Unit 8 : Marketing Flashcards
Define marketing and describe the trends in marketing today Describe your understanding of the customer through market research, market segmentation, and their decision-making process Describe the 4Ps of the marketing mix Discuss the role of Customer Relationship Management in building long term relationships Define a brand and describe how brands can be valued Explain how marketing activities should evolve at the various stages of the product life cycle
“Canada has fewer entrepreneurs today than it did 20 years ago—and that’s a big problem for everyone” - why is this a concern
- A concern as population has grown by more than 10 million over the same period
- Can’t be ignored as:
- New businesses are responsible for almost all net new job creation in the country
- A healthy economy needs a good percentage of startups to bring new products/service to market and force existing businesses to do better
what skills are business owners learning to overcome difficulties of entrepreneurship? & how can they learn these skills
- Marketing and finance skills – essential to help a business to get started
- Administration and operations skills – need to keep it going
- Leadership and people skills – essential to create growth
- Relationship skills and grit – stands out as important in every stage of business
- Can all be learned through coaching and mentorship, reading, formal classes, and engagement with peers
what is a market
Customers with wants and needs that have both an interest and resources to make a purchase
what is marketing
- The process of creating, communicating, and delivering offerings that have value for customers
- can shape customer experience
- first need to understand the needs of a market
what needs to be done to market towards meeting the needs of consumers & what is the impact
- need to scan the business environment
- can impact the success of marketing campaigns and the company overall
- adapting the offerings can maintain a happy and growing customer base
- Not keeping up with the changing needs can lead to issues surviving long-term
how did mcdonalds adapt to changing consumer preferences
- they build relationships with customers from a young age through Happy Meals
- People are looking for more healthier alternatives
- McDonald’s adapts to the changing consumer preferences
- Introduce beyond burgers & healthier options such as apple slices, 1% milk, etc.
what are the trends in marketing today
- importance of data
- emphasis on customer relationship management
- rise in cause marketing
- prevalence social media marketing
what is the importance of data
- Companies continuously collect and analyze customer data to understand current and future needs
- Can collect stuff like contact information, buying patterns, changing preferences
- Have edge on the competition
- Loyalty programs are a good way to collect this data
what is an example that shows the importance of data
Starbucks Rewards
- Customers can collect stars with their purchases that can be used for free drinks and food
- Starbucks can determine what, when, and how often their customers buy, and if they use promotional offers
what is the emphasis on customer relationship management
- Capturing data involves knowing how to act on the data
- To build long-term customer relationships (loyal customers)
- Retaining loyal customers is a more cost-effective way to grow compared to finding new customers
what is the amount of loyalty programs an average canadian is enrolled in
12, but only actively use 7
what is the prevalence of social media marketing
- Social media is another way to directly and conveniently connect with customers
- Customers can share their experiences to others on social media (additional marketing for social media)
- Using social media is about relationships and the ROI
what is the rise in cause marketing
- Companies taking action on issues that matter to the people
- Can be a part of the business model, annual initiatives, or how they react to recent social issues
- About being socially responsible and letting customers know
what facts about using social media marketing would push companies to integrate social media into their marketing strategies
- Social media = relationships
- The ROI of social media is that your business will still exist in 5 years
- 93% of buying decisions are influenced by social media
what is market research
The process of collecting information to understand customers in order to make informed decisions on how to satisfy their needs with product offerings
what can market research help a business with
- Understand who customers are & their preferences
- Assess the business environment (ex. State of the economy & competition)
- Identify opportunities to pursue
whats the catch with market research
- Research can be expensive
- Companies should put a plan to obtain what is needed based on what is most efficient and cost-effective
what is secondary research
Examines information and statistics that are available
what are the 2 types of research used to conduct market research
- secondary research
- primary research
what can secondary research include
- Published surveys
- Research studies
- Datasets
- Existing economic conditions
what kind of information is collected from secondary reseach
- Demographic (ex. Population levels, age groups, income levels)
- Trends (consumer, technological) that can influence how a product is offered
- Current economic conditions (locally or globally) that can influence demand
what are some benefits of using secondary research
- Less expensive; saving time & money
- Helpful for companies that want to do environment scans of the business environment (ex. PEST)
what is primary research
Involves gathering your own information directly
what would primary research include
- Surveys you conduct
- Interviews (focus groups)
- observation
what information would be collected from primary research
- More specific data on products/features wanted
- Factors that could influence buying decision
- Competitors (& their strengths & weaknesses)
what is a pro and con to primary resarch
pro: done when there is information needed that doesn’t exist yet
con: Requires additional time & money to collect information
what is market research data used for
- Find trends and opportunities
- Further evolve an idea or product offering
- Design marketing mix and promotion mix
what can effective market research help with
- decision making
- Ensures customer needs can be aligned with the needs of the company (cost-effective and profitable)
what are the two major markets business’ can choose to serve
- business-to-consumer (b2c)
- business-to-business (b2b)
what is business-to-consumer (b2c)
Company selling directly to consumers (generally the end users for a product)
what is the business-to-consumer (b2c) market like
- Products bought for personal consumption
- Decision-making process for consumers is shorter; Less people involved, more emotional
- Larger pool of prospective buyers, but usually make smaller purchases
what is business-to-business (b2b)
Company selling to other companies (could be or not be the end users for a product)
- Includes manufacturers, intermediaries (ex. retailers), or institutions (schools, hospitals, etc.)
