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MKT100 Notes
Principles of Marketing (Toronto Metropolitan University)
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CHAPTER 1
★ An Introduction to Marketing
What is Marketing?
-
The activities that develop an offering in order to satisfy a customer need
Helps to shape the products & services of a firm based on what is being looked for
About engaging in a conversation w/ customer & guiding delivery of what is required to
satisfy those needs
Marketing concept offers the customer what they are looking for:
➔ Focuses on customer wants & needs so organization can distinguish its offerings
from competitors
➔ Integrating all the organization’s activities (including production) to satisfy wants
➔ Achieving long term goals for the organization by satisfying the wants & needs
legally & responsibly
The Evolution of Marketing
-
“Interruption to Interaction” (moving away from stereotypical views of marketing as a
distraction to starting conversations w/ customers)
Production orientation - a focus on manufacturing & production quantity in which customers are
meant to choose based on what is most abundantly available
^ focuses on products because a lack of product options in the marketplace
Sales orientation - hard selling to the customer, who has greater choice thanks to more
competition in the marketplace
- sales techniques convince customers by giving consumers choice & ensuring
companies focus on creating market share & building sales volume in a highly
competitive environment
sales pitches are encouraged for sales people to use their understanding of human
nature to convince customers to buy products
companies respond to marketplace w/ more competition by overwhelming customers w/
promotions that focus on the hard sell
Marketing company orientation - a strong emphasis on the marketing concept & development of
a more comprehensive approach to understanding the customer
- Highlighted by coordination of advertisement, sales, public relations into 1 department in
an organization
Societal marketing orientation - looking not only at the customer but expanding marketing efforts
to include aspects from the external environment that go beyond a firm’s customers, suppliers,
& competitors
- Examines the longer-term impacts on the customer & environment when customers
seek to satisfy needs
Relationship marketing orientation - about developing a real & sustainable relationship w/ the
customer; (engagement = focus & helped through use of customer satisfaction & relation)
Customer satisfaction - customer’s evaluation of a good/service in terms of whether it
has met their needs & expectations
Relationship marketing - a strategy that focuses on keeping & improving relationships
- Important result of orientation = concept of customer relationship management
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Key Marketing Terms
Exchange - giving up one thing to receive another thing they would rather have
Customer value - the relationship between benefits & the sacrifice necessary to obtain such
benefits (customers value goods & services that are of the quality expected & sold at a price
they are willing to pay)
Market segments - groups of individuals, families, or companies placed together in a belief they
share similar needs; represent source of customer needs
- Companies expand their market share in 3 ways:
➔ Attracting new customers
➔ Increasing business w/ existing customers
➔ Retaining current customers
- 4Ps of marketing: must be studied & developed to create a proper strategy
➔ Product: relates to the tangible & intangible aspects of a company’s offering
➔ Price: relates to the quantifying of a value in exchange for a company’s offering
➔ Place: relates to much of the behind-the-scenes activities of making an offering
available to the customer
➔ Promotion: relates to what most people believe marketing to be about; most
visible activities of the field
- Marketers interested in customer value:
➔ Earn trust through loyalty programs
➔ Avoid unrealistic pricing through forward communication
➔ Offer organization-wide commitment to service & after-sale
support
➔ Partner w/ consumers to co-create desired experiences
Why Marketing Matters
-
Aspect is part of every company & everyday life
A rewarding career
Provides important skill set
CHAPTER 2
★ The Marketing Environment, Social, Responsibility, & Ethics
The External Marketing Environment
Target market - a group of people/organizations for which an organization designs, implements,
& maintains a marketing mix intended to meet the needs of the group (results in mutually
satisfying exchanges)
- Firms adjust marketing mix to reflect changing needs & composition of target marketing
Understanding the External Environment
Environmental scanning - a process in which a team of specialists continually collect & evaluate
environmental info
- Factors within external environment important to marketing managers include:
➔ Competitive
➔ Regulatory
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➔ Economic
➔ Social
➔ Technological
Competitive Factors
- Porter’s 5 forces of competition:
➔ Direct competitors: competitors most closely matching a firm’s product offering
➔ Substitutes: competitors whose products can satisfy same need, differently
➔ New entrants: competitors who might emerge due to entry barriers present in the
industry
➔ Suppliers: business partners competing for profit margins from firm motivated to charge
highest price for the goods/services produced
➔ Buyers: business partners competing for profit margins from firm and motivated to pay
less for goods/services purchased from firm
- Forces showcases competition is not always for market share
- Also about competition over dollars
➔ Firms turning to innovation across all parts of marketing mix to discover some
form of advantage; creates a double-edged sword for companies in gathering
info on any form of competition
➔ Competitors leverage the power of big data, analytics, & social media to gather
info regarding customers
➔ Relate customers across a host of different platforms
Regulatory Factors
- All parts of marketing are subject to regulatory laws & restrictions
Regular forces:
➔ Federal legislation: administered by the competition bureau & encompasses several
branches & responsible for enforcing laws covering areas (ex. Bankruptcy, trade
practices)
Competition bureau - federal department charged w/ administering most marketplace
laws
➔ Provincial & territorial laws: constitute divides legal jurisdictions between
provincial/territorial legislatures & federal government allowing each level of government
to legislate in the areas for which has been given responsibility
➔ Self regulation - programs voluntarily adopted by business groups to regulate the
activities of their members
ASC (advertising standards canada) - to monitor honesty & fairness
CAB (canadian association of broadcasters) - established a code of ethics
CMA (canadian marketing association) - develop guidelines & ethical practices
Specialized Federal Legislation Affecting Business
Competition act: promotes efficiency & adaptability of economy, expands opportunities for
participation in world markets while recognizing role of foreign competition, ensures smaller
enterprises have equal opportunity to participate, provides consumers w/ competitive prices &
product choices
Consumer packaging & labelling act: accurate prepackaged labelling info to help consumers
make informed purchasing decisions (prohibits false/misleading reps & sets out specifications
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for mandatory label info)
Trade-marks act: regulates & protects trade names & trademarks
Textile-labelling act: requires textile articles bear accurate info
Health canada’s food & drugs & regulations: establishes standards for safety & nutritional
quality
Motor vehicle safety act: regulates safety standards for manufacture & importion
Personal info protection & e-documents act (PIPEDA): supports & promotes e-commerce by
protecting personal collected info by providing use of electronic means to communicate
Privacy act (PA): governs personal info handling practices of federal government institutions
Canadian anti-spam legislation (CASL): to deter most damaging & deceptive forms of spam;
enforced by canadian radio-tv & telecomm commissions (CRTC), competition bureau, & privacy
commissioner
Economic Factors
➔ Consumer’s incomes: incomes of families; education = primary determinant of earning
potential (higher level of education = more potential & benefits, reduces risk of lowincome & unemployment)
- For every $1 earned = $1.65 in debt
➔ Purchasing power: is measured by comparing income to the relative cost of living
Discretionary income - income is high relative to cost of living (more money to spend on
nonessential items aka wants)
➔ Inflation: a measure of the decrease in value of money, impacts consumer’s purchasing
power if salary increases don’t keep up w/ inflation
- Pressures consumers to make more economical purchases & still maintain their
standard of living
➔ Recession: a period of negative economic growth
- In such event, customer’s take account the price-value aspect prior to making
purchases
- Occurs when GDP falls for 2 consecutive quarters
- To cope w/ recession: people switch to store brands that cost less than
manufacturer’s brands, increase uses of coupons, groupon
Social Factors
●
●
●
Market-Oriented Values
4 values that strongly influence attitudes/lifestyle:
➔ Self sufficiency: every person should stand on their own feet
➔ Upward mobility: success should come to anyone who gets an education,
works hard, plays by rules
➔ Work ethic: hard work, dedication, frugality
➔ Fairness: no one should expect special treatment
Shoppers rank characteristics of product quality: reliability, durability, easy
maintenance, ease of use, trusted brand name, low price
Growth of Component Lifestyles
A mode of living that involves the goods & services that meet one’s diverse needs &
interests rather than conforming to a single traditional lifestyle
Families Today
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Any combination of 2/+ people bound together over time by ties of mutual consent, birth,
adoption, placement, who together assume responsibility for variant combo’s:
➔ Physical maintenance & care of group members
➔ Addition of new members through procreation/adoption
➔ Socialization of children
➔ Social control of members
➔ Production, consumption, distribution of goods & services
➔ Affective nurturance (love)
2 key resources required for families (time & money) are in short supply
Demographic Factors
Demography - study of people’s vital statistics (ex. age, race, ethnicity, location)
● Baby Boomers: people born between 1947-1965
- Active, affluent
- Some hurt by recession, some work harder in response to worries of retirement
- Younger boomers financially stretched to support children challenged to build
careers
● Generation X: people born between 1966-1978
- First generation of dual-career households
- Half of couples ended up in divorce or separation
- Savvy and cynical consumers
- Spend money on personal services
- They fund the retirement years of the baby boomers
● Generation Y: people born between 1979-2000
- Impatient - grew up in an automated world thus, they expect instant gratification
- Family oriented - stable childhoods tight family bonds
- Inquisitive - want to know why things happen
- Opinionated - encouraged to share their opinions
- Diverse - accepting overall of people who are different than themselves
- Good time managers - live a busy lifestyle that must be scheduled
- Savvy - have been exposed to technology from a young age - globally aware
- Connected - use social media for both communication and commerce
- Life-balance seekers - more inclined to take care of themselves
- Struggling, entrepreneurial, heightened social responsibility, high expectations
● Generation Z: people born between 1995-2009
- Attitudes
- Access to info
- Brand consciousness
- Technical sophistication beyond their years
Popular Shifts in Canada
-
Most of population comes from immigration
90% of new immigrants in urban core areas are focus of marketing programs by
interested firms in reaching a large national & multicultural market
More than 50% of Canadian population lives in 4 major urban regions
Ethnic & Cultural Diversity
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Multiculturalism - refers to the peaceful & equitable coexistence of different cultures
Technological Factors
-
Maintaining & building wealth depends on the large part on speed & effectiveness with
what we invent & adopt machines & technologies that lift productivity
- External technology is important because:
● Firms could be operating more efficiently/create a better product
● New technology may render existing products obsolete
Basic Research - pure research that aims to conform an existing theory or to learn more about a
concept or phenomenon
Applied Research - an attempt by marketers to use research to develop new or improved
products
Technology and the Future of Businesses
-
Fastest changing of all external environment forces
5 of Fast Company’s Top 12 Tech Trends of 2017:
● Smart building materials: sensors prevalent in construction to max cost
efficiency & to develop environmental sustainability
● Synthetic food & cellular agriculture: plant proteins re-engineered into food
that mimics meat & ability to grow food in a lab
● Virtual reality vs live performance: expensive live performances displaced by
low-cost/high-engagement options from home
● Autonomous driving
● Spaces as participants: usage of sensors to assess how people use spaces
(ex. Hospital rooms) leading to improved design, efficiency, value
Corporate Social Responsibility
Corporate social responsibility - a business’s concern for social & environmental welfare
Triple bottom line - a business philosophy seen as the pursuit of profit while also benefiting
society & the environment
Social acceleration - the concept of exponentially rapid growth starting with human desire for
improved products, spurring competitive pursuit of market share, driving innovation and
technology, resulting in higher standard of living, but with new socio-environmental problems
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Pyramid of Corporate Social Responsibility - a model that suggests corporate social
responsibility is composed of economic, legal, ethical, and philanthropic responsibilities and that
the firms economic performance supports the entire structure.
