase in price has up to 4 times more impact on profits than a 1% decrease in expenses

Pricing strategies
The same objectives can lead to the use of several different strategies depending on the organizational and
environmental constraints
- Can be competitive and sales drives
- Can increase value with good customer service
- Skimming strategy or penetration strategy p.360
- To be useful, must include a relative price and a timeline

Pricing strategies and contexts:

Competitive pressure
- Brand is what makes the difference btwn 2 stores that are exactly the same

Pricing strategies with competitive pressures

When competitive pressure is strong, 3 main strategies are usually used:
 Price leadership strategy
o Favoured by dominant market players ex:apple
o This strategy consists of adjusting a price and expecting the competitors to follow suit
 Competitive parity strategy
o Consists of setting the same price as the market average or the leader (low differentiation)
o Usually cant sell at a higher price cuz products are similar to competitors & not at a lower price cuz often
their production costs are higher than those of the competition (not the leader, a smaller brand)
 Low-cost pricing strategy
o Involves systematically offering the lowest price on the market ex: Walmart (because production cost
also low, high purchasing power)
o Viable in the long term only for businesses that have a competitive advantage in production costs
- Southwest 49$ flights to Hawaii: sales objective (creates a buzz, in short-run many will buy)
- Big companies so have considerable bargaining power with their suppliers
- Realize economies of scale

Pricing strategies with consumer preferences

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  Quality (or prestige) signalling pricing
o Setting a price that will project the desired image of the product to consumers. Price as an indicator of
quality
- Auction prices on the paper
- High price creates expectations in consumers and signals product quality
- High price signals high quality, vice-versa. High prices reassuring and a guarantee of quality
- In a risky situation, some consumers would prefer rely on price and brand reputation rather than to
closely examine the product to judge its quality
- Usually prestige pricing targets only one market segment
- Effective strategy when buyer cannot judge product quality

Pricing strategies based on costs

 Cost-plus pricing
o Setting a product price that lets the company achieve a predetermined profit margin
o Setting s price by adding a margin to production costs
o Ignores competition and consumers preferences (centered on company)

Pricing strategy for a product-line

 Complementary product pricing
o Selling the central product at a low price, while complementary goods are sold at a higher price (like
accessories, spare parts etc) (canon, Keurig; printer, and ink; Coffee machines and coffee)
o Particularly profitable when the customer is captive after the product is bought
 Price bundling
o Offering a product with a group of items that is sold at a lower price than the sum of all products at their
regular cost
o Burger king 5 for 4$
 Customer value pricing
o Pricing a product very competitively, but offering fewer options than other products in the line. Price
sensitive consumer, increase market share…
o To be effective: firm must precisely define the benefits consumers view as essential
o For price sensitive consumers, and allows the brand to increase their market share
Planned obsolescence: planning the death of a product, so they buy a new one. Make a smaller product so they buy it
more often
Shopping carts are getting bigger, sales go up
apple without the headphone hole

The product lifecycle model:

Dragon Dean: vegan ramen

- Asking for too much (sold 25K, asking for 2.5M$)
- Cost 1.5 landed (transportation cost included), sold 4$
- Say its expensive when we don’t see the value
- Change packaging to show its more important
- Show off its vegan
- Sell at more upscale grocery stores
- A lot of salt
- A dog
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 - Accepted the bad comments without defending his point of view
- Customer testimonial gives credibility
- Before give invoice now a document with testimonial, and past experiences
- To show you are worth the amount you are charging, to show the value
- Increase price but more experience so ppl don’t negociate
- Sales: humans, profits, value

Pricing strategy and product life cycle

- Pricing strategies evolve over a products life cycle p.365

In the introduction of a new product have 2 choices:

 Skimming: high initial price, to establish an image of quality and stimulate demand, that is later lowered: apple:
want to be the first one with the new iphone (will be willing to pay more) market segment, relatively insensitive
to price
o Start with high price and slowly bringing it down
o Targets innovators and early adopters
o When competitors enter the market, the company can lower the price and thus offer the product to a
wider
o Market
o Effective for highly differentiated products that are difficult for the competition to imitate
o Appropriate when launch costs are fairly high, when there is a market segment that is not very price
sensitive, when competition is limited and when a company wants to quickly recover its investment
costs
 Penetration: ikea or airline with 49$ flights to Hawaii
o low initial price to attract a lot of ppl at the beginning
o for product similar to those of the competition (or easily imitated)
o objective is to grab a sizable market share as quickly as possible by targeting the largest number of
segments possible, eliminating potential competition and lowering the long term manufacturing costs by
realizing economies of scale attributable to the learning curve