what is the business-to-business (b2b) market like
- Usually bought to be sold to others
- Organizations have a longer decision-making process; More people are involved (to make long-term relationships), Less emotional, more logic based, More rational in purchases (negotiating prices, purchases need to be approved)
- Smaller pool of purchasers (there are more consumers than businesses), but usually larger ongoing transactions
Given the differences between the B2C and B2B market, how would you expect marketing efforts to differ between reaching an individual consumer vs. reaching another company to make a purchase?
B2C:
- more focus on promotional techniques like advertising
- Once you know your target audience and how to reach them, you can design advertisements to describe why they need or should desire your product
B2B:
- focus more on establishing personal relationships
- Personal selling may be involved, where an account manager is assigned to each large customer to develop a long-term relationship to support large ongoing purchases
what is mass marketing
When a company attempts to reach a wider audience with a single product offering
what are some difficulties related to mass marketing
- Can be difficult to make every customer happy
- Are various backgrounds and preferences
what is market segmentation
The process of dividing a total market into customer segments (groups) that have similar characteristics or needs
what are common market segments
- geographic
- demographic
- psychographic
- behavioural
what does the geographic market segment look for
- Population density (ex. Urban vs rural)
- Specific cities or countries
what does the demographic market segment look for
Age, gender, nationality, income, profession, level of education
what does the psychographic market segment look for
- Social class, lifestyle, personality
- What group they would be apart of if they bought the product/brand
- More on the attitudes of the consumer
what does the behavioural market segment look for
- What they plan to use the product for
- How they use specific products & how that can impact their purchasing behaviour
what is a target market
- A segment that is a combination of consumer segments that is sizable, reachable, and potentially profitable
- Describe specifically what kind of consumers you are targeting
what is an example of a target market
young professionals between 24-30 years old in urban areas with a specific income-level and lifestyle preference for a new product
what is an example of a product with more than one target market
a pharmaceutical company promoting a drug could have two target markets: direct consumers that want that product & doctors who prescribe & recommend that product to patients (over other competing products)
what would be the target market for a red bull energy drink
- demographic (e.g., 18 to 24, students)
- psychographic (e.g., lifestyle considerations such as how they sponsor extreme sporting events)
what would be the target market for DAVIDsTEA loose leaf teas
- demographic (e.g., middle-income tea lovers of all ages)
- behavioural (e.g., those who use products with specific health benefits)
what would be the target market for a tesla model 3
- geographic (e.g., urban)
- demographic (e.g., higher income, professional occupations)
- psychographic (e.g., those that believe they belong to a certain social class)
what is the consumer decision-making process
- companies use to understanding what process a consumer goes through to decide whether they want to purchase a good/service or not
- done after identifying their target market
what are the steps in the consumer decision-making process
- Initial consideration; what do they need?
- Active evaluation; what information is available for them to evaluate with alternatives? (product details, online reviews, etc.)
- Purchase decision; which product meets their needs the best?