Green Marketing - the development and marketing of products designed to minimize negative
effects of the physical environment
- Environmentally aware consumers tend to earn more and are more willing to pay
a premium for green products
- There are strict guidelines in place for green marketing to ensure claims are
clear, specific, accurate and not misleading
Ethical Behaviour in Business
Ethics - standard of behaviour by which conduct is judged
Morals - rules developed as a result of cultural norms & values
- Laws are the values & standards enforced by courts
- Ethics are the moral principles & values
- Development of an ethical base:
● Reflection of the consequence of the behaviour
● Rules
● An individual’s moral character
● Preconventional morality: childlike, self-centered, based on what will be
immediately punished/rewarded
● Conventional morality: moves from egocentric viewpoint towards expectations of
society
● Postconventional morality: represents morality of a mature adult
Ethical Decision Making
- Factors that influence ethical decision making and judgments:
● Extent of ethical problems within an organization
● Top management actions on ethics
● Potential magnitude of the consequences
● Social consensus
● Probability of a harmful outcome
● Length of time between the decision and the onset of consequences
● Number of people to be affected
Ethical Guidelines
Code of ethics - a guideline to help marketing managers & other employees make better
decisions
- Advantages:
● Helps employees identify business practices their firm recognizes as being acceptable
● Can be an effective internal control on behaviour
● Helps employees avoid confusion
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Process of formulating code of ethics facilitates discussion among employees
CHAPTER 3
★ Strategic Planning for Competitive Advantage
The Importance of Strategic Planning
Strategic planning - the managerial process of creating & maintaining a fit between the
organization’s objectives & resources & evolving market opportunities
- Goal of strategic planning is long-run profitability & growth
- Require long-term commitments of resources
- Diverse businesses within a corporation are linked by common corporate goals &
interdependent business strategies that must be coordinated to obtain max advantage
- A complex set of activities that takes place at 3 levels: corporate, business, marketing
Strategic business unit (SBU) - a subgroup of a single business/collection of related businesses
within the larger organization
- Goal of business-level planning is to formulate strategies that deal w/issues related to
the competitive advantage
- Marketing planning is aimed at target market & marketing mix considerations
- Corporate planning guides businesses & marketing plans
- Wider in scope & long term in its orientation vs tactical decision = narrower & short term
Marketing environment - entire set of situational conditions (internal & external) within which a
business operates
Corporate Planning- Defining the Business Mission
Mission statement - a statement of the firm’s value based on a careful analysis of benefits
sought by present & potential customers & an analysis of existing & anticipated environmental
conditions
Strategic Directions- Designing the Business Portfolio
-
Examining internal strengths & weaknesses marketers should focus on financial,
management, marketing
Environmental scanning is at its best when it is able to foresee business opportunities &
threats at an early stage (trends identified may be acted upon to either make/save $)
5 most often studied macro-environmental forces: competitive, regulatory, economic,
social, technological
Opportunities are positive factors within external environments the business may/may
not choose to take advantages of
Strategic Alternatives- Linking SWOT to Growth Strategies
Market penetration - a marketing strategy that tries to increase market share among existing
customers using existing products ex. Tim Hortons (annual) “Roll Up the Rim”
Market development - involves attracting new customers to existing products ex. New uses for
old phones stimulate additional sales among existing customers while bringing in new buyers
Product development - a marketing strategy that entails the creation of new products for current
customers
Diversification - a strategy of increasing sales by introducing new products into new markets
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^ often necessary to combat competitive forces/take advantage of new social trends
- companies might pursue profits asap / first seek to build market share & awareness
before going after profit
Business Planning or Competitive Advantage
Core competencies - key unique strengths that are hard to imitate & underlie the functioning of
an organization
Competitive advantage - set of unique features of a company & its products that are perceived
by the target market as significant & superior to the competition
Cost competitive advantage - being the low-cost competitor in an industry while maintaining
satisfactory profit margins
- Enables a firm to deliver superior customer value
Experience curves - curves that show costs declining at a predictable rate as experience w/
product increases
^ encompasses a broad range of manufacturing, marketing, administrative costs
^ reflect learning by doing, technological advances, economies of scale
^ allows management to forecast costs & set prices based on anticipated costs opposed to
current
Re-engineering - entails fundamental rethinking & redesign of business processes to achieve
dramatic improvements in critical measures of performance
Product Differentiation Competitive Advantage
-
Exists when a firm provides a unique benefit valuable to buyers beyond simply offering a
low price
Niche competitive advantage - the advantage achieved when a firm seeks to target & effectively
serve a single segment of the market
Sustainable competitive advantage - an advantage that cannot be copied by the competition
Market Planning - Setting the Objectives & Identifying the Target Market
Marketing strategy - activities of selecting & describing 1/+ target markets & developing &
maintaining a marketing mix that will produce mutually satisfying exchanges w/ target markets
Marketing objective - a statement of what is to be accomplished through marketing activities
^ should meet 5 criteria developed through SMART model
Market opportunity analysis (MOA) - description & estimation of the size & sales potential of
market segments that are of interest to the firm & the assessment of key competitors in these
market segments
The Marketing Mix
➔ Product strategies: literal satisfaction of discovered need, includes the product,
packaging, warranty, after-sale service, brand name, company image, value
- Can be tangible goods/ideas offered through consultants/medical care services
➔ Pricing strategies: most flexible component of the mix (fastest to change)
➔ Place (distribution) strategies: making the product available when & where the customer
wants them
- Distribution involves all business activities involving storing & transporting raw
materials/ finished products
➔ Promotion strategies: to introduce, facilitate, sustain convo & community between
companies & their customers
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Informs, persuades, reminds consumers of the benefits of an organization/ a
product
Elements of the promotional mix/ integrated marketing communications (IMC)
Include advertising, direct marketing, public relations, sales promo, personal
selling, digital marketing
Marketing Plan - Implementation, Evaluation, Control
Implementation - process that turns a marketing plan into action assignments
- Ensures assignments are executed in a way that accomplishes the plan’s objectives
- Must be supported by tangible tactics
Evaluation - involves gauging the extent to which marketing objectives have been achieved
during the specified time
Control - provides the mechanisms both for evaluating marketing results in light of the plan’s
objectives & for correcting actions that do not help the organization & for correcting actions that
do not help the organization reach those objectives within budget guidelines
Marketing audit - a thorough, systematic, periodic evaluation of the objectives, strategies,
structure, performance of the marketing organization
- Helps management allocate marketing resources efficiently
- Develops a full profile of the organization’s marketing effort & provide a basis for
developing & revising the marketing plan
- Effective strategic planning is a constant ongoing process
CHAPTER 4
★ Developing a Global Vision
Global vision - a recognition of & reaction to international marketing opportunities using effective
global marketing strategies & being aware of threats from foreign competitors in all markets
Importance of Global Marketing to Canada
GDP - total market value of all goods & services produced in a country for a given period
Outsourcing - the practice of using an outside supplier, where production costs are lower to
work
Inshoring - returning production jobs to Canada
Benefits of Globalization
➔ Developed countries:
- Expands economic freedom
- Spurs competition
- Raises productivity & living standards
➔ Less developed countries:
- Access to foreign capital
- Access to export markets
- Access to advanced tech
- Breaking monopoly of inefficient labour
- Reduces poverty & encourages democratization
Multinational Firms
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Multinational corporations - move resources, goods, services, & skills across national
boundaries w/o regard to country in which headquarters are located
- Stages:
➔ Operate in 1 country & sell in another
➔ Establish foreign subsidiaries
➔ Operate entire line of business out of country
➔ Virtual executive suits
- Benefits are controversial due to ability to tap into financial, physical, & HR globally &
combine them economically & profitably can be a benefit to any country
- Often possess & can transfer the most up-to-date technologies
Capital intensive - using more capital>labour in production process
Global Marketing Standardization
-
Production of uniform products that can be sold the same way all over the world
Improving profits through lower costs
Combination of standardization & variation determine which products need to be
changed & change only them
- Idea is to determine which product modifications are necessary from country-country
whilst minimizing those modifications
Multidomestic strategy - occurs when multinational firms enable individual subsidiaries to
compete independently in domestic markets
External Environment Facing Global Marketers
➔ Culture: common set of values that are shared & establish what is socially
acceptable
- Language (take care when translating product names)
- Customs & traditions (be aware for negotiations)
➔ Economic & Technological:
Gross national income per capita (GNI) - one measure of the ability of a country’s
citizens to buy various goods & services
- Marketers use this info to measure market potential & must consider cost
➔ Global economy: forecasting global demand & economic growth requires an
understanding of what is happening economically globally
➔ Political structure & actions: less regulation fosters the strongest economies