Price reduction strategy

 Promotional pricing: price decrease to stimulate sales at various times of year and to liquidate their merchandise
before new models are launched
 If sales too often ppl might not want to buy the item unless its onsale
 In the decline phase: choose btwn relaunch or accept its death. If accept death, will lower price to liquidate
stocks

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Distribution channels: (was place in the 4ps)
Distribution
 The main purpose of a distribution network is to make a manufacturer’s product available to potential
consumers in the form and quantity, and the time and place desired, so as to create continuous business
relationships between network members.
 Effort to reach the consumer

 Less evident and visible to consumers than product and price (bcuz they deal only with retailers when making
their purchases
 Decisions are linked to segmentation and brand positioning
 Technology plays a big role here
 Produces are sometimes far from consumers
 Many changes lately due to giant retailers, ecommerce…)
- We don’t see distribution (its in the price)
- Distribution decisions are closely related to a company’s choice of targeting and positioning (ex: diff target if sell
at the bay vs Holt Renfrew

If there was no grocery stores, would go to a farm

Direct to consumers: Producers  consumer
Indirect to consumers: producers  middle man (retailers, delivery man)  consumer

Distribution intermediaries
On the left, go straight
On the right, pass by an intermediary

Intermediaries
 Intermediaries help to reduce the gap btwn the consumers’ and the producers’ needs, while continuously
optimizing the distribution network (to maintain a link btwn the elements of supply & demand) (comes with a
cost)
 Actors of distribution channels are intermediaries
- All actors in a distribution network, except the producer & consumer, are intermediaries
- Main role of intermediaries btwn producers and consumers is to make the necessary effort to reach customers
- Advantage of distribution: can find different products at the same place (so go to one store instead of 3). They
make the distribution network more efficient (specialize in specific tasks)

Distribution channel length

 The number of intermediaries in between producer and
consumer
 Distribution channels can be divided in three principal types:
short, long and ultralong channels.
 Producers and final consumers are involved in performing some
of the distribution functions, they thus form part of each channel
 Example: Network of interdependent organizations engaged in a
process aimed at making a product or service available for use or
consumption.
- Every time the product passes by an intermediary, the price increases
- Producer to consumer is usually less
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 - Alibaba is a distributor
- Need to buy a big bulk to have a cheap price
- Presidents brand: no name, can offer a lower price cuz les intermediaries
 Direct:
o No intermediary btwn producers and consumers
o Producers are in direct contact with the consumers: better informed about the market
o Easier to introduce new products on the market
 Indirect: 3 main types
o Short
 Frequently used for durable goods (furniture)
 Gives producers more control
 Higher selling expenses, need to conduct their own advertising campaigns to attract retailers
and final consumers
 Physical distribution problems are more frequent and credit risk is higher
o Long
 For routine consumer goods like food, beverages, beauty products
 For industrial products, sales agents & distributors instead of wholesalers
o Ultralong
 The most common
 Agents to go to wholesaler
 Food industry, particularly imported products
 Reduces cash flow needs, better plan production
 Fairly inflexible system (many ppl involved)
 Loss of direct contact with the consumers
For services: most common is direct or short (cuz no physical distribution aspect)

Wholesalers Retailers

Integration of distribution intermediaries

VMS: Vertical marketing system: professionally managed network with centralized management. Goal: maximize the
positive influence on customers. Work together not independently
- Vertical integration is one of the factors that lead to the consolidation of an industry
 Corporate VMS
o Company owns every level of the distribution channel and performs every function
 Contractual VMS
o Cooperation and coordination are the products of a legal agreement (sets out the responsibilities and
commitment of each member of the channel)
o Voluntary chain
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  Initiated by a wholesaler that organizes a group of distributors into a program that standardizes
the way they operate and lets them achieve economies of scale (ex: ads, IT, purchasing)
o Franchises
 Most widespread type of contractual VMS
 An agreement btwn the owner of a corporate name and business system – the franchisor – and
another organization or person – the franchisee
 The franchisor provides the franchisee with a product or service, a work method and a
corporate name or trademark (gives assistance
 Belonging to a franchising system increases the chances of success, but theres still risks
 Administered VMS
o Coordination of members and their effectiveness hinge on the power and influence of one of the
members of the channel
o A dominant brand manufacturer (recognised as having considerable expertise in marketing its product)
takes control

Functions of distribution intermediaries

- Perform several diff functions
- Btwn producer, retailer and consumers some function go like this , or , or  (p.327)
- For distribution to be effective, there must be a link with the other marketing mix elements
- All these functions must be performed to ensure that the gap btwn supply and demand is filled

