Midterm Practice Questions

Marketing is a set of business practices designed to plan for and present an organization's products or services in ways that build effective customer relationships (the American Marketing Association definition). It creates, transacts, communicates and delivers value through the marketing mix (the 4 Ps), and good marketing is thoughtfully planned with attention to ethical effects on consumers and society.

A need is a basic necessity, such as water when thirsty. A want is how a person chooses to fulfil the need, such as a sturdy insulated Hydro Flask bottle that keeps water cold. Marketers uncover needs to generate new product ideas, then shape wants through the product, price, place and promotion.

C. Options A, B and D are the seller's and buyer's roles in the trade. Assessing advertising effectiveness is something the firm does internally, not part of the exchange itself.

An exchange is a trade of things of value between a buyer and a seller so that each is better off. The customer gives up money, time and information (such as an address and a browsing history), and the firm gives up a book. The exchange is mutually beneficial, and it can also be information for convenience, or between nonprofits and the people they serve (a hospital, a lecture, a barter page).

Product: creating value (goods, services and ideas that satisfy needs; Rolex is marketed as a status brand though all watches tell time). Price: transacting value (everything the buyer gives up, including money, time and energy). Place: delivering value (the marketing channels and distribution strategy that get the product to customers). Promotion: communicating value (informing, persuading and reminding customers). The four must fit together to give a consistent value proposition to the target customer.

D, communication. Promotion communicates the value of the offering to influence decisions, and it must be aligned with product, price and place.

Products are goods, services and ideas, where ideas include thoughts, opinions and philosophies that can be marketed (bicycle safety, responsible drinking). In the Bike Cochrane Society example the primary target market is children, who "purchase" the idea by listening and wearing helmets, and the secondary target is parents and siblings who reinforce it.

A market is a group of people who need or want a firm's products and also have the ability and willingness to buy them. A target market is the customer segment the firm is interested in selling to. Lamborghini (a car over $80,000) is not interested in everyone who wants the car, only those who want it and can afford it.

(a) product orientation; (b) sales orientation; (c) market orientation; (d) value-based orientation.

C, market orientation. It focuses on what consumers want and need before the firm designs, makes or sells products. Value-based orientation would add better value than competitors plus people, profits and planet.

People (meeting the needs and wants of consumers), profits (building long-term profitable relationships) and planet (social and environmental responsibility). Example: Starbucks tries to serve customers (people), earns returns through loyalty (profits) and introduced strawless lids and compostable straws (planet), though customers were still unhappy with single-use plastic and the firm may need to re-evaluate.

Value is the relationship of benefits to costs. Value-based marketing means implementing a marketing strategy according to what customers value, which includes strong products and services and not only a low price. Benefits customers value include speed, convenience, size, accuracy, price, cost savings and user-friendliness. Apple buyers pay a premium because they perceive greater benefits (design, ease of use, ecosystem) than the extra cost.

A. (Note: one notes slide shows C, but its own explanation slide gives A.) The four activities are share information (marketing analytics), balance benefits with costs, build customer relationships, and connect with customers through digital, social and mobile media.

(1) Share information: gather and analyze data on customers and competitors and share it across the firm and supply chain (Starbucks, Netflix and Amazon analyze behaviour patterns to personalize). (2) Balance benefits with costs: deliver strong perceived value for the price and keep costs down through efficiencies such as simple self-assembly designs. (3) Build customer relationships: move from one-time transactions to customer lifetime value using CRM and personalized offers for loyal customers. (4) Connect with customers through digital, social and mobile media: platforms and apps give direct, real-time contact (SkipTheDishes).

Customer lifetime value is the long-term value of a customer to the firm over the whole relationship, in contrast with a single transaction. A relational orientation is the view that buyers and sellers should develop long-term relationships that benefit both, supported by CRM systems that collect and analyze customer information.

The home brewer is B2C (a business selling to a consumer). The office coffee station is B2B (a business selling to a business). Resale of pods on online listings is C2C (consumer to consumer). Social media now supports communication in all three settings.

