MGTA02 MIDTERM NOTES
—Chapter 1—
To succeed, every business needs…
Marketing: Know what customer wants
Operations: Create what people demand
Accounting: Track the money
Finance: Raise capital & invest wisely
HRM: Hire and keep good people
Value Chain Model suggest a business turns factors into good and services that people want by following these steps:
Find customers -> Identify & research the target market
Create a product -> Develop it & set a price
Make it -> Operations (produce the product)
Improve it -> Innovate & refine products
Sell it -> Promote & distribute it
Check results -> Measure & control success
💡 To succeed: Do this fast, efficiently, better than others, & with quality
Business has a purpose & need leadership
Leaders set goals & inspire others to follow
Managers plan, organize, lead, & control to achieve goals
Management = getting things done, not just power by:
Planning, organizing, leading, & controlling
In order for business to succeed & make profit
Planning -> Decide what to do & how (ex. “Get ready by 10, we leave at 11.”)
Organizing -> Gather & prepare resources (ex. “Your shirt is ready, shoes cleaned, shorts ironed.”)
Leading -> Guide & motivate others (ex. “Shake hands like I did” (Lead by example))
“I don’t like peas either, but Gran made them (manner)”
💡 Leadership = Influencing people to willingly work toward a goal
Controlling -> Ensure things are done right
Set standards -> “Wash your hands before lunch”
Measure Performance -> “Did you wash them? Show me”
Correct it needed -> “Not clean! Go back & use soap”
Why manage? To achieve goals
Where managing happens: Everywhere (ex. Parents manage families)
What business managers do:
Turn resources (materials, labour, capital) into products people want
Key Idea:
A business transforms resources into demanded products
—Chapter 2—
An organization needs:
Purpose & Direction (called “mission”)
Goals & objectives
Goals: overall outcomes (ex. Become #1 in the industry)
Objectives: Specific, measurable actions (ex. Sell x hamburgers, hire y employees)
Marketing: Managing relationships to attract & keep customers by delivering value & satisfaction
Managing System: Identify, anticipate, & satisfy customer needs - (Chartered institute of marketing)
Business exist to: satisfy customer needs & make profit
💡You can’t do one without the other!
Marketing Key Points:
Focus on customers (who is the customer?)
Segmentation: Divide the market
4Ps: Product, Price, Place, Promotion
Research: Discover what customers want
Marketing Concept: Direct resources toward serving customers’ needs (Customer Focus)
Target Markets: Specific groups with similar needs & wants (Ideal Customers)
Market Segmentation: Grouping people with similar traits or needs
Types:
Geographic: Where people live (ex. Petro Canada)
Regions: Alberta vs. Quebec
Rural vs. Urban
Climate: Hot vs. Cold
Demographic: External traits of people (ex. Luxury hotels target higher-income customers)
Age: <5, 5-11, 12-19, etc.
Gender: Men vs. women
Race: White, Black, East/South Asian
Socio-economic status: Income, education
Psychographic: Internal traits (ex. Charities target specific beliefs)
Beliefs: Religious vs. non-religious
Values: Political views
Motivations: Meteralist vs.conservationist
Behavioural: Actions based on situations (ex. Companies offer rental gowns)
Occasions: Weddings, graduations
Example of combined segmentation:
Nike -> Sells athletic shoes & apparel
Inspires anyone with a body to be an athlete
Once the target is identified, managers must create products that:
Product -> Have features people want
Price -> Are affordable for customers
Promotion -> People know about
Place -> Are easy to buy
Marketing Mix ->
How to discover customer needs?
💡 Ask them!
📊 Study customers systematically to understand their needs and how to meet them
Why do market research?
Understand customers
Find out if a market exists
Improve business decisions
Secondary vs. Primary Research
Secondary Research -> Uses existing info
Books, websites, gov. Data (ex. Statistics Canada)
Answers: What do we already know?
Doesn’t Answer: Is there demand for your product?
Primary research -> Collects new info
Surveys, interviews, focus groups
Answers: What do customers want?
Observation vs. Communication
👀 Observation (Watching People)
✅ What it means: You quietly watch how people behave without questioning
✅ EXAMPLE: A coffee shop owner watches which drinks customers buy the most
✔ No one can influence the answers -> people just act naturally
❌ Can’t ask “why?”