- Post-purchase experience; does the product meet their needs? Will they continue to purchase from that brand?
what are the 3 ways consumers can be influenced to purchase
- social influence
- psychological influences
- situational influences
what is the social influence
- Through consumer driven activities (ex. Looking at reviews online, recommendations from friends & family)
- Companies are more encourage to target early adopters with the launch of new products because they would share reviews on social media, which can influence others
what is psychological influences
- Through attitudes or perceptions
Ex. providing eco-friendly options in hotels (washing towels less frequently). Consumers would choose to stay at that hotel because it reduces their impact on the environment
what are situational influences
- influenced through the situational impact
Ex. the social atmosphere, comfortable seating, or access to Wi-Fi a coffee shop has can lure consumers to go to that place, do work there, and even purchase from there
what is the marketing mix (4Ps), and what is it used for
- Product
- Price
- Place
- Promotion
- Helps companies create interest and influence for their goods/services
what is a product in the marketing mix
The good or service offered to targeted customers
how do companies decide what product to offer
- tied back to the value proposition of the customer
- What is the customer profile (their jobs, pains, & gains)
- Help determine what benefits customers will receive, which is what they evaluate before purchasing
what are the different ways to test product ideas in the market before investing a lot of effort & money into it
- concept testing
- test marketing
- crowdsourcing
what are customers evaluating in a product
- The quality of the product
- The packaging
- The purchase process
- If the price is worth the benefits
what is concept testing
- Sharing idea with potential customers to obtain feedback
- No physical product involved
- Feedback can include what features would be popular or how to improve the idea
- Feedback can be obtained through primary research sources (ex. surveys)
what are the benefits to concept testing
- avoids investing time & money into ideas that wouldn’t be successful
- Gets additional data on how to adjust to better meet customer needs
what is test marketing
- Launch/test new product on small scale to get customer feedback
- Can be selling the product in limited geographical areas
Ex. selling only in west ontario first
what are the benefits of test marketing
- Can gauge consumer perception
- Consider any adjustments (on the product itself or marketing)
- All before launching on a larger scale
what are the risks of test marketing
- Reveals new product idea to competitors (they can steal idea)
- Risk overall brand (if there are issues with the product)
what is crowdsourcing
- Mobilize ideas/perspectives of individual customers to help design product
- Involving customers into the product design process
what is a product line
- Group of similar products sold by a company
- Incremental changes that are made to products to reach more customer
ex. different versions of Coca Cola: regular, diet, and flavoured
what are some considerations for effective packaging
- does it stand out? does it draw your eye, stand out on the shelves, (colours, shape, logo)
- simple to use?
- does it provide information customers need? show benefits that can be compared with other products? warning/proper handling tips?
what is product differentiation
- Promotes benefits of a product that make it unique compared to similar offerings from competitors
- Involves the use of packaging, pricing, and ads to enhance the overall value proposition of a good, making it more enticing to the consumer
what do companies what to do with their product line & mix & why?
- Companies may aim to expand product lines to have a more robust product mix (diversifying)
- Would generate more revenue streams (multiple successful products)
- Expands potential reach to customers
- Diversifying helps reduce risk; even if one product doesn’t have many sales, another one can
what is a product mix
- Combination of all product lines sold by a company
Ex. Procter & Gamble (P&G) have multiple product lines (oral care, hair care, cleaning products)
what should companies consider about when pricing of their product
- Is considered as part of overall value proposition of a product/service
- Does the price justify all the benefits provided?
