Week ONE Overview of Marketing Deborah Reyner p.s NO computers/iPads or cell phones during class! Copyright © 2012 McGraw-Hill Ryerson Limited SBE Research Participation System • A maximum of 3 bonus marks (out of 100) (1) participate in 3 research studies or (2) review 3 journal articles • For either option, you must create an account at: http://sbe.sona-systems.com – Request a “new participant” account on the left side – If you are taking multiple courses that have this bonus option, make sure to select all courses – Indicate your section code accurately • Last day to receive/reassign bonus marks: Dec. 3 (Mon) 1-2 (1) Research Study Participation • Sign up for any study of your choice on http://sbe.sona-systems.com – 1 mark for each offline study participation – ½ mark for each online study participation • Participation is guaranteed on a first-come-firstserved basis • Studies will be available throughout the term (it is your job to keep checking for postings…) 1-3 (2) Journal Article Review • You must still create a sona-systems account • For BU352, review an article from one of these journals: – – – – Journal of Consumer Research Journal of Marketing Journal of Marketing Research Marketing Science • Summarize the following in 3-5 double-spaced pages: – (1) the phenomenon being studied, (2) the hypotheses, (3) the independent and dependent variables, (4) how the hypotheses are tested, (5) the results of the research, (6) criticisms of the research, (7) solutions • 1 review = 1 bonus mark 1-4 Chapter Roadmap 1-5 LO1,02 Building Value BlackBerry launched in 2000 available on 595 networks in over 175 countries sales of over $19.9 billion, 53% outside North America satisfies demand for information in real time fierce competition from Apple, Android and others 1-6 LO1 What is Marketing? Marketing is a set of business practices designed to plan for and present an organization’s products or services in ways that build effective customer relationships. 1-7 LO1 Marketing is NOT Just about buyers and sellers exchanging money for goods and services or about making a profit 1-8 LO1 Marketer’s Responsibility Marketers must address the ethical implications of their actions on society in general. 1-9 LO2 Value The fundamental purpose of marketing is to create value for both the firm and customer. Value is in essence what you get for what you give up. 1-10 Test Your Knowledge Which of the A) B) C) D) following statements about marketing is NOT true? Marketing entails an exchange. Marketing is simply about making a profit. Good marketing requires thoughtful planning. Because marketing costs money, good marketers carefully seek potential customers who have both an interest in the product and an ability to buy. 1-11 LO1 Marketing’s Core Aspects 1-12 LO1 Core One: Satisfying Customer Needs and Wants • Begins with understanding their needs and wants • Developing products and services 1-13 LO1 Satisfying Customer Needs and Wants How does a company address the diverse needs and wants of consumers for dental care products? 1-14 LO1 Case in Point: Crest Challenge Answer Results Address the diverse needs and wants of consumers for dental care products. Develop a deep understanding of what benefits consumer are seeking in their dental care products and develop brands designed to deliver those benefits. Crest provides a wide variety of dental care products to deliver the desired benefits. 1-15 LO1 Case in Point: Crest 1-16 LO1 Core Two: Marketing Entails Exchange • The exchange can occur between any two parties • Not simply a buyer and seller exchanging money for a good or service • Can be an exchange of information for convenience 1-17 LO1 Marketing Entails an Exchange Communications/Delivery CHAPTERS.ca Money/Information Customers/ Consumers (Buyers) Goods/Services Producers (Sellers) 1-18 Test Your Knowledge Which of the A) B) C) D) following is NOT part of a marketing exchange? Sellers provide products or services. Sellers communicate and facilitate delivery. Marketers assess the effectiveness of their advertising. Buyers complete the exchange by giving money and information to the seller. 1-19 LO2 Core Three: Marketing Requires Product, Price, Place, and Promotion Decisions 1-20 LO2 Product Goods Services Ideas 1-21 LO2 Price time money Price is everything the buyer gives up in exchange for the product. energy 1-22 LO2 Place • All activities necessary to get the product to the right customer when that customer wants it. • Supply chain management is the field that examines these activities. • Where would you find this product in the store? 