Communication (Talking to People)
✅ What it means: You ask people questions about their preference
✅ EXAMPLE: A business owner asks, “What do you like about our coffee?”
✔ Can ask “Why?” & get feedback
❌ People might not tell the truth. Say what you might want to hear.
Quantitative vs. Qualitative Data
📊 Quantitative (Numbers & Stats)
60% prefer this
$7.95 average price
💬 Qualitative (Ideas & Opinions)
Why do people like it?
What emotions does it create?
Research Methods: Pros $ Cons
📮 Postal Surveys
✔Low cost, no bias
❌Slow, low response rate
📞Telephone Surveys
✔Can target the right people
❌Time-consuming, low response
🚶Street Interviews
✔See reactions
❌Bias, labour-intensive
💻Internet Surveys
✔Fast, cheap, easy
❌Only certain groups respond
👥Focus Groups
✔Deep insights -> typically 6-10 participants’
❌Small sample size
—Chapter 3—
Why is CSR Important & Controversial?
✅ Critical -> Businesses are the most innovative & influential part of society
⚠ Controversial -> Some argue CSR distracts from a business’s main goal: profit
Why do businesses exist?
People create organizations to combine their resources to achieve common goals
As businesses pursue these goals, they interact with society, impacting & being impacted by it
Two Opposing Views
The Business View (Milton Friedman)
“The only responsibility of business is to increase profits.”
CSR is harmful -> Distracts from profit, wastes resources, & is against capitalism
Businesses should focus on making money, not solving social issues
The Societal View (Edward Freeman)
All stakeholders matter, not just shareholders
Companies should balance the needs of customers, employees, suppliers, & society
What is CSR?
A business’s responsibility beyond profit
A company’s relationship with its stakeholders
A way to gain trust, legitimacy, & long-term success
Stakeholders = Anyone affected by the company’s actions (ex, customers, employees, suppliers, communities, government)
Why Should Companies Care About CSR?
Moral Argument -> Businesses exist within society, so they should align with social values
Rational Argument -> Avoid boycotts, fines, & restrictions by staying ahead of social concerns
“The Iron Law of Social Responsibility” -> Abuse power, face consequences
Economic Argument -> CSR helps businesses stay competitive & profitable
Creates brand differentiation
Avoids legal & ethical issues
Strengthen stakeholder relationships
Carrol’s CSR Model (1979)
CSR includes 4 responsibilities:
Economic -> Make a profit
Legal -> Follow the law
Ethical -> Do what’s right
Discretionary -> Go beyond the minimum (sustainability)
The Pyramid Of CSR
CSR in Action
Good Leadership -> Builds trust
Stakeholder Engagement -> Understand & address concerns
Proactive Strategy -> Stay ahead of social & legal changes
Final Takeaway: CSR = Ethics + Business Success
CSR is not just a trend, it’s a strategic approach to long-term success, balancing profit with social responsibility
—Chapter 4—
What is a Product?
📌 What a buyer expects to get in a financial transaction
3 Key Product Attributes
Function - What it does
Benefits - How it helps
Features - What makes it unique
What is Price?
For businesses -> Revenue (Charge in exchange for its product)
For customers -> Cost (pays to acquire a product)
Price = Price Tag vs. Perceived Value
No fixed formula for setting prices
Businesses must balance making profits & satisfying customers
Pricing Strategies
Value-Based Pricing -> Based on customer perception of value
Cost-Based Pricing -> Based on business costs + profit margin
Rule #1: A business MUST cover its costs to survive
How Pricing Works: The Pizza Example
Step 1: Calculate Costs
Step 2: Set a Selling Price
If cost = $5, selling price must be at least $5.01 or more: $8?
Mark-up = Selling Price - Cost
$8.00 - $5.00 = $3.00 mark-up
Mark-up ensures profit
Contribution Margin = Mark-up / Selling Price
$3 / $8 = 37.5% goes toward profit
Pricing Strategies ->
Two Pricing Strategies:
Price Skimming (High Price, Low Sales)
Large mark-up
Small market, fewer customers
High profit per sale
Example: Rolls-Royce, Rolex, & Mont Blanc
Penetration Pricing (Low Price, High Sales)
Small mark-up
Large market, many customers
Low profit per sale, but more sales overall
Example: Honda Civic, Casio, & Bic Pens
Break-Even Analysis: When Do We Start Making a Profit?
