From slides - Marketing 2024 Final

marketing concept

= the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value of customers, clients, partners, and society

goals of marketing

• attract new customers by promising superior value

• keep + grow current customers by delivering value + satisfaction

marketing management orientations/philosophies

product orientation, sales orientation, marketing orientation, value based orientation

sales orientation

• focus on sales force and promos to encourage buying

• sell as much as possible

market / marketing orientation

• focus on understanding consumer needs and wants (of target market)

• deliver better satisfaction

marketing mix

4 ps

• product

• price

• promotion

• place

importance of customers

products are solutions to needs and wants

• want ppl to buy products

how to build customer relationships

• offer products that perform

• exceed expectations

• realistic pricing

• give buyer facts

• offer commitment to the product and after sale support

• solve problems

• cultivate relationships

customer equity

• refers to the amt of value the customer base generates

• better to build relationships w customers

  • less costly

  • strong competition

  • customer loyalty

  • effective marketing strategy

  • survive Econ downturn

• how to build the relationship

  • identify customers

  • understand customer values

  • understand how the customer wants to interact

importance of customer satisfaction

• needs/wants are met

• positive feelings created

• product / interaction has exceeded / met expectations

org:

• org objectives met

• building relationship w customer

• s/h are happy

strategic marketing process

• org allocates its market mix resources to reach its target market + objectives

• maintain a fit between the org’s objectives and resources and evolving market opportunities

swot analysis

INTERNAL

strength: the things that the company does well

weakness: things the company does poorly

EXTERNAL

opportunities: conditions in the external env that favour strengths (not strategies)

threats: trends that don’t relate to existing strengths / favour areas of weakness

bcg matrix

market share dominance x market growth rate

stars | problem Childs

cash cows | dogs

market product growth strategies

• Market penetration

  Increase market share by selling more of the same products or services in the current market. 

• Product development

  Create new products or modify existing ones to attract new customers and increase market share. 

• Diversification

  Expand into new markets or introduce new products to reduce dependency on a single market or product line. 

• Market development

  Sell existing products or services in new markets to broaden market share. For example, a bakery could start selling to businesses. 

• Strategic partnerships

  Partner with other brands to access their audience. 

various external environments

economic: median income, interest rate, debt, unemployment, etc

natural: climate, crime, shortage of natural resources, inc migration, etc

tech: obsolescence, computers, wireless tech, inc in private funding, ai, etc

sociodemographic: minority, foreign, origin

cultural: courtships, dance, music, gift giving, tool making, etc

understand how to ID the trends in the external environments that support/hinder your marketing strategy

generations: traditionalists (value authority, hard workers), boomers (expect deference to opinions), gen x (work as hard as needed), millenials (respect must be earned), gen z (still emerging)

political / legal environment

• protection of industries

• native land claims

• deregulation

• Labour laws

• political stability

• inc in local taxation

• foreign trade regulations

• canadian competitive act

• social welfare policies

predatory pricing

price cutting that lessens competition

price discrimination

charging different prices to competitors buying like quantities of products

misleading price advertising

misrepresenting the usual selling price

resale price maintenance

suppliers requiring subsequent resellers to offer products at a stipulated price

federal legislation affecting marketing

section 34- pricing - forbids suppliers from charging diff prices to competitors purchasing like quantities of goods - forbids price cutting that lessens competition

section 36 - pricing and advertising - forbids ads that misrepresented the usual selling price

s. 38 - pricing - forbids suppliers from req subsequent resellers to offer products at a stipulated price

s. 33- mergers - forbids mergers by which competition is or likely to be lessened to the detriment of the interests of the public

national trademark & true labelling act - CS as a national trademark. req commodities to be properly labelled / described in ads for the purpose of indicating material content / quality

consumer packaging and labeling act - provides a set of rules to make sure that full info is disclosed by the manufacturer, packer,/distributor

• req all products to be in French and English

• traditional Canadian std units of weight, volume, measure

motor vehicle safety act - mandatory safety standards for motor vehicles

food and drug act - prohibits the ad and sale of adulterated or misbranded foods, drugs, cosmetics

personal info protection & electronic documents act - establishes rules to govern the collection, use, and disclosure of personal info the recognizes right of individual privacy

