Ch 1.

Overview of Marketing

What is Marketing
- Marketing is a set of processes for creating, communicating, and delivering value to customers and for
managing customer relationships in ways the benefit the organization and its stakeholders.
- The delivery of customer satisfaction in a way that benefits the organization and its stakeholders.
- Assessing and satisfying consumers needs and wants.
- Meeting customer needs in a profitable way.
o Personal selling
o Advertising
o Placing products in stores
o Managing relationships with customers
o Designing new products.
- American marketing assoc: Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.
- Canadian marketing assoc: Marketing is a set of business practices designed to plan for and present an
organizations products or services in ways that build effective customer relationships.
Key Concepts in Marketing
- Needs vs. Wants vs. Demands
o Needs: State of felt deprivation
Occur when a person feels physiologically
deprived of necessities.
o Wants: Objects to satisfy a need that are shaped by
culture and personality.
o Demands: Needs and wants combined with buying
power.
- Example:
o Need: I am thirsty
o Want: I want to drink a Coke
o Demand: I have $2 with which I can buy a coke.
- Exchange
o The idea that people give up something to receive something they would rather have. (ie. Give
up money to buy new shoes)
o The act of obtaining a desired object form someone by offering something in return
The whole point is that both parties (the buyer and the seller) are better off.
o Therefore, price is exchanged for product in most cases.
o Marketing aims to build and maintain desirable exchange relationships with target audiences
involving a product/service, etc.
- Value Creation
o The fundamental purpse of marketing is to create value for both the firm and customer.
o Value: What you get for what you give up.
o But value depends on each customer the same product can give high value to one perosn, but
mean nothing to the next.
o Marketers set a level of expectation:
If expectation is too low Those who buy will be satisfied, but not enough buyers
If expectation is too high Buyers wont be satisfied No repeat purchases (customer
loyalty)
- Market
o Set of actual and potential buyers of a product (or service/idea)

What is a Market?
- Traditional view: A market is a physical place where buyers and sellers gathered to buy and sell goods.
- Ex. You can have a sandal market, Ottawa market, online market, B2C market, or C2C market

The 4 Ps: Controllable Marketing Decisions

- How marketing discovers and satisfies consumers needs? with controllable factors known as the 4 Ps.
o The firm uses these controllable factors to respond to the wants of its target market.
- Marketing Mix: consists of Price, Promotion, Place, and Product
- Through the 4Ps: marketers create, communicate, and deliver value to target customers.

Product
- CREATES VALUE
- A good, service, or idea to satisfy the consumers needs.
o Goods are items you can physically touch
o Services are intangible customer benefits that are produced and performed by people or
machines.
o Ideas include thoughts, opinions, and intellectual concepts which can also be marketed.
 - Anything that can be offered to a market for attention, acquisition, use, or consumption, that might
satisfy a need or a want.
Price
- CAPTURES VALUE
- Everything the buyer gives up in exchange for the product.
- Includes money, time, energy, etc.
- Key aspect in determining price is the customers willingness to pay.
Place
- DELIVERS VALUE
- A means of getting the product into the consumers hands, when they want it. (where do you sell it?)
- Supply Chain Management: A set of approaches and techniques that firms use to integrate their suppliers,
manufacturers, warehouses, and stores, into an efficient chain ( to allow merchandise to be produced and
distributed correctly), all while minimizing costs.
Promotion
- COMMUNICATES VALUE.
- A means of communication btwn the seller and buyer.
- To inform, persuade, and remind potential buyers about product or service to influence their opinions or
elicit a response.

Uncontrollable Factors: The Marketing Environment

- Environmental forces: (More details in a later ch.)
o Social
o Economic
o Technological
o Competitive
o Regulatory

- Marketers First Task: Discover Consumers Needs

- Marketers Second Task: Satisfy consumer needs by determining the Marketing mix (4Ps)
History of Marketing Concepts
Production Concept
- Until the 1920s
- Focused on production and economies of scale.
- Focused on producing the best product.
- Products will sell themselves customers will come on their own.
- Consumers prefer the best products that offers the most quality, performance, or features.
- Focus on making superior products and improving them over time.
Selling Concept
- Up to the 1960s
- Consumers will not buy our products if left alone.
- Focus on selling Hiring more salespeople to find more consumers. also focus on personal selling and
advertising.
Market-Oriented Concept
- When consumers have choice, they purchase based on factors like quality, convenience and price.
- Focus on customer wants and needs, before designing, making, or selling the product.
- Customer is always right
Value-Based Concept
- Focus on customer satisfaction
o Deliver more effectively and efficiently than competitors
o Long-term profitable relationship with customers.
- The firm needs to understand what the target customer values (whether it is low price, or quality, etc.),
and market it accordingly.
- Customer relationship management
o Customer lifetime value (CLV)
- How do firms become value-driven?
o Sharing information: about their customers and competitors across their own organization, in
the various departments.
o Balancing Benefits with Costs: Have to constantly measure the benefits that customers perceive
against the cost of their offering.
o Building long-term Relationships with Customers: Lifetime profitability of a relationship matters,
rather than the profit of each individual relationship (if you want the customers to gain loyalty
and keep coming back, you have to build good trust).
CRM (Customer relationship management) focuses on identifying and building loyalty
among the firms most valued customers. By collecting info about their customers
needs, they can target them with the products, services, and special promotions that
appeal to those customers.