1-23 LO2 Place: Marketing Channels Distribution Strategy How does a company get the product to the right customer when and where they want it? 1-24 LO2 Case in Point: Country Grocer Challenge Answer Results To expand distribution beyond the Ottawa area. Using an online distribution system to allow customers all over Canada to order directly from its store in Ottawa. • Canadian Federation of Independent Grocers award of merit for 8 consecutive years • Awarded the National Silver Award as the best store in Canada in the small surface category. 1-25 LO2 Case in Point: Country Grocer 1-26 LO2 Promotion • The communication activities of marketing • Used to inform, persuade and remind potential buyers • Used to influence their opinions or elicit a response 1-27 Test Your Knowledge Promotion is ____________ by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. A) smoke-and-mirrors B) coercion C) teasing D) communication 1-28 LO2 Marketing Shaped by External Forces 1-29 LO2 Core Four: Marketing Can Be Performed by Both Individuals and Organizations B2B: Wholesaling is often only Business to Business B2C: All retailing is Business to Consumer selling C2C: Swap Meets, EBay, yard sales, etc. ETSY Website 1-30 LO2 Core Five: Marketing Occurs in Many Settings Both profit and non-profit entities Developing economies Entire industries 1-31 LO2 Social Media Marketing Facebook – social utility or marketing tool? • > 46 million members • used by TD Bank, Molson, AOL Canada, Boston Pizza, LouLou magazine to reach target audiences • privacy concerns? 1-32 LO2,03 Core Six: Marketing Helps Create Value Production-oriented era Sales-oriented era Market-oriented era Value-based marketing era 1-33 LO2,03 Value-Based Marketing • Firms must offer customers something in excess of that being offered by the competitors. • Firms must understand how each aspect of their product/service creates value for customers. 1-34 LO2,03 Value is in the Eye of the Beholder That movie was a waste of money. That movie was so worth seeing! Discussion question If they saw the same movie, what could account for the difference in value derived from the experience? 1-35 LO2,03 How Firms Compete on the Basis of Value • Constantly changing consumer perceptions • Firms must constantly monitor the marketplace in order to create value 1-36 Test Your Knowledge What must firms do to become value driven? A) Share information, balance benefits and costs, and build customer relationships. B) Set low prices, put profit above service, and use effective marketing strategies. C) Make logistics a priority, expand globally, and always offer new goods and services. D) Keep a vigilant eye on the market-place, undercut competitors, and provide competitive salaries. 1-37 LO2 Entrepreneurial Marketing • Carmen Creek Gourmet Meats based in Calgary • specializes in grade A Canadian bison • distributes in Canada, US and Europe • brings value to consumers, retailers and food service businesses 1-38 LO4 Becoming Value Driven: Sharing Information Information technology such as Customer Relationship Management (CRM) programs are increasingly used by marketers to ensure that data is transmitted throughout the firm. 1-39 LO4 Sharing Information Why is sharing and coordinating information such a critical success factor for any firm? 1-40 LO4 Case in Point: Zara Challenge Answer Results How does the flagship brand of Europe’s fastest growing apparel retailer keep up with the latest trends? By implementing sophisticated information technology into its customer tracking and supply chain functions. Zara now has over 1500 women’s clothing stores in 78 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks. 1-41 LO4 Zara: Conquering Fashion with IT 1-42 LO4 Becoming Value Driven: Balancing Benefits and Cost • Understand key benefits • Focus on key benefits • Eliminate cost of less strategic benefits 1-43 LO4 Becoming Value Driven: Building Relationships With Customers Take a long term view of customer relationships Use data to assist in maintaining the relationship 1-44 LO5 Why is Marketing Important? 1-45 LO5 Marketing Expands Firms Global Presence Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks Canada Starbucks Australia Starbucks Germany Starbucks Taiwan 1-46 LO5 Marketing As Pervasive Across the Supply Chain • Each step in the supply chain involves marketing • All members in the chain must ultimately focus on creating value for their customer and the end user consumer 1-47 Test Your Knowledge Which of the following would NOT be considered part of a supply chain? A) consumer B) retailer C) manufacturer D) customer service representative 1-48 LO5 Marketing Makes Life Easier and Provides Employment Opportunities Choices of products and services choices as well as information about those choices Employment in diverse fields such as research, sales, promotions, global marketing 1-49 LO5 Marketing Enriches Society Discussion question Why do you think breast cancer is a good cause for Avon Foundation to support? 1-50 LO5 Marketing Can Be Entrepreneurial Though important to large firms, marketing is equally important to the success of small ventures—especially new ventures. 