• law recognizes the needs of an org to collect, use, / disclose personal info for appropriate purposes

market share calculation ($)

your brand sales $ / total segment sales $

market share calculation (units)

your brand sales units / total segment sales units

market share

= the % of the total market (in units or $) that ur brand/ product controls

step down approach to estimating market size

1. size of overall mkt in comparison to all of Canada

2. size of mtl market compared to all of QC

3. size of price sensitive (or other adjective) segment of mtl consumers

4. size of (specific product) sales in mtl

fixed costs (FC)

do not fluctuate with changing volumes of production (eg advertising, overhead)

Variable costs (VC)

directly associated with volume of production (eg labour, materials)

Contribution margin

how much is left over after accounting for the variable costs to cover fixed expenses

the % tells you the % of each $ that goes towards FC

Contribution margin formula

in units: CM (unit) = SP (unit) - VC (unit)

as a %: CM (units as a %) = (SP (unit) - VC (unit))/SP (unit)

Profit contribution

represents how much is left after accounting for all costs (both FC and VC

100% = (for profit contribution)

VC (% of sales or price) + CM (% of sales or price)

per unit contribution (CM)

unit SP - unit VC

per unit profit margin

per unit contribution - per unit fixed costs

Breakeven analysis

BE (units) = total FC / (SP (unit) - VC (unit) or CM

BE ($):

= total FC /((SP(unit) - VC (unit))/SP(unit))

= total fc/(1-(VC(unit)/SP(unit))

price elasticity

measures how responsive demand would be to change to a change in price

price elasticity: %∆ in demand

= new - old / old

% ∆ in selling price

beginning - new / new

PE

= % change in demand / % change in selling price

interpreting price elasticity

PE < 1 - price inelastic

• decrease in price = dec in demand

• lower price usually = dec profits, raising price = inc profits

PE > 1 - price elastic

• dec in price yields a greater inc in demand

• higher price = less demand (vice versa)

  • lowering price = inc profit

  • raising price = dec profit

PE = 1

unit elastic

• an inc or dec in price yields the same change in demand

cross price elasticity

examines the relationship of changing the price of one product and measuring the effect on the demand on a second product

complementary products

raising the price of one will decrease demand in the other (burgers and fries)

substitute products

raising the price in one will lead to a demand for the other (eg butter and margarine)

find cross price elasticity

1. find ∆ in P1 (N - O / O)

2. find ∆ in D2

3. CPE = ∆P1/∆D2

price chains, CM % on SP

= (SP(unit) - VC(unit))/SP (unit)

price chains, % markup on cost

= (SP(unit) - VC(unit))/VC(unit)

price chains, formula when CM on SP is known but not SP or VC

SP = (VC (unit))/(100%-CM % on SP)

price chains, formula when you know markup % on cost but not SP or VC

SP = VC (Unit) + markup % on cost x VC (unit)

market

individuals / orgs w needs and wants and the ability to buy (and who will buy)

segmentation

dividing a mkt into smaller homogenous segments

do this bc too many buyers have diff needs and preferences

better allocation of limited resources

target

selecting segments to focus the company’s resources

value proposition, positioning, differentiation

placing the product int he consumer’s head relative to competition

segmentation bases

• demographic

• geographic

• behavioural

• psychographic

targeting strategies

evaluating the attractiveness of each segment & selecting 1+ to serve

• mass/undiff marketing

• differentiated/segmented markering

• concentrated (niche) mkting

• micromarketing - local or individual marketing

deciding factors for targeting strategy

• size of segment

• attractiveness

• potential growth & sustainability

• accessibility of markets

• objectives & resources

• differentiability and comp

perceptual maps/positioning maps

• refers to place the offering occupies in consumer’s minds on important attributes relative to competitive products

• design cost effective marketing strategies

  • brand leadership

  • head on, challenger

  • innovation

  • lifestyle

value propositions - examples

more for more - most upsecale

more for the same - high quality, lower price

more for less - best winning prop

the same for less - good deal

less for much less - lower performance at a lower price

consumer purchase decision process

influences on consumer purchase decision process

• previous experience

• time

• interest level

• perceived risks - social, financial, performance, etc

• info available

types of buying decisions

extensive problem solving

limited problem solving

routine response behaviour

situational factors

specific to the situation that influence / override psych and social issues

related to the purchase and shopping situation & temporal state

involves the 4 P’s —> within marketing’s control

psychological influences

• perception - one’s view of reality - type of risks (financial, social, psych, physiological, performance)