Logistics function:
- operations required to move products from the producer to the consumer (btwn supply & demand)
- to bridge the gap btwn in quantity demanded (consumers want a small number of products, but for
manufacturer its cheaper to mass produce & consumers prefer buying everything at the same place), and
assortment (gap btwn manufacturer’s product line and all the products that a consumer want)
- also warehousing and transportation
- The logistics function is a 2 way street: it is essential that the info required for the physical transfer of
merchandise in a network circulates optimally
Financing:
- Like the bay credit card, or offer financing to suppliers in the wake of a recession or/and distribution
intermediaries
- Also from consumer to the retailer: when pay for an item & when retailers transfer a portion of their costs to
consumers
Title transfer:
59
 - Transfer of title is not automatic from one distribution intermediary to another (some intermediaries refuse to
assume the risk associated with acquiring merchandise)
Promotion:
- When done through distribution intermediaries: called push strategy
- Intermediary is encouraged to order large quantities & give a privileged position on store shelves
- Directly addressing the final customer through sales promotions and ads (no intermediaries): pull strategy
Sales:
- Searching for potential customers, convincing ppl to buy your product
- Negotiations btwn intermediaries and suppliers (link btwn supply & demand, and influence the price and other
conditions of the final offer
Customer service:
- Physical support like installation, delivery, repairs, warranty
- Customer service

Types of distribution intermediaries

Distribution circuit or network: the combination of all the businesses that perform the various distribution functions and
help transfer a product, service or title from a producer to a consumer
2 types of businesses can be distinguished in a distribution network: traders and agents

Traders: buy merchandise that they offer to their own customers (they assume all the risk inherent to possessing the
merch)
1. Retailers
 Merchant whose main activity is making direct sales to final customers (physical or online)
 2 major retail strategies:
o High-level service stores
 Maximum quality customer service and wide selection of products in each category (ex: running
shoes store)
 Narrow range of products but a good depth in each product line
o Discount stores
 Slimmer profit margins and quicker inventory turnover
 Buying volume gives them bargaining power with their suppliers
 Only offer a few models (ex: Costco)
 Lower monetary price but often accept higher non-monetary costs (travel further from home to
buy a product, buy larger quantities and assume part of the warehousing costs)
 Direct contact with end consumers
 Retailers are most prominent on the market because:
a. place on store shelves is limited even if producers innovate new products
b. les producteurs offrant les mêmes produits dans plusieurs commerces différents, la différenciation entre
ces produits identiques vendus dans plusieurs lieux ne peut être effectuée que sur la base des prix. Les
commerces de détail font donc pression sur leurs fournisseurs pour obtenir des prix toujours plus bas.
c. cette forte compétition sur la base des prix a amené les entreprises à se consolider/ consolidate. Par
exemple, la marque Snapper choisit quelles lignes de produits distribuer avec de grandes chaînes pour
préserver ses marges sur des modèles plus sophistiqués.
- Direct sales to consumers (B2C)
- Pharmacies are a retailer, Mckesson is the wholesaler, DHL distributor
Ex: winners

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 2. Wholesalers
 Merchant who buys large quantity of merchandise from producers and importers, and resells it in varying
quantities to retailers and industrial or institutional users (B2R)
 Some but not all have direct contact with final consumers
 Take control of most of the distribution functions of the marketing mix
o Allows producers to reach a larger customer base but limits their capacity to control their products (like
product positioning)
o Takes title of the products
o Consolidation of retailers has pushed wholesalers to consolidate among themselves to restore the
balance of power among intermediaries
o ex: pharmaceuticals, auto, food industry, pharmacies
Costco is a wholesaler and retailer

There is not always a distributor

Agents:
 Intermediaries who do not buy the merchandise that
they sell for producers
 Performs function similar to those of a manufacturer’s
sale team
 Receive a commission for their services
 Don’t purchase the merchandise from whom he is
offering representation
 Do not have the title to the product they sell,
 The producer has a better control over his marketing mix
 Offer a variety of complementary products. Buyers deal with a sigle intermediary for each product category
 Called manufacturers representatives, manufacturers agents, distributor agents or brokers
 The middle men

Exercise: Producer: Distributor: DHL Wholeseller:

Distribution channel decision: Strategic

Distribution channel: a network of interdependent organizations engaged in a process aimed at making a product or
service available for use or consumption. A subset of a distribution network. Interdependence
Classify channels by:direct, short, long, ultralong or based on links btwn intermediaries

