#2429. Marketing

other, level: all
Posted Mon Nov 19 17:14:10 PST 2001 by seeralan (southcinema@hotmail.com).
Seneca Student, Canada
Concepts Taught: Marketing?

hapter 1: Marketing's Role within the Firm or Nonprofit Organization
People don't make most of the products they use - lack of skill, resources or lack of time. Our high standard of living is made possible by specialized production. Canada's ability to retain its high standard of living will depend on its ability to compete in the global market.
Products don't sell themselves
· Need more than just production - "if we build it, they will buy it"
· Production and marketing are both important parts of a total business system aimed at providing consumers with need-satisfying goods and services
What is marketing?
· Marketing is more than selling and advertising
· Marketing provides needed direction for production and helps make sure that the right goods and services are produced and find their way to the customers
Utility means the power to satisfy human needs. Together production and marketing provide five kinds of economic utility - form, task, time, place and possession which are needed to provide customer satisfaction.
Production:
Form utility is provided when someone produces something tangible.
Task utility is provided when someone performs a task (service) for someone else.

Marketing:
Possession utility means obtaining a good or service and having the right to use or
Consume it. Customers usually exchange money or something else of value.
Time utility means have the product available when the customer wants it.
Place utility means having the product available where the customer wants it.

Why study marketing?
In advanced economies marketing costs almost 50 cents of each consumer's dollar and for some goods and services it is even higher
· Marketing is something that you are exposed to all your life
· Marketing is important to your job. U R writing resume to sell your self.

Micro Marketing is the combination of activities involved in planning and developing a product, promoting pricing and distributing it in individual marketing.
· Applies to profit and non-profit organizations
· More than just persuading customers
· Begins with customers needs
· Marketing can't do it alone
· Builds an on-going relationship with the customer

Macro Marketing is the social process that directs an economy's flow of goods and services from producers to consumers.
· Emphasis on the whole system
· Is it effective and fair?
Micro-Macro dilemma - what is good for some producers and consumers may not be good for society
Marketing's role has changed over the years. Only in the last 30 years have organizations adopted modern marketing thinking - not just focusing on producing and selling but focus on consumers
Marketing Evolution - five stages
· Simple trade era - families trade or sell surplus to middlemen
· Production era -- is a time when a company focuses on producing a few specific products; because few of the products are available in the market.
· Sales era -- is a time when a company emphasizes selling because of increased competition.
· Marketing department era -- is a time when all marketing activities are brought under the control of one department to improve short-run policy planning and to try to combine the firm's activity.
· Marketing company era -- is a time when, in addition to short-run marketing planning, marketing people develop long-range plans.
Marketing Concept - total company effort at satisfying its customers to make a profit.
· Customer satisfaction
· Total company effort
· Profit

Production orientation: means making whatever products are easy to produce end then
And then trying to sell them.
Marketing orientation means trying to carry out the marketing concept
Adoption of marketing concept started with consumer product companies (GE & P&G) but now is spreading to service industries due to government deregulation, which has caused increased competition. Adoption of the concept is not easy though as it is easy to slip into a production orientation.
Customer value is the difference between the benefits that a customer sees from a market offering and the costs of obtaining these benefits.
· Companies that offer superior customer value are more likely to win and keep customers
· Companies need to build long term relationships with customers
Social responsibility is the firm's obligation to, improve its positive effects on society and reduce its negative effects.

Marketing ethics are the moral standards that guide marketing decisions and actions.
How well does our Macro-Marketing system work?

Chapter 2:
Strategic Market Planning and the Evaluation of Marketing Opportunities

Ch1 told us -- marketing & marketing mgt are important to our society and to an organization
-- marketing is concerned with anticipating needs and directing the flow of goods and services from producers to consumers and satisfy the objectives of the firm (micro view) and society (macro view)
-- organizations are adopting the marketing concept which leads to building customer relationships

Marketing Management Process - is a continuous process, as markets are dynamic, which is used by the marketing manager to help a firm achieve its objectives
· Planning marketing activities
· Directing the implementation of the plan
· Controlling the plans

Strategic Market Planning means finding attractive opportunities and developing profitable marketing strategies.