- Least regulated & most efficient economies are concentrated amongst those
countries w/ well-established common-law traditions
Legal Considerations
Tariff
Quota - a limit on the amount of a specific product that can enter a country
- Companies request quotas as a means of protection from foreign competition
Boycott - exclusion of all products from certain countries/companies
- Government use boycotts to exclude products from countries w/ which they have a
political dispute
Exchange control - law compelling a company earning foreign exchange from its exports to sell
it to a control agency
Market grouping - occurs when several countries agree to work together to form a common
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trade area that enhances trade opportunities
➔ Trade agreement - an agreement to stimulate international trade
Uruguay round & doha round: created by WTO to dramatically lower trade barriers
worldwide
WTO: replaced old general agreement on tariffs & trade (GATT)
GATT: contained loopholes that enabled countries to avoid trade-barrier reduction
agreements
NAFTA: Canada, USA, Mexico created world’s largest free trade zone
Canada & FTA: progressive free trade sector, covers aspects of CA-EU trade to
eliminate/reduce barriers
EU: world’s most important free trade zone (28 countries), guarantees freedom
movement of people, goods & services, & capital between member states
- Maintains a common trade policy w/ outside nations & regional development
policy
Demographic Makeup
- 2 primary determinants of consumer market = wealth & age
- World wealth not evenly distributed
High-net-worth individual (HNWI) - individuals who have $1 million in liquid financial assets
- Asia-pacific anticipated to grow to rep ⅖ of world’s wealth
- Over 60% of HNWI populations concentrated in 4 countries: USA, Japan, Germany,
China
- Wide age gap separates older population of industrialized countries from vast workingage populations of developing countries
- Demographic dividend is a gift of falling birthrates = temporary bulge in # of working-age
people
Natural Resources
-
Shortage of natural resources much more evident today
Differences create:
^ international dependencies, huge shifts of wealth, inflation & recession, export
opportunities for countries w/ abundant resources, stimulus for military intervention
(fights over resources)
Global Marketing by Individual Firm
Methods of entering global market:
➔ Exporting: selling domestically produced products to buyers in another country
Buyer for export - intermediary in global market that assumes all ownership risks & sells
globally for its own account
Export broker - intermediary who plays traditional broker’s role by bringing buyer & seller
together
Export agents - intermediaries who act like manufacturer’s agents for exporters; live in
foreign market
➔ Licensing & franchising: a legal process whereby a licensor allows another firm to use its
manufacturing process, trademarks, patent, trade secrets
➔ Contract manufacturing: private-label manufacturing by a foreign country
➔ Joint venture: domestic firm joins w/ foreign firm to create a new entity
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➔ Direct investment: active ownership-majority/controlling interest in a foreign firm
Global Marketing Mix
Product & promotion strategy options:
➔ One product, one message: global marketing standardization, uniform branding
➔ Product invention: create a new product/drastically change an existing one
➔ Product adaptation: slightly alter to meet local conditions
➔ Message adaptation: maintain same product but alter the message based on way
product is used
Place options:
- Channel members vary globally
- Shopping behaviour varies globally
- Innovation = key to success
Pricing options:
- Exchange rates; if country appreciates = less of currency is needed to buy another
country’s currency; if country depreciates = more of currency will be needed to buy
another country’s currency
- Dumping (form of price discrimination)
Floating exchange rates - prices of different currencies move up/down based on demand for &
supply of each currency
Countertrade - fast growing way to conduct global business- all/part of payment in form of other
products/services (form of barter)
CHAPTER FIVE
★ MARKETING RESEARCH
The Role of Marketing Research
Marketing research - the process of planning, collecting, analyzing data relevant to decisions
3 roles marketing research plays in an organization:
● Descriptive role: presenting factual statements
● Diagnostic role: explaining relationships within data
● Predictive role: predicting results of a marketing decision
- Is the function that links the consumer, customer, public to marketer through info
The Marketing Research Process
1. Identify the problem; differentiate between a management decision & research
problem
Management decision = often big-picture dilemma facing a marketing manager
Research problem = statement that identifies what info to be gathered
Marketing research objective - developed to provide insightful decision-making info
2. Design the research
Research design - specifies how to go about answering the questions & achieving the
objectives
Types of research:
Exploratory research: done to help explore problem in depth
Conclusive research: more focused on developing conclusions & courses of action
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Descriptive research: more common type, attempts to describe marketing phenomena
Casual research: focuses on cause & effect of 2 variables & attempts to find correlation
3. Collect the data
Secondary data - data previously collected for any purpose other than the one at hand
- Collected for another purpose
2 main sources of secondary data:
Sources inside the organization: documents, company’s own data, house periodicals prepared
External sources that are publicly available: business data summaries prepared by government
departments & agencies
Primary research - new & created by the researcher; many techniques to generate data
that can be tailored to meet specific research needs; more costly & timely, has distinct
advantage
Qualitative Research: researcher still needs to clear up aspects of the research problem or
requires a better understanding of a research situation
- Includes descriptive and causal research
- Depth Interviews: interviewing qualified people one-on-one
- Focus Group: small group of recruited (via screening) participants in an unstructured
discussion in a casual environment
Quantitative Research: when a researcher wants specific numbers and the ability to analyze
data to provide statistical conclusions
Survey Research
❏ In-Home personal interviews
❏ High-quality information, but very expensive
❏ Mall intercept interviews: shortest interviews conducted when respondents
standing - could invite to office for a brief >15 minute survey
❏ Using computer-assisted personal interviewing/self-interviewing at
the mall
❏ Pros: Ability of interviewer to probe when necessary
❏ Cons: difficult to get a representative sample of the population
❏ Telephone Interview
❏ Costs less than personal interviews - cost is rapidly increasing due to
refusals to participate
❏ Conducted from central-location telephone (CLT) facility
❏ Mail Surveys:
❏ Low cost, elimination of wage expenses, usually produce low response
rates - certain population tends to respond more than others
❏ Questionnaire Design: Included in all forms of survey research
❏ Questions must be clear and concise, ambiguous language avoided
❏ Open-ended question: Encourages answer phrased in respondent’s
own words
❏ Close-ended question: respondent makes a selection from a limited list
of responses
❏ Scaled-response question: close-ended question with a scale of
intensity
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❏ Observational Research: Watching people or phenomena in a controlled manner,
through either human or machine methods
Mystery shoppers - researchers posing as customers who gather observational data about a
store & collect data about customer-employee interactions
Ethnographic Research - Observation of behaviour in people’s “natural” physical setting
❏ Experiments: researcher (in a lab or field) alters one or more variables (price,
package design, shelf space) while observing the effects of those alterations on
another variable (sales) Specifying Sampling Procedures: Choosing sampling
population, determining behaviour/preferences/attitudes, determining whether
sample is representative of that population
Probability Samples: every element in the population has a known likelihood of being selected
- Random Sample: every element of population has an equal chance of being
selected as part of the sample (ex: Ryerson University student survey)
- Non Probability Samples: little or no attempt is made to have a representative sample of
the population
- Convenience Sample: respondents are readily accessible (friends, employers)
Types of Errors:
- Measurement Error: information desired by researcher differs from information
provided by the measurement process (i buy crest when i do not)
- Sampling Error: sample does not represent target population
- Frame Error: sample drawn from a populations differ from
- Random Error: a type of sampling error in which the selected sample is an
imperfect representation of the overall population
4. Analyze the Data
Cross-tabulation - a method of analyzing data that shows the analyst the responses to 1
question in relation to the responses to 1/+ more other questions
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The Impact of Technology on Marketing Research
- To test accuracy of online sources: CARS (credibility, accuracy, reasonable, support)
Online Sources
- Benefits of surveys: rapid development, real-time reporting, dramatically reduced costs,
improved respondent participation, contact w/ difficult-to-reach
- Benefits of research panels: allows research firms to build large pools of individuals who
are available to respond quickly to demands of online marketing research
- Companies can now purchase online focus group software (cost efficient)
- Benefits of focus groups: firm builds database via screening questionnaire on website,
firm sends email to individuals w/ need for a particular focus group to log on to particular
site at a particular time schedules for group
^ provides real cost savings & convenience
Mobile Sources
- Challenge = trying to find a way to measure the chatter going on in social media
Velocity - refers to how quickly volume of data is entering a system
Big data - large amounts of data collected from interactions w/ customers that reveal trends &
patterns
Competitive intelligence (CI) - an intelligent system that helps managers assess their
competition & vendors in order to become more efficient & effective competitors
CHAPTER 6
★ CONSUMER DECISION MAKING
The Importance of Understanding Consumer Behaviour
Consumer behaviour - how consumers make purchase decisions & how they use & dispose of
purchased goods/ services (also includes factors that influence purchase decisions & product
use)
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1. Need Recognition: the results of an imbalance between actual & desired states
- Occurs when triggered by an internal/external stimulus
Stimulus - any unit of input affecting 1/+ of the 5 senses: sight, smell, taste, etc.