Distribution channel decisions/ selecting a distribution network

 Decisions of distribution impact the other marketing mix variables.
 Choosing a pricing method is linked to the choices made regarding
the size and quality and number of intermediaries
 If a marketing manager opts for a mass distribution, it is possible
that it will affect more resources of advertising and promotional
activities than just the sales team. The product itself may be
modified;
 The choice of distribution channels is critical
 New businesses don’t really choose, its more which intermediaries will agree to put them up for sale

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Determining the intensity of distribution
Intensity of distribution : Number of intermediaries on each level of a channel.
3 types of distributions: intensive, selective & exclusive
The intensity of distribution depends on the level of market coverage that a company seeks
1. Intensive
Number of intermediaries on each level of a channel.
 Extensive coverage of all appropriate points of sale where the company wants to stock and sell a product
 Linked to mass marketing which aims to make a product as easily available as possible for the largest target
possible.
 Objective is to capture market share
 Requires the greatest involvement from a manufacturer in terms of management resources and promotional
resources (many intermediaries must get involved to make this type of distribution effective)
 Associated with long or ultralong distribution channels
 May cause price wars

2. Selective
Number of intermediaries on each level of a channel.
 Characterized by the availability of a product at points of sale where retailers are willing to give it a special
attention.
 Favored by manufacturers of shopping and specialized goods
 Advantage of exclusive distribution
 Promotes cooperation among the members of the same channel
 Easier and more profitable for a company to choose selective distribution when it is well established and has a
good reputation

3. Exclusive
Number of intermediaries on each level of a channel.
 Characterized by a product available at only one point of sale in each geographic zone.
 Niche or high-end positioning
 Greater control over the policies of the members in the channel
 Optimal product presentation (target objective is to optimally showcase a product)
 Exclusive distribution (sometimes distributors cannot sell rival products, signed agreement)
 Stereo system only is 2 stores in mtl, so easier to make sure the sales clerks know their product

Intermediaries and channel selection criteria

Distribution intermediaries are selected based on 6 criterias:
- Sometimes the optimal chain of intermediaries should be avoided bcuz it is too expensive (so higher prices for
consumers, and lower profit margins for manufacturer)

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 of each distribution option

Control of the network:

o Purpose is to enhance the coordination of intermediaries that will guarantee the smooth running of the network
and solid relationships btwn the players
Image of the intermediaries:
o Consumers perception of their competence, very important
o Ideally, synergy btwn the manufacturer’s actions and those of the distributors
Sharing of functions:
o Functions must be shared equitably btwn the intermediaries and all members must be aware of and accept their
role
o Determines responsibility and commitment of each member
Compatibility with the existing network:
o Modified network is often = to the addition of a new channel, therefore the combability with the existing
channels must be confirmed
o Existing intermediaries usually perceive the addition of a new channel as a lack of loyalty on the part of the
manufacturer

Multichannel distribution
- Dynamics of distribution are strongly affected by technological advances and evolving consumer behaviour
Multichannel distribution
 Distribution mode that combines several distribution channels to
reach different target markets for a personalized optimal experience
 Several distribution channels used simultaneously
 The rule rather than the exception
 Ex: apple: website, specialized boutiques and big box stores
 The drive to achieve growth is a major motivator for implementing a
multi-channel distribution strategy
 Broader market coverage, so higher sales
 Reduces risk bcuz of the diversification of companies sources of revenue
 Increases points of contact with consumers, consumers can reach companies through the channel of their
choice
 Segmentation tool for businesses
 Consumers consult several distribution channels before buying something, so companies that use various
channels become more firmly anchored in consumers minds

Disruption in the various channels

- E-commerce has disrupted the traditional distribution channels
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 - Disintermediation: Disappearance of intermediaries: like MP3 replaced record stores
- Reintermediation: appearance of new intermediaries: ex: Itunes
- new form of specialist intermediary surface when there is a gap btwn supply and demand of a large number of
consumers: Airbnb, Etsy, Uber
- with consolidation, manoeuvring room of the other players has been significantly reduced

Conflicts linked to a multi-channel distribution strategy

 channel conflict: a situation in which members perceive that other members behaviour is preventing them from
achieving their own goals or is detrimental to them
 3 major sources of conflicts commonly emerge:
1. Incompatibility of objectives
2. Poorly defined roles and rights
o Manufacturers trying to distribute their product directly to consumers, but the retailers are also
trying to sell the products to the same customers
o Can create tension btwn the entities
3. Differences in perception
o Result of poor communication

Champion in all categories

- Disney gets omni-channel experience right It starts with your initial experience on the entertainment giant's
beautiful, mobile-responsive website. 
- Once you've booked a trip, you can use the My Disney Experience tool to plan your entire trip, from where you'll
dine to securing your Fast Pass.
- In the park, you can use your mobile app to locate the attractions you want to see, as well as view the estimated
wait time for each of them.
- The entertainment company takes it one step further, though, with the release of its Magic Band program. This
tool acts as a hotel room key, photo storage device for any pictures taken of you with Disney characters, and a
food ordering tool.