1-51 Chapter 2 Developing Marketing Strategies Ajax Persaud Dhruv Grewal Copyright © 2012 McGraw-Hill Ryerson Limited Shirley Lichti Michael Levy Chapter Objectives LEARNING OBJECTIVES LO1 Describe how a firm develops and implements a marketing plan LO2 Conduct a SWOT analysis and explain its use in marketing planning LO3 Explain how a firm chooses what group(s) of people to pursue with its marketing efforts LO4 Describe how the marketing mix increases customer value LO5 Describe how firms grow their businesses 1-53 Chapter Roadmap 1-54 LO1,02 Disney Goes Digital Global positioning satellites Smart sensors Wireless technology Mobile devices Pal Mickey 1-55 LO1 The Strategic Marketing Planning Process 1-56 LO1 Step 1: Defining the Mission and/or Vision Defining the Mission Heart & Stroke Foundation mission statement: The Heart and Stroke Foundation, a volunteer-based health charity, leads in eliminating heart disease and stroke and reducing their impact through the advancement of research and its application, the promotion of healthy living and advocacy. 1-57 LO1 Heart & Stroke Promotion 1-58 LO2 Step 2: Conduct a Situation Analysis Using SWOT 1-59 LO3 Step 3: Identifying and Evaluating Opportunities Using STP Segmentation Targeting Positioning 1-60 Hertz: Market Segmentation 1-61 LO3 Disney: Segmentation, Targeting, Positioning Magic Kingdom Pleasure Island Families w/younger kids Singles and Couples Epcot Adults, families w/older kids 1-62 Test Your Knowledge Which of the following refers to a group that responds similarly to a firm’s marketing efforts? A) Segment B) Following the leader C) Targeting D) Positioning 1-63 LO4 Step 4: Implement Marketing Mix and Allocate Resources 1-64 LO4 Product and Value Creation Discussion question How does satellite radio deliver value? 1-65 LO4 Price and Value for Money • Customer perception of value. • Price is only a part of value. 1-66 LO4 Place and Value Delivery • Product must be readily accessible • Why is this retailer growing? 1-67 Test Your Knowledge One of the keys in place and value delivery is to provide the consumer _______________. A) a wide product selection B) merchandise they want at the time they want it C) a variety of media communication methods D) accessible management personnel to handle complaints 1-68 LO4 Promotion and Value Communication Television Radio Magazines Sales force New Media 1-69 LO5 Step 5: Evaluate Performance and Make Adjustments P&G Website 1-70 LO5 Growth Strategies 1-71 Test Your Knowledge Which of the strategy? A) B) C) D) following is NOT considered a marketing growth Market penetration Diversification Product development Sequential planning 1-72 LO5 Market Penetration Existing marketing mix Existing customers Discussion question In what way is a sale a market penetration strategy? 1-73 LO5 Market Development Strategy What can a company do to continue to grow in a difficult retail environment? 1-74 LO5 Case in Point: Tim Hortons Challenge Answer Results To continue to grow in a competitive retail environment. Continue an international expansion strategy while also expanding menu options. 2724 Canadian outlets, 340 US outlets. Total 2006 Revenue of $1.66 Billion up 12% from 2005. 1-75 LO5 Product Development New product or service Current target market 1-76 LO5 Diversification New product or service New market segment 1-77 Test Your Knowledge A diversification strategy introduces a new product or service to a market segment that _______________. A) is currently not served B) includes many ethnicities C) already exists D) does not traditionally respond to mixed media 1-78 LO5 Entrepreneurial Marketing 2.1 Cupcakes by Heather and Lori Store vision to be a “magic cupcake factory” High quality cupcakes decorated in whimsical colours Now franchising this popular store concept 1-79 LO5 Sustainable Competitive Advantage 1-80 LO5 Sustainable Competitive Advantage Discussion question What do you think are the keys to McDonald’s sustainable advantage? 1-81 Test Your Knowledge What is sustainable competitive advantage? A) A broad description of the firms objectives and scope of its activities. B) Tool used to evaluate marketing performance. C) Something the firm can consistently do better than its competitors. D) Written document that discusses competitor strengths and weaknesses, and the firms advantages over them. 1-82 LO5 Customer Excellence Retaining loyal customers Customer service 1-83 LO5 Operational Excellence Efficient operations Excellent supply chain management 1-84 LO5 Product Excellence Achieving effective branding and positioning Discussion question How are these two firms positioned in the market place? 1-85 LO5 Locational Excellence The three most important things in retailing are location, location, location. Photo by Tim Boyle/Getty Images 1-86