^ internal stimuli are occurrences you experience (ex. hunger)
^ external stimuli are influences from an outside sources (ex. someone’s advice)
Engineered demand - where firms, led by marketers discover a marketable need not yet
known by consumer
2. Information Search: both can occur
^ internal info search: process of recalling info stored in one’s memory
^ external info search: process of seeking info in outside environment
- 3 basic types of external info sources:
Nonmarketing-controlled info source - product info source not associated w/ advertising or
promotion
Marketing-controlled info source - product info source that originates w/ marketers promoting
product
C2C reviews - consumers reviews of products on the vendor’s sites where products were
purchased
- As perceived risk of purchase increases, consumer expands search & considers
alternative brands
Platform - a business model usually digital where producers and buyers exchange value
Evoked set - a group of the most preferred alternatives resulting from an info search, which a
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buyer can further evaluate to make a final choice
3. Evaluation of Alternatives:
- Cutoffs are either a min/max levels of an attribute that an alternative must pass to be
considered
Decision confirmation - the reaffirmation of the wisdom of the decision a consumer has made
Cognitive dissonance - the inner tension that a consumer experiences after recognizing an
inconsistency between behaviour & values or opinions
Routine response behaviour - the type of decision making exhibited by consumers buying
frequently purchased, low-cost goods & services
Limited decision making - requires moderate amount of time for gathering info & deliberating
about an unfamiliar brand in a familiar product category
Extensive decision making - most complex type of consumer decision making, used when
considering purchase of an unfamiliar, expensive product/infrequently purchased item (requires
use of several criteria for evaluating options & much time for seeking info)
Factors determining the level of consumer involvement
- Previous experiences
- Interest
- Perceived risk of negative consequences (financial, social, psychological risk)
- Situation
- Social visibility (make a statement about purchaser)
Cultural Influences on Consumer Buying Decisions
Culture - set of values, norms, attitudes, meaningful symbols that shape human behaviour &
artifacts/products of that behaviour that are transmitted from one generation to the next
^ is pervasive, functional, learned, dynamic
Value - enduring belief shared by a society that a specific mode of conduct that is
personally/socially preferable to another mode of conduct; creates lucrative market
Subculture - homogeneous group of people who share elements of the overall culture & also
have their own unique cultural elements
Social class - group of people who are considered nearly equal in status/community esteem
who regularly socialize among themselves
Social Influences on Consumer Buying Decisions
Reference group - a group in society that influences an individual’s purchasing behaviour
Primary membership groups - groups with which individuals interact regularly in an informal
manner
Secondary membership groups - groups with which individuals interact less consistently & more
formally than with primary membership groups
Aspirational reference groups - groups that an individual would like to join
Norms - the values & attitudes deemed acceptable by a group
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Non aspirational reference groups/ dissociative groups - groups that influence our behaviour
because we try to maintain distance from them (avoids things to avoid being associated to
particular group)
- Reference groups have 3 important implications:
^ serve as info sources & influence perceptions
^ affect an individual’s aspiration levels
^ norms either constrain/stimulate consumer behaviour
Opinion leaders - an individual who influences the opinion of others
Sociometric leader - a low-profile well-respected collab professional who is socially &
professionally well connected
Socialization process - the passing down of cultural values & norms to children
Family life cycle - an orderly series of stages through which consumers attitudes & behavioural
tendencies evolve through maturity, experience, changing income & status
Personality - a way of organizing & grouping the consistency of an individual’s reactions to
situations
Self-concept - how consumers perceive themselves in terms of attitudes, perceptions, beliefs,
self evaluations
Ideal self-image - the way an individual would like to be
Real self-image - the way an individual actually perceives themselves to be
Lifestyle - a mode of living as identified by a person’s activities, interests, & opinions
Psychographics - analytical technique used to examine consumer lifestyles & to categorize
consumers
Psychological Influences on Consumer Buying Decisions
Psychological factors - tools that consumers use to recognize, gather, analyze, self-organize to
aid in decision making
Perception - the process by which people select, organize, interpret stimuli into a meaningful &
coherent picture
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Selective exposure - the process whereby a consumer decides which stimuli to notice & which
to ignore
Selective distortion - a process whereby consumers change/distort info that conflicts w their
feelings/beliefs
Selective retention - a process whereby consumers remember only info that supports their
personal beliefs
Threshold level of perception - minimum difference in a stimulus that the consumer will notice
Motives - driving forces that cause a person to take action into satisfy specific needs
Maslow’s hierarchy of needs - a method of classifying human needs & motivations into 5
categories: physiological, safety, social, esteem, self-actualization
Learning - a process that creates changes in behaviour, immediate/expected, through
experience & practice
Belief - an organized pattern of knowledge that an individual holds as true about his/her world
Attitude - a learned tendency to respond consistently toward a given object
CHAPTER 7
★ Business Marketing
B2B - process of matching capabilities between 2 non consumer entities to create value
The Network & Relationships Approach to Business Marketing
Relationship commitment - a firm’s belief that an ongoing relationship w/ another firm is so
important that the relationship warrants max efforts at maintaining it indefinitely
Trust - confidence in an exchange partner’s reliability & integrity
Networks in Business Marketing
➔ Sales approach: focused on generating leads & new business through various
persuasion techniques; focuses on what a company has to offer to other firms (very little
time is spent on understanding problems facing potential customers)
➔ Market management approach: focuses on that passive customer & assumes that all
customers will have the same needs & will respond in a similar way
➔ Network approach: looks at factors & forces around a firm & other firms that will have an
impact on their business
Fundamental Aspects of Business Marketing
Types of Demand:
Derived demand - demand in the business market that comes from demand in consumer market
Inelastic demand - an increase/decrease in price of product will not affect demand
Joint demand - demand for 2/+ items used together in a final product
Fluctuating demand (multiplier effect) - a small increase/decrease in consumer demand can
produce a much larger change in demand for the facilities & equipment needed to make
consumer product
Reciprocity - a practice where business purchasers choose to buy from their own consumers
- Benefits to a lessor include total greater revenue from leasing compared w/ selling & an
opportunity to do business w/ customers who cannot afford to buy
Types of Business Products
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Major equipment - large & expensive purchases that depreciate over time
Accessory equipment - smaller in size & expense than major equipment; more standardized &
often sold to consumers
Raw materials - unprocessed/untapped materials that are extracted/harvested for consumption
of further processing
Component parts & materials - finished products ready for assembly
Supplies - consumable items not part of the final product
Business services - complementary & ancillary actions that companies undertake to meet
business customer’s needs
Classifying Business Customers
4 major categories of customers:
➔ Producers: use purchased goods & services to produce other products to incorporate
into other products
Original equipment manufacturers (OEMs) - individuals & organizations that buy
business goods & incorporate them into the products that they produce for eventual sale
to other producers/ to consumers
➔ Resellers: includes retail & wholesale businesses that buy & resell (wholesaler - retailer consumers)
➔ Governments: thousands of federal, provincial, territorial, municipal buying units
- Contracts for government purchases are often put out for bid; interested vendors
submit bids to provide specified products during a particular times
➔ Institutions: seek to achieve goals other than the standard business goals of profit,
market share, return on investment, includes also nonbusiness organizations
Classification by Industry
North american industry classification system (NAICS) - developed by US, CA, ME, to classify
north american business establishments by their main production processes
^ each classified group is relatively homogenous w/ regard to raw materials required,
components used, manufacturing processes employed, problems faced
^ more digits in a code = more homogeneous group is
^ codes can help identify firms that may be prospective users of a supplier’s goods & services
Business Buying Behaviour
Buying centre - all those people in an organization who become involved in the purchase
decision
New task buy - a situation requiring the purchase of a product for the first time
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Modified rebuy - a situation where the purchaser wants some change in the original
good/service
Straight rebuy - a situation in which the purchaser reorders the same goods/services w/o
looking for new info/new suppliers
- Trends in B2B online marketing:
➔ Growth of mobile
➔ Importance of content marketing
➔ Social media growth
Chapter 9
Customer Relationship Management:
-
System that gathers information about customers that can help to build customer
loyalty and retain those loyal customers
Customer Relationship Marketing
- Using hardware and software to create a database to track customer information
CRM Cycle (Creation of a CRM System)
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1. Marketing and Market Research
-
Companies understand what they have to offer to customers
Marketing and market research tools that help them use the four Ps
2. Business Development
-
Use of tech to identify customers, gather and store info
- Interactions with the consumer; physical store location visits, purchasing history
Identify Customer Relationships
- Customer-centric: philosophy under which the company customizes its offerings based
on data generated between the customer and the company
- Learning: collecting customer comments and feedback on products or service
performance
- Knowledge management: information and customers is centralized and shared for
enhancing relationships between the customer and organization
- Empowerment: delegation of authority to solve customers’ problems quickly - usually by
the first person who learns of the problem
- Interaction: customer and company representative exchange information (ex, SPC
card: students’ interactions are tracked to study behaviour)
Understand Interactions of Current Customer Base
- Touch Points: all possible areas of a business where customers have contact with that
business
- Point-of-sale interactions: communications between customers and organizations that
occur at point of sale
Store and Integrate Customer Data
- Data warehouse: central repository of data collected by an organization
- Contains channel, transaction and product/service touch points
- Database: collection of data, especially one that can be accessed and manipulated by
computer software
- CRM Databases collects: customer statistics, purchasing habits, transactions
methods, product usage
- Response list: customer lists, includes names and addresses of those who responded
to an offer of any kind
- Compiled lists: prepared by an outside company and available for purchase
- Contains names, addresses from telephone directories/membership rosters,
census data, birth announcements, business start-ups, bankruptcies
Identifying the Best Customers:
- Companies need to identify customers who yield high profits/potential profits
- Used to develop interactions that target top 20 percent high-value customers
wants/needs
Data Mining - used to find hidden patterns in the customer data stored in the data warehouse
- often used to categorize significant characteristics, develop customer profiles, predict
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purchasing behaviour
Customer Segmentation - generates a profile/picture of customers’ similar demographic,
geographic, psychographic traits, purchase behaviour to focus on best customers
Recency-Frequency-Monetary (RFM) Analysis - identify customers who have purchased
recently and categorize them by money spent (those who have spent a lot will probably
purchase again)
Lifetime Value (LTV) Analysis - projects the future value of a customer over a period of years
by using the assumption that marketing to repeat customers is more profitable than marketing to
first-time buyers
Predictive Modeling - marketers try to determine, based on past occurrences, the odds that
some other occurrence (inquiry or purchase) will take place in the future
3. Customer feedback
-
Looks at ways to use the information about customers to retain them in the long term by
satisfying their needs
CRM is NOT a sales tool or tech solution
Leveraging Customer Information
Campaign Management - developing products/services customised for a customers segment
and then pricing and communicating these offerings to enhance customer relationships