Marketing Strategy - specifies a target market and a related marketing mix
· Target market is a similar group of customers that the a company wants to appeal to
· Marketing mix are the controllable variables that the company uses to satisfy this group.
Target marketing (specific customers) vs. mass marketing (sell to everyone)

Marketing Mix is made up of four basic variables - Product, Place Price & Promotion
customer is not part of the marketing mix as it is the target of the marketing mix
· Product is concerned with developing the right product for the target market - good or service
· Place is concerned getting the right product to the target market through a channel of distribution
· Promotion is concerned with telling the target market about the right product and includes personal selling, mass selling (advertising & publicity) and sales promotion
· Price has to be competitive, attract customers and generate a profit
PROMOTION:
Mass Selling is communicating with large numbers of customers at the same time. The main form of mass selling is advertising (any paid form).
Publicity: any presentation of ideas, goods or services by an identified sponger. (Unpaid)
Sales Promotion: refers to that promotion activities-other than advertising, publicity, and personal selling. This can involve use of coupons, poit-of-purchase materials, samples, signs, catalogues, etc.

Selecting a target market and developing a marketing mix are interrelated
Both parts must be decided together
Strategy must be evaluated against the company's objectives
Understanding target market leads to good strategies
Marketing Plan is a written statement of a marketing strategy and the time related details for carrying out the strategy
Marketing manager is concerned with implementation of the plan uses operational decisions (short run decisions) to implement strategies
Several plans are blended into a whole marketing program
To understand marketing strategic planning you need to read/discuss lots of examples
Strategic planning takes place within a framework of controllable variables (marketing strategy - 4 P's) and uncontrollable variables (marketing environment)
Environmental variables are
· Political and Legal Environment
· Economic and Technological Environment
· Competitive Environment
· Culture and Social Environment
· Resources and Objectives of the Firm

Focus on marketing strategy which involves finding attractive target markets, but how do you identify a good target market?
Breakthrough opportunities: opportunities that help innovators develop "hard to copy"
Marketing straggles that will be very profitable for long time.

Competitive advantage: that a firm has a marketing mix that the target market sees as better than a competitor's mix.

Four types of Market Opportunities
· Market Penetration: mean trying to increase sales of a firm's present products in its present markets.
· Market Development: mean trying to increase sales by selling present products in new markets.
· Product Development: offering new or improved products for present markets.
· Diversification: moving into totally different lines of business.

Market Penetration Product Development
Market Development Diversification

How does the marketing manager evaluate the different opportunities?
· Develop and apply screening criteria - quantitative and qualitative
· Whole plans need to be evaluated
· Total profit approach
· Return on investment approach (ROI)
· Use planning grids to evaluate a portfolio of opportunities

Multi-product firms have a difficult strategic planning job
· Use strategic business units (SBU)
· Use portfolio management approach

International Opportunities are important
· Harder to understand the marketing environment variables
· Risks vary with environmental sensitivity

Summary
· Marketing provides direction for a firm by focusing on satisfying some target customers at a profit
· Marketing management involves continuous planning, implementing, control and feedback
· Marketing Mix has 4 P's - Product, Place, Promotion and Price
· Focus is on customer, control the 4 P's but can't control environmental variables
· Changing environment creates four types of marketing opportunities which have to be evaluated

Chapter 3: The Changing Marketing Environment
Ch. 2 told us -- finding target market opportunities is the key to effective marketing management
-- the marketing manager need to understand the marketing environment in order to plan marketing strategy and evaluate marketing opportunities, yet the environment is constantly changing
The marketing Environment falls into five basic areas.
1. Objectives and Resources of the Firm - Objectives shape direction and operation of the whole business, specifically guide managers as they search for and evaluate opportunities and later plan marketing strategies. Resources are things that set a company apart from other firms. To find its strengths a firm must evaluate its functional areas, as well as present products and markets. A firm should:
· Engage in specific activities that perform and socially and economically useful function
· Develop an organization to carry on the business and implement its strategies
· Earn enough profit to survive
· Resources may limit the search for opportunities - finance, production capability and flexibility, marketing strengths