Omnicanal strategy (to resolve conflicts)

 Complete and transparent integration of all channels and points of contact to offer an optimized and
personalized experience : a sustainable solution to the tension
 Consistent experience btwn points of contact at all times
 Ex: purchase online and choose btwn in store or home delivery
 Easier to execute when the distribution intermediaries are highly integrated
 Can also integrate information systems to share key data on consumers more effectively
 Can also resolve conflicts based on the marketing mix elements. Diff marketing mix for each channel
 Differentiated distribution channels & different products to avoid cannibalization
 Silo management
 Showrooming: see product in store, buy it online
Vertical vs non-vertical integration?

SESSION 11: MARKETING COMMUNICATION AND RELATIONSHIP: CHAPTER 9 AND 10

PESTEL impact the business activities (floods in Venice)
Marketing communication (planification): ads, sales promotion, public relations

Strategic planning in marketing communication

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Marketing communication (or promotion)
 The set of initiatives deployed to reach a target audience and transmit a message
 Marketing communication consists of translating, and expressing, the desired positioning of the offer in a
language that the target segment will understand in order to attain communication objectives.
 Marketing communication initiatives must be in synergy with the other elements of the mix to convey the
positioning of the brand.
- Is a silent communicator
- Constant multiplication of media through which a brand can express its message (tv, radio, snapchat filter,
game, etc
- Important to transmit a coherent and pertinent message to the target audience (the challenge of the integrated
communication approach)
- Strategic communication plan that rests on clear communication objectives, which then guides the selection of
the most appropriate communication media
- Integrated approach: planning and evaluating communication initiatives by considering both their specific role
and their interrelations to ensure that messages are coherent and investments optimized

Steps of strategic planning in marketing p.247

*target audience and consumer insight: initiates the strategic planning

1. Situation analysis (internal & external, positioning of the brand) and understanding of the audience (the target,
their decision process and the factors that influence them)
2. Planning: identified the communication opportunities of the situation analysis. Communication objectives,
performance indicators to evaluate the success of the communication plan. Timatable, detailed budget
3. Communication objectives are examined (decide on key message of the campaign and then choose the
communication media they will use to communicate the message in an integrated fashion)
Advertiser: a business that transmits a message to a target segment (a brand)

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Communication objectives
 Hierarchical effects model
 A target audience must first be aware of the existence of a brand before being able to prefer it over the
competing products
 Communication objectives: what the target should know, think, fell or do after exposure to a communication
(more specific than the marketing objectives, since market objectives are more general since they concern the
whole company). Comm objectives are more specific to the brand communication efforts
- Need to know that it exists in order to buy it

Communication objectives: hierarchical effects model

 Helps clarify communication objectives
 6 steps that consumers complete when making a purchase
decision: awareness, knowledge, liking, preference, conviction and
purchase (p.248)
 Comm objectives should first concentrate on cognitive aspects
(awareness and knowledge) then on emotions (liking and
preference), then encourage ppl to take action (the behavioural
aspect). Can be done in a different order too
 Important to ensure that a comm objective corresponds with measurable performance indicators. (measure of
awareness p.249 table 9.2)
 Sequences followed by target
- Walk the client from one phase to another (be in brain and then will buy the product)

Palessi/ payless shoes ad:

Message: perception of luxury brands. Change of perception after the purchase

Consumer insights
The consumer’s perception of an unresolved problem or dilemma in a product category that the brand offers.
- Communication professionals seek consumer insight from the wealth of information accumulated concerning
consumer’s psychographic profile
- Like the profound truth felt by the target audience (is an opportunity for the company)
- Can be the basis for the statement of an effective axis of communication, and can inspire the communication
process
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 - Dove real beauty campain

Bell wifi password:

- Families saying the long and complicated wifi password, doesn’t work
- Relatable problem, we have a product just for you

Insights at that intersection:

Merge revelation and opportunity
- Prob asked clients what they don’t like and said long password

Kraft dinner:
- Even richer/ up scale ppl eat kraft dinner
- Ashamed, guilty: need to ask ppl when they eat kraft dinner how they feel

Key message
Encapsulates the promise or benefits that the business offers, to reach the target consumers. It refers to the main idea
that the communication program must express (sometimes called the line of communication)
- Product: package of benefits
- Ppl don’t buy product they buy a benefit (not buying classes, but education and a better future)
- Helps orient the creative team in charge of expressing the message

IMC and media types

IMC: Integrating Marketing Communication: the process of coordinating and integrating all marketing communication
tools to maximize the impact of the message sent to the consumer. To convey a central unified message through means
of communication.