Evolution of North American Business

- Customer experience management era: Present
o Managing customers interactions with the organization at all points (experience)
- Social media era: present
o Marketing content is consumer generated
o Marketers use this as a platform to promote brands.
Why is Marketing important?

Expands Firms Global Presence

- Ie. Coca-Cola is present in every single country in the
world.
- Glocalization If a firm wants to expand globally,
they must understand the needs and wants on a
segment-by-segment, region-by-region basis
o McDonalds USA and McDonalds India has
totally different menu options because fo the
demographic.
Pervasive across the Organization
- In value-based marketing, the marketing department
works with other functional areas to design, promote,
price, and distribute products.
Pervasive across the Supply Chain
- Supply chain: The group of firms that make and deliver
a given set of g&s.
- Supply-chain parties must establish long-term
relationships, and cooperate to share date, make joint decisions, etc.
Makes Life Easier & Provides Job Opportunities
- Provides consumers with product and service choices, as well as information about those choices to
ensure our needs are met.
- Lots of jobs, both creative (graphic designers, writers, etc) and analytical (analysts, market researchers,
etc)
Enriches Society
- Many firms market themselves as socially responsible organizations.
- Not only gains consumers trust, but also trust form investors in financial markets.
Can be Entrepreneurial
- Marketing also plays a role in new ventures by entrepreneurs.
o Because successful ventures are those that aim to satisfy unfulfilled needs.
- These successful entrepreneurs saw the marketing opportunity, conducted market research, and
developed and communicated the value of their product/service to potential consumers.
 Ch 2&3. Developing Marketing Strategies, and Analyzing the Market Environment

Strategic Planning in Corporations

1. Corporate level strategy Overall strategy for the entire organization.
2. Strategic business unit level strategy Strategy for set of related products
3. Functional level strategy Most specific and focused strategy

What is a Marketing Strategy?

- Marketing strat. identifies:
o a firms target market(s)
o a related marketing mix the four Ps
o the bases upon which the firm plans to build a sustainable competitive advantage

Developing Customer Value

- Customer Excellence
o Retain loyal customers viewing them with a, lifetime value perspective
o Provide excellent customer service
- Operational Excellence
o Efficient operations low cost for the firm, but delivering customers what they want.
o Excellent supply chain management
o Strong supplier relationships
o Netflix, Amazon
- Product Excellence
o High perceived value
o Effective branding and positioning
o Ex. Apple products
- Locational Excellence
o Ex. The success of a restaurant depends on its location
o Tim Hortons, Starbucks located very conveniently, everywhere
 Developing a Marketing Plan

What is a Marketing Plan?

- A written document to give marketers a road-map for the company to market its products.
- Includes an analysis of the current marketing situation, opportunities and threats to the firms, marketing
objectives and strategies, etc.
- The 3 phases are planning, implementation, and control.
Developing a Marketing Plan

Step 1: Business Mission & Objectives (Planning Phase)

- Mission
o Provides reason for existence (Why it exist?) of the organization.
o Foundation of marketing plan The marketing plan focuses on accomplishing the mission.
- Mission Statement
o A statement of the organizations scope that often identifies its customers, markets, products,
technology, and values.
o States the orgs purpose, and provides direction to internal stakeholders.
o Also includes something about its sustainable competitive advantage
o Answers: What is our business, who is the customer, what does our customer value?
- Marketing Goals/Objectives
o A statement of what is to be accomplished through marketing activities.
o Basis of measuring success
o Marketing objective must be SMART:
Specific
Measurable
Actionable
Relevant
Time specific
 o Ex. Our objective is to increase market share by 40% and to obtain customer satisfaction ratings
of at least 90% in 2015.

Step 2: Situation Analysis (Planning phase)

- Where are we now?
o SWOT Analysis & Environmental Scanning
Company
Consumers (Present and future)
Competitors (Industry trends, competitions, etc)
Remember with SWOT, company wants to capitalize its strengths, correct its
weaknesses, exploits its opportunities, and avoid threats.
- Where do we want to go?
o Business Portfolio Analysis (BCG)
o Product-Market Growth Analysis
*Next we move on to the Implementation Phase
o Obtain resources
o Design marketing organization
o Develop schedules
o Execute marketing program.