2. Competitive Environment - affects the number and types of competition the marketing manager must face and how they may behave.
· Search for breakthrough opportunities - competitive advantage requires competitor analysis and consideration of competitive barriers
· Canadian corporations are taking several initiatives to be more competitive

COMPETITOR ANALYSIS: which is an organized approach for evaluating the strengths and weaknesses of current or potential competitors.

COMPETITIVE RIVALS: the firms that will be the closest competitors.

COMPETITIVE BARRIERS: the conditions that may make it difficult. Or even
Impossible, for a firm to compete in a market.
3. Economic and Technological Environment - affect the way a firm uses resources as technical skills and equipment affect the way that company resources are converted into output and the economic environment is affected by how all the parts of our macro-economic system interact.
· Inflation and interest rates affect buying
· Free trade agreements affect competition and buying
· Rapid pace of technological change and transfer creates opportunities - Internet
· Tariffs and quotas can restrict the flow of goods and services
· Global trade is increasing though with WTO, GAAT and NAFTA and counter trade
4. Political and Legal Environment - attitudes and reactions of people social critics and governments affect the political environment, while in turn lead to changes in the legal environment.
· Nationalism, regionalism, consumerism environmentalism
· Competition act, Federal and Provincial regulations, GST
5. Cultural and Social Environment -affects how and why people live and behave, which affects buying behavior and eventually political and legal environment.
· Canada is a cultural mosaic, emphasis on health & fitness, changing women's roles
· Change comes slowly

Tariff: a tax on certain imported or exported products. To raise revenue or to limit other countries export.

QUOTA: A limit on the amount of goods that an importing country will accepted in certain product, designed to conserve on foreign country and to protect local industry.

World Trade Organization: (WTO) the only international body dealing with the rules of trade between nations.
CHANGED TO
General Agreement on Tariffs and Trade (GATT) which was a set of rules governing restrictions on world trade and agreed to y most of the nations of the world.
NAFTA: The North American Free Trade Agreement: Between Canada, Mexico, and US.
COUNTERTRADE: a special type of bartering on which products is from one country is traded for products from another country.
NATIONALISM: the placing of a country's interests before everything else. Can affect how marketing system work
CONSUMERISM: is a social movement that seeks to increase the rights and powers of consumers and buyers in relation to sellers and the government.
Summary
o There are 9 environmental variables organized in 5 categories which are all changing very rapidly
o These environmental variables impact on the consumer (target market), which requires the marketing manager to adapt the firm's marketing strategy
Appendix A
Economics Fundamentals

How potential customers (not the firm) see a firm's product (marketing mix) affects how they are willing to pay for it, where it should be made available and how eager they are for it.

Their view has a direct impact on marketing strategic planning.

The analytical tools of the economists can be very helpful in summarizing how customers view products and how markets behave.

Law of diminishing demand: General relationship between price and quantity
demanded by a customer is called Law of Diminishing demand.

Demand Curve: is a graph of the relationship between price and quantity demanded in a market - (price on the x axis and demand on the y axis).
· Most demand curves are down-sloping meaning that if prices are decreased, the quantities that customers demand will increase.

Inelastic demand: meaning that although the quantity demanded increases when the price is decreased, it will not "stretch" enough (not "elastic" enough) to avoid a decrease in total revenue.

Elastic demand: meaning that if prices are dropped, the quantity demanded will stretch (increase) enough to increase total revenue.

It is wrong to refer to a whole demand curve as elastic or inelastic. Elasticity for a particular demand curve refers to the change in total revenue between two points on the curve, not along the whole curve.