Retaining Loyal Customers - build long-term mutually beneficial relationships between a
company and key customers (Loyalty reward programs)
Cross-Selling Other Products and Services - Use database to match product profiles with
consumer profiles (based on demographic, lifestyle, behavioural characteristics)
Designing Targeted Marketing Communications - track customers’ relationships to the
company’s products and services, modify marketing messages accordingly
Reinforcing Customer Purchase Decisions - thanking customers for their purchases, telling
them they are important, updating them on the status of their purchase - creates a long-term
profitable relationship
Inducing Product Trial By New Customers - use the results of modelling to profile potential
customers
Increasing Effectiveness of Distribution Channel Marketing - Since the retailer is the one who
moves the product to the consumer, marketers use mediums to keep in touch with customers
and prospects
Improving Customer Service - many companies are using information and training webinars for
their product/services to contact interested customers
Privacy Concerns and CRM
-
Many customers are concerned about databases because of the potential for invasion of
privacy
Users complain about being spammed, being asked for personal information to access
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certain screens or to purchase goods/services
Regulated by PIPEDA and the Privacy Act
CHAPTER 8
★ Segmenting, Targeting, and Positioning
Market Segmentation: - the process of dividing a market into meaningful, relatively similar, and
identifiable segments or groups
Segmentation Bases - characteristics of individuals, groups, or organizations
- Examples: age group, gender, education (single vs multiple variables)
- Single variables: less precise, simple and easier to use
- Multiple Variable: more difficult to use (lack of secondary data); more precise (companies
utilize data-driven consulting firms)
Types of Segmentation
Demographic
- Geographic: segmenting markets by region of a country or the world, market
size, market density, or climate
- Demographic: segmenting markets by age, gender, income, ethnic background,
and family life cycle
- Age: identifies potential profitable market segments with unique wants and
needs
- Other companies may want to attract young children - CrossFit recently
developed a program for kids, which can create lifelong consumers
- Gender: women are the largest spenders on behalf of their immediate and
extended family
- Income: influences consumers’ wants and determines their buying power
(Honda vs Acura)
- Ethnic: different cultures have different wants: French vs English Canadians
- Family Life-Cycle: series of stages determined by combination of age, marital
status, and the presence or absence or children
- (patterns among people of the same age and gender frequently differ
because of difference stages)
Psychographic Segmentation:
the basis of personality, motives, lifestyles, and geodemographic categories
● Motives: ex - marketers of baby products and life insurance appeal to consumers’
emotional motives; to care for loved ones
● Lifestyles: divides people into groups according to the way the spend their time, the
importance of the things around them, their beliefs, and socioeconomic characteristics
as income and vinyl
● Geodemographics: clusters potential customers into neighbourhood (small geographic)
lifestyle categories
○ Combines geographic, demographic, and lifestyle segmentations
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Benefit Segmentation:
Grouping customers according to the benefits (needs and wants) they seek from the product
Usage-rate Segmentation:
Dividing a market by the amount of product bought or consumed
- Categories are likely to be: former, potential, first-time, light/irregular, medium, and heavy
users
Pareto Principle: holds that 20% percent of all customers generate 80% of the demand
Criteria for Successful Segmentation:
1. Substantiality: a segment must be large enough to warrant developing and maintaining
a special marketing mix
2. Identifiability and measurability: ex - data on population within geographic
boundaries, number of people in various age categories
3. Accessibility: the firm must be able to reach members of targeted segments with
customized marketing mixes (eg: elders who speak another language/no access to
internet)
Company Characteristics: markets may tend to be regional, buyers prefer to purchase from
local supplies, distant suppliers may have difficulty competing in price and service
Buying Processes: segment current and prospective customers on the basis of how they buy
(ex: key purchasing criteria; price, quality, technical support, service)
- Satisficers: business customers who place their order with the first familiar supplier
- Optimizers: business customers who consider numerous suppliers, solicit bids, study all
proposals
Steps in Segmenting A Market
1. Select a market or product category for study
Define the overall market or product category to be studied
2. Choose a basis or bases for segmenting the market
3. Select segmentation descriptors
Descriptors identify the specific segmentation variables to use (heavy users, nonusers, etc)
4. Profile and analyze segments
Profile includes: segments’ sizes, expected growth, purchase frequency, current brand usage,
brand loyalty, long-term sales, profit potentials
5. Select target markets
6. Design, implement, and maintain appropriate marketing mixes (4 Ps)
Target Market: group or people/organizations for which an organization designs, implements,
and maintains a marketing mix intended to meet the needs of that group
- Undifferentiated targeting strategy: marketing approach that views the market as one big
market with no individual segments and thus uses a single marketing mix
- Concentrated Targeting: a strategy used to select one segment of a market to target
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marketing efforts
- (market) Niche: one segment of a market
Multisegment Targeting: a firm that chooses to serve two or more well-defined market
segments and develops a distinct marketing mix for each
- Cannibalization: when sales of a new product cut into sales of a firm’s existing
products
Positioning: process that influences potential customers’ overall perception of a brand, product
line, or an organization in general
- Position: place a product, brand, or group of products occupies in consumers minds
relative to competing offerings, target a segment of a market
- Product differentiation: positioning strategy that some firms use to distinguish their
product from those of competitors (can be real or perceived)
Perceptual Mapping: means of displaying or graphing, in two or more dimensions, the location
of products, brands, or groups of products in customers’ minds
Positioning Bases:
-
Attribute: a product is associated with an attribute, feature, or customer benefit
Price and quality: may stress high price as a signal of quality or emphasize low price as
an indication of value
Use or application: a company can stress a product’s uses or applications as an an
effective means of positioning it with buyers
Product user: focuses on a personality or type of user (Fido: build deeper connections
to millennials than Rogers brand)
Product Class: position product as being associated with a particular category of
products (ex: margarine brand with butter)
Competitor: positioning against competitors
Emotion: focuses on how the product makes the customers feel (Reebok: pump up
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women with an empowerment-powered message; “Express Your Strong”)
McDonald’s ad campaign: Is the Big Mac with bacon #NotABigMac or #StillABigMac?
- Product attribute/benefit: includes bacon
- Product user: argument targeted towards those who are loyal Big Mac consumers
- Emotion: strong emotional connection with the brand because campaign is based on an
argument
Repositioning: changing consumers’ perceptions of a brand in relation to competing brands
Developing a Positioning Statement:
1. Targeted Consumers
Develop a brief statement of the target market in terms of their segment description
2. Frame of Reference
Identify the consumption situations in which the product/brand is to be used
3. Point of Difference
Why is the product/brand superior?
4. Reason to Believe
Provide evidence to support the claim provided in frame of reference
CHAPTER 10-12
★ Product Concepts, Developing & Managing Products, Services &
Nonprofit Organization Marketing
Product Types:
Business - used to manufacture other goods or provide services, facilitate operations, resell to
other customers
Consumer - bought to satisfy an individual’s personal wants
Convenience - relatively inexpensive product that merits little shopping effort (toothpaste)
Shopping - requires comparison, more expensive, found in fewer stores
Specialty - item with unique characteristics, customers search extensively and for which are
reluctant to accept substitutes (Rolls-Royce cars, specialized forms of medical car, BeaverTails)
Unsought - unknown to the potential buyer or a known product that the buyer does not actively
seek (new products, insurance, burial plots)
Product Items, Lines, Mixes:
Product line - a specific version of a product that can be designated as a distinct offering among
an organization’s products
Product line - group of closely related product items
Product line length - number of product items in a product line
Product line depth - different version of a product item in a product line
Product mix - all products that an organization sells
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Product mix width - number of product lines an organization offers
Product, Line, and Mix Adjustments:
PRODUCT MODIFICATIONs:
Quality, Functional, Style (Aesthetic)
Planned Obsolescence - modifying products so that those products that have already been sold
become obsolete before they actually need replacement
REPOSITIONING:
- Changing consumers’ perceptions of a brand
PRODUCT LINE EXTENSIONS:
- Adding products to an existing product line to compete more broadly
PRODUCT LINE CONTRACTION:
- Benefits: (1) concentrated resources on important products, (2) no longer waste
resources improving sales on underperforming products, (3) new items are more
successful
Branding
Brand - name, term, symbol, and/or design that identifies and differentiates a seller’s products
- (1) product identification, (2) repeat sales, (3) new-product sales
Brand Mark - elements of a brand that cannot be spoken (Mercedes-Benz symbol)
Brand Equity - value of company and brand names
Global Brand - (1) Conduct research in countries, (2) identify which markets are most attractive,
(3) decisions made at local level or centrally? (4) assess any aspects that need to be altered to
foreign markets
GENERIC VS BRANDED PRODUCTS:
Generic product - no brand name, low cost product, identified by its product category
^ main appeal of a generic product is their low price
MANUFACTURER’S BRAND VS PRIVATE BRANDS:
Manufacturer’s brand - brand name of a manufacturer (ex. Samsung)
Private brand - also known as a private label, brand name owned by the wholesaler/retailer
INDIVIDUAL BRANDS VS FAMILY BRANDS:
Individual branding - the use of different brand names for different products
Family brand - the marketing of several different products under the same brand name
Co-branding - placing 2/+ brand names on a product/package
1. Ingredient branding: identifies the brand of a part that makes up the product. Example:
an Intel microprocessor in a personal computer such as Dell or Apple
2. Cooperative branding: when 2 brands receiving equal treatment, borrow on each
other’s brand equity. Example Intel launched Centrino wireless processor and
establishing co-branding with VIA Rail (WiFi Access) and Hotel Chains
3. Complementary branding: Products are advertised or marketed together to suggest
usage. Example: Seagram and 7-Up (mixer)
TRADEMARKS
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Trademark - the exclusive right to use a brand/part of a brand
Service mark - a trademark for a service
Generic product name - identifies a product by class/type & cannot be trademarked
PACKAGING
- 3 most important functions of packaging are:
➔ Containing & protecting products: to contain products that are liquid, granular, or divisible
➔ Promotion products: helps differentiate themselves amongst competing products & may
associate a new product w/ a family of other products from the same manufacturer
➔ Facilitating storage, use, convenience: prefer packages that are easy to ship, store,
stock on shelves
Persuasive labelling - focuses on a promotional theme/logo
Informational labelling - designed to help consumers make proper product selections & to lower
their cognitive dissonance after the purchase
Universal product codes (UPCs) - series of thick & thin bar codes, readable by computerized
optical scanners that match the codes to brand names, package sizes, prices
GLOBAL ISSUES IN BRANDING & PACKAGING
- One brand name everywhere
- Adaptations & modifications
- Different brand names in different markets
PRODUCT WARRANTIES
Warranty - a confirmation of the quality/performance of a good/service
Express warranty - a written guarantee
Implied warranty - an unwritten guarantee that the good/service is fit for the purpose for which it
was sold
CHAPTER 11
★ Developing & Managing Products
CATEGORIES OF NEW PRODUCTS
Discontinuous innovations: represent the smallest category of new products (new market)
New-product lines: products firm has not previously offered
Additions to existing product lines: includes new products that supplement a firm’s established
line
Improvements/revisions of existing products: new & improved product may be changed
Repositioned product: targeted at new markets/new market segments
Lower-priced products: products that provide performance similar to that of competing brands
NEW-PRODUCT DEVELOPMENT PROCESS
➔ Make long-term commitment needed to support innovation & new-product development
➔ Use a company-specific approach
➔ Capitalize on experience to achieve & maintain competitive advantage
➔ Establish an environment
IDEA GENERATION
New product strategy - a plan that links new product development process w/ objectives of the