• motivation - drive behind actions (Maslow)

• learning - consumers learn from other consumers

• attitudes - positive or negative feelings associated

• age and family life cycle - stage in family dev

• personality, gender, self concept lifestyle

types of consumer products

1. convince product

2. shopping product

3. specialty product

4. unsought product

product

soln to consumer needs and wants

bundle of tangible and intangible benefits that a buyer receives in exchange for money / other considerations

when developing new p/s

1. recog the various terms that pertain to p/s

2. id the ways that consumer goods can be classified

3. explain the various components of product strategy

product line

grouping of product items that have major attributes in common

product portfolio

the # of product lines offered by company

packaging

contains the product and informs and persuades - legal standards

simplify label (eg rx bar)

types of consumer products - convenience product

a relatively inexpensive item that merits little shopping effort (eg milk)

types of consumer products - shopping product

requires comparison shopping bc it is more expensive & found in fewer stores (car, appliances)

types of consumer products -specialty product

particular item that consumers search for extensively & are reluctant to accept substitutions (eg custom furniture)

types of consumer products - unsought products

product unknown the potential buyer or a known product that the buyer doesn’t actively seek (eg funeral products)

product life cycle

theory that describes the stages that a new product goes through in marketplace

steps of NPD process

1. innovator

2. early adopter

3. early majority

4. late majority

5. laggards

6. lower prices

7. major ads

8. comp enters mkt

9. strong comp

10. high prices

11. recover r and d costs

12. basic version of product

13. avail in stores

14. cupons, sample

15. BCG dog

16. influencer

17. product avail everywhere

18. negative profit

19. high profit

20. BCG cash cow

21. BCG stars

22. new features to product

23. new mkt

24. reduce promo

25. peak sales

26. BCG question marks

27. max market share

28. trial phase - important

29. changing product image / positioning

30. new segments adopt product

NPD - new product development - why?

1) innovation

2) market sat and competition

3) changes in external env - political, natural, economic

adopting the product curve

BCG matrix

price

what the consumer pays in exchange for p/s (tuition, interest, rent, fare, fee, retainer, toll, tips, dues)

5 c’s of pricing

1. comp

2. costs and constraints

3. company objectives

4. customers

5. channel members

company objectives and pricing strategy implications

examples of pricing constraints

• demand

• newness/PLC

• single vs product line

• cost of prod

• price elasticity, cross elasticity, cannibalization

• external env trends - comp, economy, socio-demographic, regulatory, tech, environment

various pricing strategies and objectives: competition based pricing

various pricing strategies and objectives: price skimming

various pricing strategies and objectives: prestige pricing

pricing a good higher than comp to make it seem of higher quality (eg Hermes)

various pricing strategies and objectives: price penetration

pricing lining

establishing a price floor & ceiling for an entire line of similar prods and setting price pts in between to rep diffs in quality

value based pricing

price based on how much consumer believes product is worth

std markup pricing

adding a fixed % to the total cost of all items in a specific product class

cost plus pricing

summing total unit cost of providing p/s & adding a specific amt to the cost to arrive at the price

distribution components

inbound partners supply raw materials, components, info, finances, expertise to create p/s

outbound partners serve as distr channels that link firm and customers

manufacturer

make product in large quantities, can sell directly to consumer, mostly from secondary sector

wholesaler & distributor

middle player in supply chain

buying / handling of merch and reselling to orgs, retailers, wholesalers

retailers, e-tailer, m-tailer

business activities involved in selling p/s to end consumers for personal use

last step in supply chain

SKU - stock keeping unit

designing distribution channels

• direct

• indirect

• multichannel

consists of entities involved in the process of making a p/s available for use or consumption by consumers or industrial users

vertical marketing

vertical marketing system: corporate systems

involve combining successive stages of production and distribution under a single ownership

forward integration would occur when a producer owns an intermediary at the next level down in the Channel

backwards integration might occur when a retailer owns a manufacturing operation

VMS: wholesaler sponsored voluntary chains

involve a wholesaler that develops a contractual relationship with small independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts

VMS: contractual systems

consists of independent production and distribution firms integrating their efforts on a contractual basis

they obtain greater functional economies and marketing impact than they could achieve above

VMS: franchising

is a contractual arrangement between a parent company and an individual or firm that allows the franchisee to operate a certain type of business under an established name and according to specific rules