Ad of Lotto 6/49
- #TuDevraisAcheterUn649
- Behavioural variable in segmentation: how we act
- Consumer insight is what matters
- Print, tv all the same message, Integrating Marketing Communication, put it everywhere, ppl will see it and get
your message. Needs to be coherent and the same message in all the platforms
- Hashtag on a ad (twitter), to know how many ppl actually say and read the ad, increase in google searches
- Hard to measure the success of ads: sales but also research (survey, ask in a year do you remember watching an
ad on luck)
- Le concept reposait sur le fait que les moments de chance sont partout, puis que l’expression «Tu devrais
t’acheter un 6/49» faisait partie du vocabulaire des Québécois. Par conséquent, chaque démonstration les
encourageait à y penser.

Types of media (p.251 for examples)

 Paid media (content providers that sell space to advertisers; radio, tv, bus shelter…; pay for an ad in the metro)
 Owned media (broadcasting channels that belong to the brand, under its full control: company’s store, website,
blog, newsletter, social media…)
 Earned media (not controlled by the brand; free exposure for a brand; words-of-mouth, reviews of customers
on your hotel, shares and comments on facebook…)
Synergy of all of them, not only one

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Incorporating components of integrated marketing communication
 Integrated marketing communication: the process of coordinating and integrating all marketing communication
tools to maximize the impact of the message sent to the consumer
 Important since consumers receive info about a product or company from several sources (not only from
messages created by marketing managers)
 360 communication: brands communicate with its target audience through all possible contact points
 Everything communicates, from packaging and salespeople’s uniforms to store decor

Marketing communication media

 The 8 communication tools used to deliver a key message to a target audience

One per target

Advertising
5.25 million US$ for a 30sec brand during the super bowl
 Placement of announcements and persuasive message in time or space purchased to communicate to members
of a particular target market or audience
 Powerful mean to raise awareness of a brand (info about product), can improve consumers attitude toward a
brand or change their perception of it
 Capacity to reach broad segments of the population
 Allows creativity
o Paid media
 Difficult to establish ROI (return on investment) (can’t track the behaviour of the ppl targeted)
 Increased scepticism (mostly millennials cuz bombarded with messages; ¼ use ad block, skipping
ads)
o Media planning
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  Consists of selecting the media to use to disseminate an advertisement as effectively and
economically as possible (a strategic decision)
 Media planners must determine who to reach (target group), where to reach them (place),
when (time), for how much time (duration) and how often (frequency)
 Btwn 80-85% of the advertising budget
 Raises several challenges: both qualitative and quantitative criteria’s guide the choice of media
use in a campaign
- In Canada, less ad spending in newspaper, magazines, tv, radio, etc,(all the traditional media) only online/digital
is increasing (cuz now a lot more ppl online). Right place, right message, right time
Criteria for media selection
o Mostly the capacity to communicate the message and cover the target
o Legal environment is another important variable
 In qc ads to children under 13 is illegal
 Every media has advantages & inconvenient p.256 for more

o TV
o Radio (popcorn, original, gets ur attention)
o Magazines (ricardo is the #1 in Mtl) less ppl buying magazines but ricardo’s magazines sales are
increasing
o Newspaper (sale of some are decreasing others are increasing)
 Quantitative indicators serve to compare media in terms of their capacity to cover the target effectively and
economically
o Reach or cumulative audience
 The unduplicated % of the target group that is exposed to a set of media during a previously
defined period
 % of the target exposed to a medium in a given geographical area
o Opportunity to see (frequency)
 The # of times that the target population is exposed to a message (reached) during a given
period (usually 1 – 4 weeks)
 Need to compromise btwn reach and frequency
 New product: wider reach; mature product: frequency
o Continuity
 The time required to ensure that a medium will have a particular effect on a target group
o Cost per 1000
 Media costs evaluated and compared in terms of their returns (often used to compare medias)
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 o Share-of-voice
 Portion of its media purchases relative to its competitors in the industry
 A has 1M$ worth of media time in 10M$ industry, so 10% share-of-voice
 Media schedule
o time when ads will be broadcasts
o use an advertising schedule
o choose optimal time to reach consumers/ target
 Measuring effectiveness
o Will the message achieve the objective for which it was created (pre-test) or did it achieve the campaign
objective (post-test)
o The pre-test
 Evaluation before final production, suggest improvements
o Post-test
 Determine if a campaign has achieved the initial objectives
 Useful for next campaign
 Glocalization: companies must try to maintain a coherent execution across different countries
while expressing recognition of local characteristics