marketing department, business unit, corporation
Customers: customers’ wants and needs should be the springboard for developing new
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products; using consumer feedback
Employees: exchange of ideas from different divisions and getting involved in the workplace
Distributors: use their awareness of customer needs than are manufacturers
Competitors: monitor the performance of competitors’ products
Vendors: 7-Eleven partners with vendors to make proprietary products
Research and Development:
- Product Development: converts applications into marketable products
Consultants: outsiders available to examine a business and recommend product ideas
IDEA SCREENING
- Eliminates ideas that are inconsistent with the organization’s new-product strategy or are
inappropriate
- Concept test: evaluation of a new-product idea using consumer reactions to
descriptions and visual representations
BUSINESS ANALYSIS
- Second stage of the screening process; preliminary figures for demand, cost, sales,
profitability are calculated
- Newness, size of market, forecasting market, overall economic trends
DEVELOPMENT - stage in the product development process; prototype is developed and
marketing strategy is developed
TEST MARKETING - limited introduction of a product and a marketing program to determine the
reactions of potential customers in a market situation
- Can have very high costs, but it is better to fail in a test market than in national
introduction
Alternatives: Simulated (laboratory) test marketing; presentation of advertising and other
promotional materials for several products, including the test product, to members of the
product’s target market (e.g: mock or real store, purchases are recorded)
COMMERCIALIZATION - decision to market a product
- Tasks: ordering production materials, starting production, building inventories, shipping
product to field distribution points, training sales force, advertising to potential customers
SPREAD OF NEW PRODUCTS: study of how consumers adopt new products
Diffusion: process by which the adoptions of an innovation spreads
- Innovators: first 2.5% of those who adopt the product
- Early adopters: next 13.5% to adopt the product; early in the PL
- Early Majority: next 34%, weighs the pros and cons before
- Late Majority: next 34%, rely on group norms, adoption stems from pressure to conform
- Laggards: last people to adopt, tied to past experience
Product Characteristics and the Rate of Adoption
- Complexity: degree of difficulty involved in using a new product
- Compatibility: degree the new product is consistent with existing values and product
knowledge, past experience, current needs
- Relative advantage: superior is a product to existing substitutes
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- Observability: how well benefits are conveyed to target customers
- Trialability: how well a product can be tried on a limited basis
Product Life Cycles
- Introductory stage : launch
- Growth stage: sales grow at an increasing rate, many competitors enter the market,
large companies start to acquire small firms, profits are healthy
- Maturity stage: sales increase at a decreasing rate
- Decline stage: a long-run drop in sales
CHAPTER 12
★ Services and Nonprofit Organization Marketing
Service - result of applying human/mechanical efforts to people/objects
How Services Differ from Goods
➔ Intangibility
Search quality - a characteristic that can be easily assessed before purchase
Experience quality - a characteristic that can be assessed only after use
Credence quality - a characteristic that consumers may have difficulty assessing even after
purchase b/c lack of necessary knowledge/experience
➔ Inseparability: inability of the production & consumption of a service to be separated
(consumers must be present during the production) ex.surgery
Inconsistency - inability of a service quality to be consistent b/c service depends on ppl
Inventory - inability of services to be stored for future use
➔ Service Quality
➔ Gap Model of Service Quality
Gap model - identifying 5 gaps that can cause problems in service delivery & influence critique
Gap 1: knowledge- between what customers want & what management thinks they want
Gap 2: standards-between what management thinks they want & quality specifications
management develops to provide the service
Gap 3: delivery - between quality specifications vs service actually provided
Gap 4:communication- what the company provides vs what the customer is told it provides
Gap 5: expectation- what customers expect they should receive & perceived service provided
Marketing MIxes for Services
- 8 P’s of service:
Product: make intangible to tangible (logos, tag limes)
- People processing: service is directed at a customer
- Possession processing: service is directed at a customer’s physical possession
- Mental stimulus processing: service directed at customer’s minds
- Information processing: service that uses technology directed at a customer’s assets
price, place, promotion, people, process, productivity, environment
- Customization = flexibility, standardization = efficiency
- Mass customization = technology & customization to the masses
Process: market research > update processes > standardize
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People: standards gap & delivery gap must be managed to improve the service
- Strategic management where incentives, training, recognition programs available
Place: convenience, # of outlets, direct vs indirect, location, scheduling
Physical Environment: visual cues that communicate a message
Promotion: stress tangible cues
- Use personal info source (using social media celebrities)
- Create strong organizational image (manage the evidence ex. physical space)
- Engage in postpurchase communication (follow up after purchase)
Pricing: unit of service consumption: specific task, time based, goods consumed w/ service
- Multiple elements (bundle price & separate price)
- Set pricing objectives
Productivity: managing supply/availability of service w/o affecting service quality
Relationship Marketing in Services
- Discrete transaction services = more difficult; uses marketing tools, sell in bulk, loyalty
programs, targeted communications
4 levels of relationship marketing
❖ Financial: pricing incentives ex. flyers
❖ Social: pricing incentives w/ social bonds (firms stay in touch w/ customers)
❖ Customization: creation of 1-1 solutions through intimate knowledge
❖ Structural: offering the above w/ addition of value-added services
Internal Marketing
- Service provider = service
- Important to treat employees & develop proper systems & benefits as encouragement
Non-profit Organization Marketing
Positioning decisions: critical for success, end-goal should be stated in positioning statement
Product: benefit complexity (difficult to communicate), benefit strength, involvement varies
Place decisions: capacity for distributing services is a key variable, mobility of offering
Promotion decisions: ability of affordability limits promotional options, PSA, social media
Pricing decisions: key points of difference = objectives, nonfinancial prices, indirect payment,
separation between payers & users, below-cost pricing
CHAPTER 13
★ Setting the Right Price
The Importance of Pricing
- Internal & external pricing must be balanced to meet bottom line customer needs
- Price includes the time lost while waiting for the good/service
- Reasonable price = perceived value at time of transaction
- Creates a perception of quality “price is what you pay, value is what you get.”
Trends
- Potential buyers carefully evaluate price of a product against value of existing products
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- Increased availability of bargain-priced private & generic brands (downward pressure)
- Market share pressure (using price cuts to gain share)
- Internet & mobile make comparison shopping seamless (downward pressure)
4 Step Pricing Process
1. Establish pricing objectives:
❏ Profit- Oriented: profit maximization, satisfactory profits, target ROI
❏ Sales-Oriented: market share, sales maximization (ignores profit & competition)
❏ Status-Quo: maintain existing prices, meet competition prices, little planning
2. Establish demand, costs, profits:
❏ Cost estimation: variable & fixed costs
❏ Demand estimation: historical data, life cycle, elasticity of demand
- Price changes through product life cycle:
● Introductory: high price, recover development costs, inelastic
● Growth: prices stabilize, competition enters, widened product
appeal, economies of scale lower costs, demand rises
● Maturity: price decreases, distribution channels = cost factor,
prices across competitors stabilize, demand is limited
● Decline: further price reductions from remaining competitors to
recoup, prices could possibly rise if remaining product becomes
future specialty good
- Break-even analysis; B-E Point = fixed cost/(variable price/per unit - variable
cost/per unit)
3. Choose a price strategy to help determine a base price: defines initial price &
intended direction of price movement over the product life cycle
- 3 approaches:
❏ Price skimming: new products perceived to have unique advantages, high prices at
start > lower prices over time, market is willing to buy at premium, cannot expand
production rapidly due to technology issues, recover production costs quickly, test
market at a high price to see if sales are fast
❏ Penetration pricing: charging a relatively low price for a product initially to capture
large share of the market (reduce production costs), lower profit/per unit sold (volume of
sales is critical), low price can discourage competition from entering
- In a price-sensitive market (elastic demand), competitive market (homogeneous
products, potentially large market), low fixed-cost structure (each sale contributes
large amount to fixed costs)
❏ Status quo pricing: meeting the competition/going-rate pricing; charges price
identical/very close to competition
- Ignores demand & costs
4. Fine-tune base price w/ pricing tactics: set a base price & fine tune using a variety
of pricing tactics
- Provides opportunity to adjust for unforeseen events in market place
Discounts & Allowances
❏ Quantity discounts: unit price reduction offered if buying multiple units/+ at once
❏ Cumulative quantity discount: deduction from list price that applies to total purchase
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❏ Non-cumulative quantity discount: deduction from list price that applies to a single order
vs total volume of orders placed
❏ Cash discounts: price reduction offered to consumer in credit terms
❏ Functional discounts: discount to wholesalers & retailers for performing channel
functions
❏ Seasonal discounts
❏ Value-based pricing: good price compared to prices of other competitors
Geographic Pricing
❏ FOB origin pricing: farther buyers are from sellers = more they pay
❏ Uniform delivered pricing: seller pays actual freight charges & bills every purchaser an
identical flat freight charge
❏ Zone pricing: modification of uniform pricing, firm divides it into segments/zones &
charges flat rate per zone
❏ Freight absorption pricing: seller pays all freight; used in intensely competitive markets
as a way to break in/be more competitive
❏ Basing-point pricing: designate a location as a basing point & charges all buyers the
freight cost from point regardless of the city from which goods are shipped
Other Pricing Tactics
❏ Single Price: all goods & services @ same price, removes price comparison
❏ Flexible price: diff customers pay diff prices, good for price-conscious ppl, lack of
consistent profit
❏ Professional services: used by people who have specialized training, price sensitivity is
limited, must be ethical
❏ Price lining: line of products w/ prices set at several price points within, reduces
confusion for both seller & buyer, limit flexibility as prices fluctuate
❏ Loss leader: selling a product near/even below cost in hopes shoppers will buy other
items in store
❏ Odd-even: using odd numbers in price to connote a bargain
❏ Price bundling: 2/+ products in a single package for special pricing, customer behaviour
issues
❏ 2-part pricing: charging 2 separate amounts to consume a good/service (ex. Gym
Membership fee & flat fee for use)
- Can attract consumers who will not pay a high upfront fee for limited use
Legality and Ethics
❏ Bait pricing: luring customers through false ads, use of high pressure in-store sellup
❏ Deceptive pricing:
- Promoting a product/price saving not actually available/low price on a limited # of
products
- Promoting a discount from regular price that has not been the regular price
- Selling a price above advertised price
- Double ticketing
❏ Price fixing: when 2/+ companies conspire to set a price-establishing a floor in bidding
situation/setting the market price that consumers will pay
❏ Predatory pricing: setting a price very low w/intent of driving competition out
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- Difficult to prove as must show willful intent
❏ Resale price maintenance: cannot dictate price that retailers sells at or retailer’s price
min
- Manufacturers can provide an MSR but cannot discriminate against retailers that
do not adhere to MSR
❏ Price discrimination: charging different prices for different buyers of goods of like quality
& grade within the same time period to reduce competition
- Promotional $ can be offered to channel members to stimulate support but must
be offered proportionally
CHAPTER 14
★ Marketing Channels and Supply Chain Management
- Trends:
● Continual push for growth
● Increased power of retailers
● Greater role of info tech
Marketing channel (channel of distribution) - a set of interdependent organizations that ease the
transfer of ownership as products move from producer to business user/consumer
Channel members - all parties in marketing channel that negotiate w/ one another
- Buy & sell products
- Facilitate change of ownership between buyer & seller as they move products from
manufacturer into hands of final consumer
Supply chain - connected chain of all business entities, internal & external to company,
perform/support marketing channel functions
How Intermediaires Help?