- Optimal price considers overall costs to make/market the product, price of competing products, what customers willing to pay
- Indirect & direct costs
- Price can be set strategically to create an image
Ex. more expensive to seem more luxurious - Price still needs to be set in a way where customers will still buy & company will make profit (not too expensive so people still buy, not too cheap so company can still run)
what is price
Money exchanged to buy or use a product/service
what are the different pricing strategies
- cost-plus
- competitive pricing
- value-based pricing
- price skimming
- penetration pricing
what is cost-plus pricing
- Ensures all costs are covered
- Using the cost to produce (materials, labour, overhead costs (ex. Rent & utilities), etc.) as a base
- Adding a mark-up to make a profit
what is value-based pricing
Price based on assuming how much a customer is willing to pay based on the value of the benefits from the product
what is competitive pricing
Base price based on what competition is doing
what is price skimming pricing
- Done when a product is first introduced
- Setting a high initial price
- Optimizes profit when there’s little competition
- Helps set an image for the product
how to calculate break-even point
Fixed cost / (Price Per Unit - Variable Cost Per Unit)
what is penetration pricing
- Done when a product is first introduced
- Setting a low initial price
- Helps enter competitive market or build customer base
what is break-even analysis
- Helps evaluate profitability of a product
- Point at which sales cover expenses, and any units sold above that point, is when you start making a profit
- Reveals how break-even point changes (how many units you need to sell) when selling price adjusted
what is place
- Where and how customers can buy a product
- Different means of distribution to maximize ways customers can find & buy a product
what is a distribution channel
- How products move from a producer to the consumer
- Can be direct (B2C), selling through own locations, online or other sales people
- Can be through intermediaries
what are intermediaries
Individuals or organizations in the middle of the distribution channel that help move products from producers to consumers
what can intermediaries include
- retailers
- wholesalers
- agents/brokers
what are retailers
Companies that typically sell to consumers
Ex. Walmart, Sobeys
what are wholesalers
Companies that buy products in bulk to sell to other organizations like retailers
what are agents/brokers (as intermediaries)
- People that negotiate the exchange between buyers & sellers
- Don’t get the goods in any way
- Like a real estate agent that helps people buy houses, but they don’t buy the house themselves (only helping switch ownership from the seller to the buyer)
why would a company use intermediaries
- Lack of money to do everything on their own
- Prioritizing to use their money toward core business activities instead of distributing
- Depending on others that are more efficient (cheaper & faster) in distributing products & have a wider reach to consumers
what are the different efficiencies intermediaries provide
- transportation efficiencies
- promotion efficiencies
- customer support efficiencies
what are the transportation efficiencies intermediaries provide
- Shipping to intermediaries is easier and cheaper for the company
- Intermediaries have efficient systems to move products between locations to reach many customers (ex. Shipping to individual customers)
what are the promotion efficiencies intermediaries provide
Intermediary can help promote and sell a product
what are the customer support efficiencies intermediaries provide
- Intermediaries can provide convenient access to products (through their multiple locations)
- Can also provide timely service/support (ex. Returns, refunds)
what are the different distribution strategies
- intensive distribution
- selective distribution
- exclusive distribution
what is intensive distribution
Putting products in as many retail outlets as possible
Ex. Coca Cola
Can find in convenience stores, gas stations, large retailers
what is promotion
- Techniques used to motivate customers to take action and buy
- Aims to inform, increase interest, and encourage interaction
- The strategies chose to promote should reach the target market in a cost-effective manner
what is selective distribution
- Choosing specific outlets to sell a product
- Can be done to cater to target markets that shop at specific stores or to guarantee service levels
Ex. Apple
Only sell products through authorized dealers like Best Buy
what is exclusive distribution
- Choosing very few outlets to sell products
- Can provide exclusivity to a retailer to sell a product
what is the promotion mix
Includes various activities a company can use to motivate customers to take action and buy
what is advertising (promotion mix)
- Media communication
- Includes radio/tv commercials, print or digital ads
what is public relations (promotion mix)
- Activities that creates a positive image and publicity
- Includes media coverage, community involvement (donations, sponsoring events)
- Companies can build relationships with the media, community leaders, or government officials
what does the promotion mix include
- advertising
- public relations
- sales promotion
- direct marketing
- personal selling
what is direct marketing (promotion mix)
- Links the producer directly to the customers
- Includes, telemarketing, mail, or emails
- Requires comprehensive & up-to-date databases on customer information
- Can be time consuming & costly to maintain
- Also need to be aware of privacy & consumer protection laws (make sure they have consent from consumers to contact them)
what is sales promotion (promotion mix)
- Techniques to motivate consumers to buy
- Includes incentives like coupons, rebates, or free samples
- With loyalty programs, companies can push sale promotions through their apps
what is personal selling (promotion mix)
- Face-to-face selling between seller and buyer