Public relations
Public relations
 Strategic management of relationships btwn an organization and its diverse publics (external or internal)
through the use of communication
 Build and manage reputation of the organization among its audience through relational approach
 Launching a new product drawing attention to company ethical responsibility
 Correcting a situation / crisis…
 Earned media and controlled by the media (so company wants to make sure that diverse target groups are
getting the right message) p.259, methods to achieve the communication objectives
 2 audiences in public relations: internal (close to business: employees, shareholders, suppliers, customers) &
external (with whom the business communicates: gov, media, potential customers & employees…) Journalists
are the external audience most sought after by marketers
Tools:
 Media relations refers mostly to activities that target journalists and the media (ex bloggers)
 Provide info so they can inform the public
 Main activities: invitations to press conferences, press release (main tool), events, specialized articles and letters
to editors.

 Seen as more credible & effective

 Cheaper: free of charge by the media

Digital and mobile marketing

Digital marketing: 2 types (outbound and inbound)
 Outbound marketing

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 o Strategies used to reach target customers as they search for a product or service (Paid listing and
display advertisement) usually to enhance brand awareness. Also called the push strategy
o Paid listings: sponsored links when keyword search on google
o Display advertising: appear on websites (usually ads related with the website)
 Retargeting: targeting internet users according to their browsing history, provided by cookies
(search for an item, then ad on fb)
 Native advertising: article on like la presse, but to promote for ex royal bank’s travel insurance
o Performance indicators of digital ads include the # of impressions (when ad seen by customer), click rate
(#btwn ad clock and # of impression) and cost per click
o Hard to measure the sales attributed to a specific ad (sales results from an integrated communication
program)
 Inbound marketing
o Search engine optimization (SEO): business improves its positioning in the list of natural links proposed
by a search engine (so can find your link quickly)
o inbound vs outbound
o It is also called the pull strategy: rather than hunt for the potential customer through advertising
(outbound), this approach aims to attract the customer to the brand
o Objective is to ensure that the natural referencing of the brand (link naturally suggested by search
engines) place the brand above competitors
o Must create blogs, podcasts, studies so ppl can easily find them online
o trying to optimize website according to customer search process and search engine so people find them
quickly.
o Google: considers the usefulness (if keywords match) and authoritativeness of a link (if the link is reused
in other websites)
o Attracting ppl already interested (looking for cupcakes online, when ppl search for the key words u
attract/pull them)
 Mobile marketing
o Consists of adapting a communication strategy to the specific parameters of each device (computers,
tablets, smart phones
o Apps (ikea app to image the furniture in your house)
o Or games Pokémon GO
o Power of internet to reach consumers anywhere, any time
 Social media
Simple observation: positioning evolution monitoring
o Sources of dissatisfaction
o Conversion in innovations
o Active participation
o Buying of advertising space
o Participation to conversations
o Reactions to news
- Get ppl involved (Laws create ur flavor) even if don’t buy laws can get involved
- Loyalty by interacting with the ppl (long-term)
- Brand community (Harley Davidson community)
- Snap cream egg: if target market uses snap, use snapads
- Give products to influencers, or paid to mention a brand

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Direct and relational marketing
 Direct marketing: reaching an audience directly (without intermediaries); call, membership, product trial,
email… (comm tool and distribution channel). Way to retain customers and forge long lasting relationships
(relationship marketing). Bday car to customer when its his bday.
o Database with customer’s info, profiles based on purchasing behaviour
o Personalize each interaction
 Consumer experience= sales promotion + direct marketing
 Creativity
 Innovation
 New points of contact (advertisements, website, social media, consumer service (can be everywhere), purchase,
emails, process that goes till infinity) How can u stand out if don’t know what makes you unique

Sales promotion
 Media and nonmedia marketing pressure applied for a predetermined, limited period of time in order to
stimulate trial, increase demand or improve product availability
 Popular cuz immediate action and easy to measure
 Simulate ppl to buy or sell a product/ service; prompts action. To boost profits or sales
 Some brands use it. If channel did sales, ppl would stop buying it. Sales promotion is not for every brand
Types of sales promotion
 Promotions directed at final consumers (final buyer)
o pull strategy (heighten the desire for the product)
o discount coupon, contests, samples, bonus, price cut… p.269 for more examples
 Promotions for intermediaries (distribution channel member, wholesaler, retailer or other)
o push strategy (motivate partners and distribution intermediaries to develop sales to end consumers (to
push the product through the distribution chain until it reaches the final consumer
o manufacturers offer promotions to distribution channels members in order to gain their support
o gifts (like trips), sales contests, sales premium, rebate, shows and stands…