Formula:
Break-Even Point = (Fixed Costs) (FC) / (Selling Price (SP) - Variable Cost per unit (VC))
📌 Helps managers decide pricing and how many units must be sold to make profit.
Types of Costs
Variable Costs (VC) 🔄
Change with sales volume
Example: Ingredients, packing
Fixed Costs (FC) 🔒
Stay the same regardless of sales
Example: Rent, salaries, electricity
Opportunity Cost
Every choice has a trade-off
Scarcity forces businesses to make smart choices
Pizza Business Example
Fixed Costs (FC) = $100,000 per year
Variable Cost (VS) per pizza = $5
Higher price -> fewer sales needed
Lower price -> more sales required
Using Break-Even Analysis
Managers must ask:
Can we sell this many pizzas?
Should we raise prices, sell fewer, but make more profit per sale?
Should we lower prices, sell more, but make less per sale?
Psychological Pricing Tactics
✔ Odd-Even Pricing: $9.95 instead of $10.00
✔ Bundle Pricing: “Combo Deals” to increase value perception
Key Takeaways
✅ Customers only buy if the price feels right
✅ Business must understand their costs before setting prices
✅ Mark-up = profit added to cost
✅ Pricing strategies: Skimming vs. Penetration
✅ Break-even analysis helps determine the right price & sales volume
🚀 Smart pricing = profitable business!
—Chapter 5—
Promotion & Buyer Decision Process
Why Promotion Matters
📢 In a market, buyers & sellers interact
✅ Promotion should:
Raise awareness
Create interest
Stimulate sales
Buyer Decision Process (5 Stages)
Need Recognition: “I’m hungry”
Information Search: “Where can I eat?”
Evaluation of Alternative: “Pasta is good, but expensive here”
Purchase Decision: “I’ll have spaghetti”
Post-Purchase Evaluation: “I'll come here again!”
🚀 Understanding this process helps businesses target buyers at each stage!
The Promotional Mix (4 Key Methods)
ADVERTISING 📺📻📰
💰 Paid, non-personal communication used to inform audiences about a product
Where is advertising used?
Internet
TV
Radio
Newspapers
Direct Mail
Billboards
📢 Best for:
✅ Raising awareness
🚫 Not great for educating buyers or closing sales
Brand Image Building: Helps share how people perceive a product/service
PERSONAL SELLING 👥💬
🔹 One-on-one interaction between salesperson and potential buyer
📌 Best for:
✅ Educating (info search)
✅ Creating enthusiasm (evaluating alternatives)
✅ Closing the sale (purchase decision)
💰 Most expensive form of promotion
📍 Used for complex/customized products:
Cars
Houses
Insurance
Investments
🚫 Not ideal for raising awareness
SALES PROMOTION 🎉🔥
🎯 Short-term incentives to create excitement
🔹 Examples:
Sales
Coupons & Discounts
Bonuses & Premiums
📌 Best for:
✅ Creating enthusiasm
✅ Closing the sale
🚫 Not effective for awareness or education
Common Sales Promotion Strategies:
📌 Everyday Low Pricing (EDLP) - e.g., Walmart, No-Frills
📌 High-Low Pricing (HLP) - e.g., Boxing Day Sales, Hudson’s Bay
PUBLICITY & PUBLIC RELATIONS 📰🤝
📢 Generating positive media coverage
Press releases
Sponsoring events & causes
✅ Pros:
Free marketing!
❌ Cons:
No control over the message (e.g., Toyota recall scandal)
Public Relations (PR): Creating goodwill (ex. Sponsoring events/individuals)
📌 Best for:
✅ Post-purchase evaluation & validation
🚫 Not great for education or closing sales
What is “Place” in Marketing?