Step 3: Identify Opportunities (Implementation Phase)

- Effective marketing requires S.T.P.
- Which products will be directed toward which customers ?
o (The What and Who of the strategic marketing process)
- STP allows firm to identify and evaluate opportunities for increasing sales and profits.
- Segment the market: who
o A market segment consists of consumers who respond similarly to a firms marketing efforts.
the process of diving the market into these groups is called segmentation.
- Target market(s): Who
o Which segment is the most attractive to pursue?
- Position the product: What
o How does the firm want to position itself and/or its products to the target sgements?

Step 4: Implement Marketing Mix (Implementation Phase)

- Product strategy
o Creating value for consumers (ie. Innovative features)
- Price strategy
o Exchange: product = money
o Price and value for money
o Value-based pricing
- Promotion strategy
o Communicating value through TV, Radio, Personal Selling, other media
- Place (distribution) strategy
o The firm must make the product/service readily accessible when and where the customer wants
it.
o Ex. Walmart and Loblaws offers online shopping and delivery now

Step 5: Evaluation (Control Phase)

- Evaluate performance using marketing metrics and make adjustments.
- Compare results with marketing plan
- Why did we or did we not achieve performance goals?
- Exploit positive deviations
- Act on negative deviations

Business Portfolio Analysis (BCG)

- Analyzing current portfoliowhere do we want to go?
- In the diagram, the circles represents the different brands/products
- Stars: Make large profit, but require a lot of cash
- Question Marks: Need a lot of cash investment, but have potential to become stars.
- Cash Cows: Generate strong cash flow.
- Dogs: Low growth potential and small market share.
Environmental Scanning
- Tracking environmental trends
- Changes in the environment can affect the organization as well as its suppliers and customers.
Macroenvironments are sources of opportunities and threats and need to be managed.
- SWOT Analysis requires environmental scanning.

The Microenvironment (Immediate/Internal Environment)

- Company Capability
o Core ability = satisfy customer needs
o Knowledge, facilities, patents, technology, etc
These are applied to target markets, products, etc.
- Competition
o Identify and analyze direct and indirect competitors
o Know strengths & weaknesses
o Competitive Intelligence (CI) used to collect and synthesize info about a firms position with
respect to their rivals.
- Corporate Partners
o Firms are part of alliances few work in isolation
o From the time the product is manufactured, to delivered to the customer, many different firms
must coordinate and work together.
The Macroenvironment External Env. (CDSTEP)
- Demographics
o Provides a snapshot of the characteristics of the typical consumer in a specific target market.
o Must keep in mind the different generation of consumers (Generational cohorts), since they have
similar purchase behaviours and value, because they are in the same stage of life.
Tweens, Gen Y, Gen X, Baby Boomers, Seniors
o Age, gender, income, education, ethnicity
o Demographics segmentation is the most common form of segmentation since the info is so
widely available.
- Culture
o The shared meanings, beliefs, morals, values, and customs of a group of people
o Passed down through generations, and learned over time
o Social trends affect consumer values.
o Country culture (USA) vs. regional culture (difference in language, slang, etc. among each state)
o Products have to be marketed separately depending on the culture of where it is being sold.
- Social Trends
o Greener consumers: Hybrid cars, green bin program, reusable water bottles
o Privacy concerns
o Time-poor society: Consumers are now so busy multitasking it is harder to get their attention
o Consumers want healthier food options
- Technological
o New technology has impacted every aspect of marketing new products, new retail channels,
new forms of communication
o But also things like RFID chips and scanner systems have allowed firms to make supply chain
operations more efficient.
- Economic Situation
o The economy home and abroad affects the way consumers buy merchandise and spend money.
o Foreign currency fluctuations can influence consumer spending.
o Combined with inflation and interest rates affect a firms ability to market goods and services.
Ie. When inflation increases, consumers shift their spending habits, to more inexpensive
items, or necessities.
- Political/Legal
o Comprises political parties, government, and laws.
o Protection of consumers and competition, as well as self-regulation
o The gov. has put in many laws that promote both fair trade and competition by prohibiting
monopolies, or anything that would damage a competitive marketplace.
Competition Act designed to protect and balance the interests of competitors and
consumers.
Consumer Packaging and Labelling Act
Food and Drugs Act
Access to Information Act
Patent Act
o North American Free Trade Agreement (NAFTA)

- Scenario planning? in TB but not in lectures.

Growth Strategies (Market Product Analysis)

- Market Penetration: Uses existing marketing mix and focuses on existing customers. When Subway
does $5 footlong specials to encourage customers to buy more/often.
- Market Development: Using existing marketing to reach new market segments, whether domestic or intl.
Opening Subways across the world
- Product Development: Introducing a new type of Subway sandwich
- Product Diversification: Introduces a new product/service to a segment that is currently not served.
Creating a Tikka Masala Sub for Indian Subways.
-