- Includes having salespeople to support customers in buying a product
- Can be costly
- Need to hire sales personnel & associated costs (salary, commission, training, etc)
what is buzz marketing
- Encourages consumers to try products then publicly share their reviews and opinions on them
- Generate a buzz or positive word of mouth
- End goal is for positive buzz to increase interest (and sales) for a product
what is greenwashing
Words on products advertising them as “eco-friendly, sustainably sourced, biodegradable, green, natural, etc”, but they are not
what are things to do to spot greenwashing
- Read beyond the labels
- Don’t fall for nature-based imagery
- Pay close attention to certifications
- Consider what you’re not being told
what is relationship marketing
- Aims to develop long-term relationships with specific customers to foster customer loyalty and interaction
- Focuses on customer retention as much as finding new ones
- Being mindful of customer experience and use of 4Ps
how can a relationship be continued after a sale
- Can be through online surveys asking about recent purchase
- Can be targeting additional promotions to cater to their needs
what is customer relationship management (CRM)
Captures data to support interactions and engagement with customers to build long-term relationships
what information can be captured with the use of elaborate software/databases in CRM
- Contact information
- Past communications
- Purchases
- preferences
what are the benefits of CRM
- Able to identify the best customers
- Can customize communications (since you know their preferences and past purchases)
- Assess the effectiveness of marketing campaigns (can track what customers did during sale promotions)
what are some other things to know about CRM
- Know issues of protecting/respecting customer data
- Information collected through CRM can inform marketing strategies to retain customers, and develop relationships with them over time
- Encourage loyalty and drives satisfaction
what is a brand
A name, symbol, or design that distinguishes a company and its products from their competition
what do good brands support
- A clearly delivered message
- Credibility for company in marketplace
- Emotional connection between customer and product
- Motivation for a buyer to buy
- Customer loyalty
what is brand awareness
- How quickly a brand name comes to mind when a product category is mentioned
- Symbols or logos can also play a significant role in building brand awareness
what are some questions companies may ask about their brand
- What does a consumer associate with their brand?
- Do they feel proud to use that brand’s products?
- What is the quality or prestige that is associated with the brand?
what are the benefits of building brand loyalty
- Building brand loyalty with customers makes them buy more from the company
- Brand loyal customers bring substantial value to a company
what is brand equity
- Overall value for a brand
- Outside of building up reputation and recognition, a strong brand influences consumers to pay more or buy new products associated with that brand
how can brands be valued by
by independent business organizations
ex. international brand consulting firms like interbrand
what do valuations for brands consider
- current and future financial performance
- customer perceptions
what is interbrands’ valuation method
- financial analysis: what is the overall financial return to investors
- Role of the brand: ability of brand to influence a purchase decision
- Brand strength: ability of a brand to create loyalty = sustainable demand = profits, into the future
what is the product life cycle & the use
- determine marketing activities for a product
- Product life cycle looks at how sales for a product rise and fall over 4 stages
- Can help inform what marketing strategies (decisions around 4Ps & promotion mix) to pursue
what does the product life cycle graph look like
- time on the x axis
- sales on the y axis
- sloping up for the first 2 stages
- reaches its max in the 3 stage
- slopes down in the last stage
what are the stages of the product life cycle
- introduction
- growth
- maturity
- decline
what is the introduction stage of the product life cycle
- When a product is launched, sales start off slow
- Customers are learn how the product can meet their needs
- Company is in process of spreading awareness through promotion mix activities
- Distribution may be selective
- Pricing may be high or low (depends on pricing objectives to encourage sales)
what is the growth stage of the product life cycle
- Sales are starting to pick up (and profits)
- Competitors could release competitive products
- Causes consumers to consider which product & from who to buy
- Promotion & distribution can be increased to encourage sales & fight off competition
- Pricing could be relative to competitors
what is the decline stage of the product life cycle
- Sales and profits begin to fall
- Happens when many customers already have the product or moved to substitute products
- Prices can change to still encourage sales from loyal customers
- Less effort on promoting and distributing
what is the maturity stage of the product life cycle
- Company will reach peak sales
- Goal is maintaining profitability when there is fierce competition
- Can be incremental changes to product to create more interest in product
- Promotion is continued to encourage loyalty
- Distribution may be intensive - trying to reach out to new customers
- Prices may be reduced to encourage customers to buy
do all products go through the product life cycle at the same pace
- no
- can go through at different paces
- Some takes years to go through the stages
- Some never go in decline
what can be done at the maturity stage when sales for a product starts to decline
- play with the 4Ps
why is it good to know where the product is in its life cycle
can help companies make informed decisions about managing the product, how to extend the life of the product, and when to phase out the product when it won’t rebound in sales