● Provide specialization & division of labour:
- Manufacturers gain efficiencies & lower production costs by concentrating on
production
- Intermediaries do what producers aren’t equipped to do
● Overcome discrepancies:
❏ Quantity: difference between amount produced & amount end user wants to buy
❏ Assortment: when consumer does not have all items needed to be fully satisfied;
marketing channels assemble all products in 1 location
❏ Temporal: when product is produced but consumer not ready to buy
- Inventories are maintained in anticipation of demand
❏ Spatial: buyers are all over but producers are concentrated-making products
available in convenient locations
● Provide contact efficiency
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Channel Intermediaries and their Functions
- Taking title to own merchandise & control terms of sale
3 characteristics that determine type of intermediary that should be used:
★ Product characteristics: may require a certain type of wholesaling intermediary,
include whether product = standardized/customized
★ Buyer considerations: include how often product is purchased & how long buyer is
willing to wait to receive the product
★ Market characteristics: include # of buyers in market (dispersed/concentrated stats)
Channel Functions Performed by Intermediaries
★ Transactional: contracting & promoting, negotiating, risk taking
★ Logistical: physically distributing, storing, sorting, sorting out, accumulating, allocating
★ Facilitating: researching, financing
- Taking title (owning the merchandise & controlling terms of the sales)
Types of Marketing Channels
Consumer Products Channel:
Direct channel; a distribution channel in which producers sell directly to consumers
agent/broker channels; typically used in markets characterized by many small manufacturers &
many retailers that lack resources to find each other
- retailer channel; when retailer is large & can buy in large quantities directly from the
manufacturer
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- wholesaler channel; commonly used for low-cost & low-involvement items that are frequently
purchased
Business & Industrial Product Channels:
- Direct channels
- Industrial distributors; wholesalers & channel members that buy & take title to products
- Keep inventories of their products & sell & service them
- Virtual distributors
- Worldwide retail exchange
Alternative Channel Arrangements:
Multiple channels: use of 2/+ channels to distribute the same product to target markets
Nontraditional channels: help differentiate a firm’s product from the competition
- Can provide another avenue of sales for larger firms
Strategic channel alliances: cooperative agreements between business firms to use 1 of the
manufacturer’s already established channels
- Alliances are often used when the creation of marketing channel relationships may be
too costly & time consuming
Factors Affecting Channel Choice
★ Market Factors:
Who: consumers/industrial buyers
What: product quantity
Where: geographic location/size of the market
When: seasonal/not
How: large/small quantities
★ Product Factors:
Complexity: complex, customized, expensive use more of a direct channel
Product Life Cycle: choice of channel may change, product gaining more acceptance
may become more complex
Delicacy of the Product: perishables require shorter channels
★ Producer Factors:
More resources (financial, managerial, marketing)
More control (more control desired w/ pricing, positioning, image)
Customer support (manufacturer wishes to provide more)
Levels of Distribution Intensity
★ Intensive: max market coverage
★ Selective: eliminate all but a few in any single area
★ Exclusive: only 1/few dealers in any given area
Channel Relationships
Critical function - managing the social relationships amongst channel members w/ the goal of
retaining & promoting synergy
Channel power - member’s capacity to control/influence the behaviour of other channel
members
Channel control - when 1 channel member intentionally affects another member’s behaviour
- Control is achieved when 1 member assumes leadership
Channel leadership - channel captain; varies by channel
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Channel Conflict
- Inequitable channel relationships can lead to conflict
- Clash of goals & methods amongst distribution members
Types of Conflict:
Horizontal: among channel members at the same level, when manufacturers practise dual
distribution
Vertical: more serious, between different levels in a marketing channel, most typically between
manufacturer & wholesaler/ manufacturer & retailer
Channel Cooperation
- Joint effort of channel members to create a supply chain that serves customers &
creates a competitive advantage
- Channel alliances & partnerships help SCM to create channels that work
Managing the Supply Chain
- Customer-driven focus
^ GOAL: coordinate & integrate all activities performed by supply chain members into a
seamless process from source to point of consumption
^ PHILOSOPHY: by visualizing entire chain, supply chain managers can max strengths
& efficiencies at each level in the process
- Benefits: lower costs, greater flexibility, improved customer service, higher revenues
Managing Logistics
Sourcing & procurement activities: to reduce costs of raw materials & supplies
^ plan strategies, develop specifications, select suppliers, negotiate prices & service
Production scheduling: inventory low/forecasts suggest more is needed = production scheduled
“push” effect by pushing product to consumer
- Order placed by consumer = production scheduled
^ mass customization (build to order)
^ “pull effect” pulling product through
Order processing sends info into the supply chain via logistics info system & thus goes to
manufacturer’s warehouse
^ if product is in not in stock: triggers a replenishment request that finds way to factory
floor
^ as an order enters the system, management must monitor flow of goods & info
Electronic data interchange - info tech that replaces the paper documents usually
accompany business transactions
Inventory control develops & maintains an adequate assortment of goods to meet demands
- Goal is to keep inventory as low as possible while maintaining an adequate supply
Just-in-time production (JIT) - a process that redefines & simplifies manufacturing by
reducing inventory levels & delivering raw materials just when they are needed on the
production line
Distribution Challenges in World Markets
- Spread of FTA & treaties = global marketing channels and SCM
- Global manufacturing demands decisions on channel structure, personnel, type
Global Logistics & SCM
- Key issues that impact logistics: legalities, transportation infrastructures (border-crossing
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issues) , reason why smaller companies resist globalization
CHAPTER 17
★ Advertising, Public Relations, Direct Response
Advertising and Market Share
- Helps build brand
- Marketers need to measure the incremental value of spending additional money on
advertising vs sales increase to ensure greatest return on investment
Advertising response function - a phenomenon in which spending for advertising & sales
promotion increases sales/market share up to a certain level but then produces diminishing
returns
Effects of Advertising on Consumers
- Informs consumers about products & services
- Influences attitudes & beliefs
- Ultimately affects purchase decisions
Major Types of Advertising
Institutional: goal = improve image of the company/industry, maintain favourable attitude
Advocacy - expressing views on a cause
Product:
Pioneering: stimulate primary demand for a new product/product category
- Provides in-depth info about benefits of product class, seeks to create interest
Competitive: goal = influence demand for a specific brand
- Appeals more to emotions
- Advertisements stress differences between brands (heavy emphasis on building recall of
a brand name)
Comparative: directly/indirectly compare 2/+ competing brands on 1/+ more specific
attributes
- Products experiencing minimal growth/those entering marketplace against strong
competitors are more likely to employ comparative claims in their advertising
Creative Decisions in Advertising
Advertising campaign - series of related ads focusing on a common theme slogan & set of
advertising appeals
- Advertising objectives: needed before any creative can begin, specific communication
task that a campaign should accomplish, for a specific targeted audience
Creative Decisions
★ Identify product benefits: “sell the sizzle- not the steak”
★ Develop & evaluate appeals: advertising appeal becomes the unique selling
proposition (ex. Profit, health)
★ Execute the message: way advertisement portrays its info (ex. “Slice of life”; depicts
people in settings where the product would normally be used)
★ Evaluate effectiveness:
Programmatic buying - using an automated system to make media buying decisions in real time
Media Decisions in Advertising
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Medium - channel used to convey a message to a target market
Media planning - series of decisions advertisers make regarding the selection & use of media to
efficiently & cost-effectively communicate the message to target audience
Types of Media
- Media types: newspaper, magazines, radio, tv, outdoor media, digital, direct response
Cooperative advertising - an arrangement in which the manufacturer & retailer split costs of
advertising the manufacturer’s brand
Cord cutting - discontinuing/never committing to a TV cable/satellite provider
Infomercial - 30 minute/+ advertisement that looks more like a talk show than sales pitch
Advergaming - placing ad messages in web-based/video games to advertise/promote
Social gaming - playing an online game that allows for social interaction
Media Selection Considerations
★ Cost per contact: enables evaluation of alternative media
★ Cost per click: cost associated w/ clicking on a display/banner ad
★ Reach: # of target who are exposed to a commercial at least once in a month
★ Frequency: # of times an individual is exposed to a message during specified period
★ Target audience: audience selectivity - ability to reach a precisely defined target
★ Flexibility: lead times
★ Noise level: level of distraction-within medium
★ Lifespan: longevity of message
Media fragmentation: forcing media planners to pay as much attention to where they place the
ad as to how often
- Qualitative considerations:
● Attention to program & commercial
● Involvement
● Program liking
● Lack of distractions
● Internet = multitasking media users
Media Scheduling
Continuous: ad is run steadily throughout ad period
Flighted: run heavily every other month/ every 2 weeks
Pulsing: combines continuous scheduling through the year w/ a flighted schedule during best
sales periods
Seasonal media: run only during times when product is most likely to be purchased
Media Buying
- Negotiation process w/ media-buying agency earning a commission on media dollars
spent
- Challenge = build media plans that achieve the client’s objectives at lowest possible cost
Public Relations
- Evaluates public attitudes, identifies issues that may elicit public concern, executes
programs to gain public understanding & acceptance
- PR campaigns strive to maintain a positive image of the corporation in eyes of public
Publicity - effort to capture media attention
^ corporates usually initiate publicity by issuing a media release
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PR Functions:
★ Media Relations: placing positive, newsworthy info in news media for attention
★ Product Publicity
★ Corporate Communications: creating internal & external messages to promote a
positive image
★ Public Affairs: building & maintaining national/local community relations
★ Lobbying: influencing legislators & government officials to promote/defeat legislation &
regulation
★ Employee & Investor Relations: maintaining positive relationships w everyone
★ Crisis Management: responding to unfavourable publicity/negative event
Major PR Tools:
★ Product Publicity
★ Product Placement: involves getting a product, service, or company to appear
★ Sponsorship: when a company spends money to support an issue
Cause-related marketing - type of sponsorship involving the association
Ambush marketing - when an advertiser attempts to position itself w/ an event but not
sanctioned as an official sponsor
★ Experiential: form of advertising that focuses on helping consumers experience a brand
such that a connection is formed
★ Websites
Managing Unfavourable Publicity
Crisis management - coordinated effort to handle the effects of unfavourable
publicity/unexpected unfavourable event ensuring fast & accurate communication in times of
emergency
Direct-Response Communication
- Provides opportunity for 1-1 communication resulting in more targeted messaging &
relationship building
Direct marketing - profitable results through targeted communications to a specified audience
- 5 key elements:
● The offer: catalyst that stimulates response
● The creativity
● The media: most common is direct mail
● Response & tracking: strength is ability to track & evaluate progress
● Customer call centre: to handle customer requests
Tools:
● DR broadcast
● Dr print
● Telemarketing
DNCL - free service where Canadians register their #’s to reduce/eliminate calls from
telemarketers
● Direct mail
● DR internet
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CHAPTER 18
★ Sales Promotion and Personal Selling
-
Sales promotion can make product available anywhere, close sale, provide results
Provides short-term incentive to consumer/members of the distribution channel as
motivator
Sales Promotion Target
Consumer sales promotion - sales promotion activities targeting the ultimate consumer
Trades sales promotion - sales promotion activities targeting a marketing channel member (ex.