Substitutes: are products that offer the buyer a choice - the greater the number of substitutes available, the greater will be the elasticity of demand.


Markets as seen by Suppliers
Customers may want a product but there is no market if there are no suppliers
Suppliers' costs affect the quantity of products that they are willing to offer in the market.
While a demand curve shows the quantity of products customers are willing to buy at various prices,

Supply curve: shows the quantity of products that will be supplied at various prices.
Together the demand and supply curves summarize the probable behavior of buyers and sellers about a particular product in a particular market.
Supply curves usually slope upward, as suppliers are willing to offer higher quantities at higher prices.
Inelastic supply: curve (very steep) means that the quantity supplied does not enlarge much if the price is increased.
Elastic supply: curve is flatter because the quantity supplied stretches (increases more as the price is raised.
Equilibrium point: is where the quantity and price sellers are willing to offer are equal to the quantity and price that buyers are willing to accept.
Elasticity of supply and demand curves and their interaction help predict the nature of competition a marketing manager is likely to face.
Nature of Competition
Pure Competition -- many competitors offer about the same thing: (perfect Competition)
· Homogeneous(similar) products
· Many buyer and sellers who have full knowledge of the market.

Oligopoly --Few competitors offer similar things.
· Similar products (Gas, basic industrial chemical)
· Fairly inelastic industry demand curve.

Monopolistic -- One company control the market place.
· Different products,
· Sellers who feel they do have some competition in this market.

Marketing managers prefer to be in a market where they have more control

Conclusion:
The nature of supply and demand and competition is very important in marketing strategic planning.

Chapter 8:
Finding Target Market Opportunities through Segmentation

Market: is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and services.

Generic Market: is a market with broadly similar needs and sellers offering various, and often diverse, way of satisfying those needs.

Product Market: is a market with very similar needs and sellers offering various close substitue way of satisfying those needs.
Product terms don't describe a market --
Complete product market definition includes four parts:
· What - product type describe the goods/service customer want.
· To meet what - customer needs refers the product type satisfies for the customer.
· For whom - customer types refers to the final consumer or user of a product type.
· Where - geographic are where a firm competes/plan to compete.
Generic market definition does not include any product type terms
Market Segmentation: To identify their target market, businesses use Market Segmentation -- a process of subdividing the market according to customer needs and characteristics. (into small group)
Once a company identifies its target market, its activities can be guided by the Marketing Concept: focusing on the needs and wants of the customers to get long-term profit for the company (focus on items such as convenience, one-stop shopping, everyday low prices, credit and liberal returns policy)
Exhibit 8-3 A Market Grid Diagram with Sub-markets
Broad product-market(or generic market) name goes here
(The Bicycle riders' product-market)
Exercisers Transportatio Riders Socializers
Off-road adventurers Environmentalists

Market grid is a visual aid to market segmentation

Market Segment is (relatively) homogeneous group of customers who will respond to a marketing mix in a similar way
Good market segments meet the following criteria:
· Homogeneous (similar) within
· Heterogeneous (different) between
· Substantial
· Operational
In a broad product market, a company can use:
· Single target market approach (segmented)
· Multiple target market approach (segmented)
· Combined target market approach (combiner)
Segmented aims at one or more homogeneous segment and develops a different marketing mix for each segment.
Combiner tries to increase the size of their target markets by combining two or more segments
Should a firm segment or combine?
· Depends on the firm's resources, nature of the competition the similarity of the customer needs, attitudes and buying behavior
· Safer to be a segmented - try to satisfy some customers very well instead of many fairly well e.g. P&G
· Other consideration is cost - what a firm can afford to market to a particular group

Dimensions are used to segment markets:
· Qualifying dimensions - those relevant to including a customer type in a product market
· Determining dimensions - those that affect the customer's purchase of a specific product in a target market
· Exhibit in text - Relation of Dimensions to Marketing Strategy