📦 “Place” (Distribution Strategy) refers to how a product gets from the seller to the buyer
Why It Matters
If a product is hard to find or get, people are less likely to buy it
Businesses must make products easy to find & purchase
💡 Example: PizzaPizza’s “30 minutes or it’s free” - ensures fast delivery for customer convenience
Two Key Issues in Distribution
Intensity - How common/easy to find the product?
Channel - How does the product reach consumers?
Distribution Intensity Strategies
Intensive Distribution 🌍
Maximum exposure: saturate all possible outlets
Used for everyday items with substitutes
Examples: Soft drinks, snacks, toothpaste
Selective Distribution 🛍
Limited availability: chosen retailers
Used for branded goods that consumers shop around for
Examples: Ralph Lauren, Black & Decker
Exclusive Distribution 💎
Very limited availability: only through a few high-end retailers
Used for luxury or high-end products
Examples: Gucci, Louis Vuitton, Tiffany & Co.
Distribution Channels - Getting Products to Consumers
Direct Channel 🏢 → 👤
Producer sells directly to consumers
Example: Nike stores sell only Nike products
Indirect Channel 🏢 → 🏪 → 👤
Uses intermediaries (retailers & wholesalers)
Examples:
🔹 Sell Through Retailers - Nike shoes at Sporting Life
🔹 Sell Through Wholesalers - Nike sells to wholesalers, who sell to retailers
💡 Trade-Off:
Retailers & wholesalers help with distribution
❌ They take a share of the revenue
E-Tailing: The Growth of Online Shopping 🌐
🚀 The Internet has changed shopping - no need to visit stores!
Consumers can browse & buy 24/7
Businesses can reach a global audience
Marketing Roundup
📢 A social process where individuals & groups exchange value to satisfy their needs & wants.
Key Marketing Concepts:
Segmentation: Selecting the right customer
Targeting: Reaching them through the right medium
Positioning: Building brand recognition
Market Research: Understanding customer needs
Marketing Mix: Creating the right product, price, promotion, & place
📌 Takeaway: Successful distribution ensures that products are easily available, using the right intensity & channels to reach customers efficiently!
—Chapter 6—
Operations Management - Key Concepts
What’s the Point?
A business can’t make sales unless it has a well-organized plan for:
What to make
How much to make
When to make it
How to make it
Who will make it
💡 Example: A coffee shop must have coffee - otherwise, customers won’t return!
What is Operations Management?
📌 Definition: Managing the creation of goods & services using the factors of production
📌 Why It’s Important: Ensures a business can deliver on what it promises to customers
🔄 Operations impact:
Cash inflow: Selling products/services brings in money
Supplier relationships: Managing raw material & inventory efficiently
Financial health: No products = No sales = No revenue
Why is it Called “Operations”?
The term “Production” refers to manufacturing goods
However, 80% of Canadians work in services, so the term
Goods vs. Services
🛍 Goods: Physical products you can see & touch
🛎 Services: Intangible experiences
Examples of Services:
Finance: Loans, investment
Consulting: Marketing, design
Legal Advice: Contracts, wills
Why Are Services More Difficult to Manage?
Unlike goods, services face unique challenges:
Immediacy: Services can’t be stored
📖 A book (goods) can be stored
🍽 A meal (service) must be provided instantly
Customer Involvement
✍ A pen (goods) can be made without the customer
🚌 A bus ride (service) needs the customer present
Customization:
👖 Jeans should be identical (mass production)
💇♂ Haircuts should not be identical (customized service)
What Do Operations Managers Do?
Demand Planning
Forecast how much to produce
🚫 Bad example: A coffee shop that runs out of coffee!
Capacity Planning 🏭
Ensure enough space & workers to meet demand
🚫 Bad example: A Tim Hortons at UTSC with long wait times due to understaffing
Location Planning 📍
Find the best location for success
✅ Good example: Auto manufacturing in Ontario (access to suppliers & labor)
🚫 Bad example: A restaurant placed in a low-traffic area
Layout Planning 🏗
Optimize store/factory setup for efficiency
✅ Good example: Well - organized student center at UTSC
Scheduling ⏳
Start on time to finish on time
🚫 Bad example: The 1976 Olympic Stadium - completed years late!
🚀 Takeaway: Effective operations management ensures smooth production, satisfied customers, & a profitable business!