wholesaler/retailer)
- Has more effect on behaviour than attitudes
- Immediate purchase = goal
- Objectives are driven by general behaviour of consumer & stage in PLC
Objectives:
➔ Loyal customers; reinforce behaviour, increase consumption, change purchase timing
➔ Competitor’s customers; break loyalty, persuade to switch to another brand
➔ Brand switchers: people who consistently buy the least expensive brand; persuade to
buy 1 brand more often
➔ Price buyers: people who consistently buy the least expensive brand; appeal w/ low
prices/supply added value that makes price less important
Tools:
Coupon - immediate price reduction (product trial, repurchase, increase amount purchased)
Rebates - cash refunds provided for the purchase (not immediate), (more control, direct to
consumers, build databases, high slippage), preferred by manufacturers
Premium - add value to the product to differentiate it
- Reinforce purchase decision, increase consumption,
Loyalty programs - build long-term mutually beneficial relationships, can enhance profitability by
reducing switching, should support brand promise, personalization, encourage redemption & be
mobile enhanced
Frequent-buyer programs- a loyalty program in which loyal consumers are rewarded for making
multiple purchases of a particular good/service
Sampling - a promotional program that allows the consumers to try for free
Shopper marketing - (point of purchase) engaging the consumer in-store
Trade Promotion
- Consumer promotion PUSHES the product through the channel
- Trade promotion PULLS product through channel
Tools:
● Trade allowances: price reduction offered by manufacturers to intermediaries
● Push money: money offered to channel intermediaries to encourage them to push
products
● Training: train an intermediary’s personnel if the product is complex
● Free merchandise
● Store demonstrations
● Co-op advertising: partnership between channel members w/ intent of sharing in cost
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of advertising directed at the final consumer to improve sales
● Business meetings, conventions, trade shows
Personal Selling
- Direct communication between a sales rep & 1/+ prospective buyers; influence each
other in a purchase situation
- Advantages: can provide detail, personalization, targeted, control costs, effective sales
- More important for product w/ high value
- Advertising & sales promotions more important when product has a low value
Relationship Selling
- Build long-term branded relationships w/ consumers & buyers
- Focus is on building trust between buyer & seller (delivery of anticipated, long-term,
value-added benefits)
- Salespeople are consultants, partners, problem solvers (build relationships over time by
providing solutions)
Selling Process
● Generating leads
● Qualifying leads
● Approaching the customer & probing needs
● Developing & proposing solutions
● Handling objectives
● Closing sale
● Following up
Key Issues in the Steps
Lead generation - life blood of an effective sales team
- Use data to qualify leads
- Network
- Social media
- Social selling:
● Leveraging your network to find the right prospect, build trusted relationships to
achieve sales targets
● Can lead to better leads, enhancements to the prospecting process & elimination
of the need for cold calling
● Build & better maintain relationships w/ larger networks more efficiently
● Lead qualifications: determining the recognizing need, buying power, receptivity
● Preapproach: needs assessment before sales call to enhance effectiveness of
the sales call
^ enough knowledge to engage & keep engaged
- Goal = customer profile
- Upon completion of the needs assessment & customer profile
^ creation of sales proposal
● Written document (solution to the situation the customer is in)
● Sales presentation (formal meeting where the sales proposal is presented &
reviewed)
● Conclusion of sales presentation (next steps/close sale)
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● Close sale: negotiation
● Follow up
Impact of Technology
- Customers where web = powerful tool
- Salespeople; increased efficiencies
- Relationships are the lifeblood of success-technology won’t replace relationship but it
can enhance it
Canadian professional sales association (CPSA)
- Offers the certified sales professional CSP designation (recognized standard of
excellence)
- Sign of a committed, honest, knowledgeable sales expert w/ training in the consultative
selling method
- Offers a competitive advantage & reported increase in success upon completion of
training
CHAPTER 16
★ Marketing Communications
-
Promotional strategy = plan for the optimal use of the promotional mix elements
Main function = convince target consumers, competitive advantage, position the product
in the marketplace
Communication Process
❏ Sender & Encoding: originator of message, conversion of sender’s ideas
❏ Message Transmission: requires a channel
❏ Receiver & Decoding: intended target, interpretation of conversion, selective processes
❏ Feedback: provides analytics necessary to determine if message is achieving objectives
- Goal of promotion = modify behaviour/thoughts, reinforce existing behaviour
Promotion Mix
❏ Advertising: any form of impersonal, one-way mass communication
- Benefit = ability to communicate w/ large # of people at 1 time
❏ Publicity: mass communication tool, not paid for by marketers
- Can be used to earn public understanding & acceptance
- Often achieved by PR strategies
- Helps an organization communicate w/ surrounding environments
❏ Sales Promotion: tools that stimulate consumer purchasing, dealer effectiveness
- Generally short-run to stimulate immediate increases in demand
- Can be targeted at end, trade, or a company’s employees
- Benefit = adding value to brand
❏ Personal Selling: personal, paid for communication between 2 people in attempts to
influence one another
- Want to accomplish persuasion
- Traditional (planned presentation) vs. Now (building customer relationship)
❏ Direct Marketing: message directly from a marketing company to an intended individual
target audience
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-
Uses a variety of media to deliver personalized message
Objective = generate profitable business results through targeted
communications to a specific audience
❏ Social Media:
- Online marketing; real-time 2-way communication
- Content marketing = new level of engagement, reinforce brands positioning
- Social media = promotion tools used to facilitate convo
How the Internet has Changed Communication
- Consumer-generated content;
● Consumers can pass judgment
● Can alter message immediately
● Can create their own message
Categorization of Media Types Based on Social Media
● Owned: websites, blogs, social media presence
● Paid: banner ads, sponsored posts
● Earned: media coverage, SEO, publicity
Integrated Marketing Communications
- To ensure consistency of messages
- Reasons for growth: market fragmentation, budget cuts, accountability, measurability
Factors Affecting the Promotion Mix
➔ Push/Pull Strategy: push directly promotes products from manufacturers straight to
consumer & pull forms a cycle from promoting to consumer & increased demands that
circle back to wholesaler demanding product from manufacturer
➔ Nature of Product: consumer good vs. business good, goods class, costs & risks
➔ Stage in PLC: Intro, Growth, Maturity, Decline
➔ Target Market Factors: varies w/ geographic concentration, level of knowledge,
availability, loyalty
➔ Types of Buying Decision: routine vs. complex
➔ Funds Available: lack of funds can impact heavily on every promotional choice, if funds
are available; optimize ROI while minimizing cost/per contract
CHAPTER 19
★ Social Media Strategies
- Forms 1-way content production to 2-way convo’s that lead to community building
- Provide opportunity to listen, co-market, learn
Crowdsourcing - redistribution of control to the consumer, providing opportunity for heightened
consumer engagement w/ a brand
- Social commerce is designed to help consumers make more informed purchase
decisions
Categorization of Media Types in Digital World
● Inbound: online content created & managed by organization, websites, blogs
● Earned: free media earned through verbal/online buzz, viral buzzes
● Paid: content paid for by the company to be placed online, SEO
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Max inbound media; create portfolios of digital touch points
Recognize aptitude that does not translate into earned media
Paid media can act as a catalyst for consumer online engagement
Social media strategies:
● Manage reputation
● Improve customer service
● listen, learn, respond, repeat
● Build relationships & trust
Evaluation & Measurement
ROI = (profit/social media investment) X 100
Social Media Tools
- Corporate blogs (company sponsored) & noncorporate (independent & perceived more
authentic)
- Microblogs; strict limit to length of post
- Location-based sites; GPS-enabled technology
- “Phablets” (tablet phone combo) increased video consumption
^ low barriers to entry, reduced concerns over privacy, portability
- Widgets allow for company info to be displayed on customer’s website
Downloaded by Navraj Mander (nmander@torontomu.ca)