- Expand database (with info filled by the participants of the contests)

- Promotional price might become the normal price in customers minds if used too often, wait till sell to buy the
item
- Roll up Tims
- Youtube ads: push
- Effective ad: right target
- Loyalty cards

Sponsorship
 Financial support that a business provides to another one. Not directly related and with which it wants to
associate the brand of a product or service in consumers’ minds (sport, humanitarian activity…)
 To associate brand and event/ activity /celebrity (transfer positive attitude) (for the brand image)
 To establish an image or boost their reputation (many events wouldn’t be possible without sponsorships)
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  Helps connect with a group
 Unique opportunity to create an emotional connection with the audience (if brand presence is perceived as
relevant and unobtrusive)
Types of sponsorships:
 Sports domain largely favoured
 Athletes as spokespeople
o If the spokesperson behaves badly it impacts the company (but should continue the association, all
depends on severity of scandal)
 Brand events
o Create ur own event to reach target group (often less expensive) lole white tour, yoga classes
 Product placement
o Products in television shows, movies or video games
o +: visibility and reputation
o Compensates for consumers loss of interest in traditional advertising
Sponsorships + and -

- Increase visibility of the brand among the target audience in an original context
- Create associations
- Benefits for both ppl (influencers)
- ROI: return on investment (% that u get back) low if there no obvious connection btwn the company and the
even

Alternative forms of communication

Experimental marketing
 Consumer experience = Sales promotion + Direct marketing
 Creativity
 Innovation
 New points of contact
 Ex: offer samples; field conditions that no dot necessarily involve large financial resources
- Interacting with the ppl
- Ad cartes, vous avez choisi…, magie de Québec
- Stairs transformed in a piano: fun theory: ppl choose the fun option (stairs vs escalators): fun is the easiest way
to change behaviour

Content marketing
- Producing and disseminating content that is relevant, informative, educational, useful or playful, and that
focuses on customers’ interests in order to reinforce their affinities with the brand
- Branded entertainement
- Ex: go pro videos of extreme sports
- Series, podcasts

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92% of consumers trust recommendations from their friends and family over all forms of advertising

Creative strategy and the advertisement idea

 Brief: document prepared by the strategic planning teams for the creation teams, after having completed the
strategic planning step and selected the communication tools to use
 Creative team must transform the key message in words, images, video

Structure and role of communication agencies

 Since media landscape is complex, many businesses are hiring communication agencies to help them develop
and execute their communication plans
 2 types of agencies:
o Integrated generalists: offer all the services required to produce an integrated communication plan
o Specialists in specific communication media like digital, experimental, promotion or public relation
 Agencies organized around 3 main functions:
o Advice
o Creation
o Strategy (recommendations)

CHAPTER 10: RELATIONSHIP SELLING

 Mostly for B2B selling
Selling approaches
 Selling: a form of communication btwn 2 ppl (company representative and an existing or potential customer)
 Transmitter
 Receiver
 The message
 The channel through which the message circulates
 Feedback
3 selling approaches
 Transactional approach
 Consultative (diagnosing the customers needs, offering the most suitable solution for each client, receive advice
 Relational: crucial in B2B
Salesperson
 Consultative: sell solutions
 New business development salesperson: spend most of their time recuiting new customers: sell products or
services that are bought very rarely or once by the same customer
 Missionary: inform and educate ppl, not directly sell
 Delivery: personally delivering the products they sell
 Sale support salesperson: hired to coach and support salesppl with more experience
 Key account salesperson: not full time salesperson. Need a lot of experience. Sell to executives of organizations
or to the company’s largest customers
The selling process
 Pre-approach: gather info on customer; prepare for the meeting with the customer; being customer focused;
personalized preparation
 Approach: during the first few mins; first impression
 Need assessment: help customer satisfy their needs in one of the fundamental qualities of a good salesperson
o SPIN method:

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 o Used to identify the customer’s needs, expectations and dissatisfaction using open and closed questions
o P: customers problems, needs, difficulties, dissatisfaction
o I:implication: for the customer to envision that the problem can be solved once and for all
o N: Need-payoff is the solution. clarify the problem to highlight the value or usefulness of the solution
 Etre bien prepare pour pouvoir bien répondre aux objections
 Follow-up : if met expectations

Business development
 Customer relationship management (CRM) software: indispensable tool
o Compiles info on current and potential customers

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