D. The supply chain consists of raw material suppliers, manufacturers, distributors (retailers) and customers. Each step involves marketing and an exchange.

(1) It expands a firm's global presence (Starbucks, one of the fastest-expanding global firms). (2) It is pervasive across the organization and across supply chain members, since all must focus on value for the end user. (3) It enriches society (Maple Leaf Sports and Entertainment donated 27,000 lb of food through Second Harvest when the NHL season was cancelled). (4) It can be entrepreneurial, because small and new ventures need it as much as large ones (Dani Reiss and Canada Goose).

A marketing intermediary simplifies buying by purchasing large quantities from producers and selling smaller amounts to consumers through retail channels. An entrepreneur is a person who organizes, operates and assumes the risk of a business venture (Dani Reiss of Canada Goose is the slide example).

Doing something about environmental responsibility is part of value-based marketing (planet), but a firm's first step may not satisfy consumers, so it must keep listening to customers and re-evaluate its approach. Ethical marketing considers the effects on consumers and on society, not only profit.

A marketing strategy identifies (1) the firm's target market or markets, (2) a related marketing mix (the 4 Ps), and (3) the bases on which the firm plans to build a sustainable competitive advantage.

C. That is the definition of a sustainable competitive advantage (Pepsi's examples are a strong brand, innovative capabilities, an extensive distribution network and loyal customers).

Disney is customer excellence (loyalty through exceptional experiences, MagicBand, trained staff). Amazon is operational excellence (advanced logistics, technology and fast reliable delivery). Bubly (PepsiCo) is product excellence (a distinctive, playful brand that expands beyond colas). McDonald's (like Tim Hortons and Starbucks) is locational excellence (dense networks of convenient locations that competitors cannot easily copy).

A. Loyal customers resist competitors' offers, let firms introduce new products or change prices without losing them, and focus on customer lifetime value instead of single transactions.

False. Expensive is not the same as product excellence. Product excellence is high perceived value created through a clear, distinctive brand image and positioning, consistency between product, image and promotion, and innovation that keeps brands relevant.

A single strength is rarely enough, so firms combine strategies to build a wall around their position. WestJet combines fair prices, reliable service and clear customer expectations, which positions it as "Canada's value airline"; good service is good value.

A marketing plan is a written document that analyzes the current marketing situation, opportunities and threats, and sets marketing objectives and strategy in terms of the 4 Ps, action programs and projected financial statements. Its phases are planning, implementation and control. Steps: (1) define the business mission and objectives (planning); (2) conduct a situation analysis, SWOT (planning); (3) identify and evaluate opportunities using STP (implementation); (4) implement the marketing mix and allocate resources (implementation); (5) evaluate performance using marketing metrics (control).

C. Step 5 is the control phase. Segmentation is not a phase at all.

A mission statement is a broad description of a firm's objectives and the scope of activities it plans to undertake. It defines purpose and direction by answering what the business is (what we do), what we aim to achieve, and how we will do it. It is decided at the highest corporate level before the marketing strategy, and objectives differ by organization (shareholder value for public firms, serving a population for nonprofits). Examples: Coca-Cola "To refresh the world and make a difference"; Heart and Stroke Foundation "Promote health. Save lives. Enhance recovery."

(a) strength: internal and positive. (b) weakness: internal and negative. (c) threat: external (political and regulatory change) and negative. (d) opportunity: external (a social trend) and positive.

C. A new entrant is a threat, an external factor. A strong brand, limited distribution and a loyal customer base are internal strengths and weaknesses.

A. In the Hertz example, thrill seekers (Adrenaline Collection), business and luxury customers (Prestige), environmentally conscious customers (Green) and families (SUVs) are different segments.

Price. Product, place and promotion all cost the firm money, while price generates revenue. Value-based pricing sets prices on what customers perceive as worth paying: too high reduces demand and too low reduces profitability, and price is only part of value (Dyson charges a premium that matches its perceived quality and innovation).

B. Lee Valley Tools shows it: stores, catalogues and online ordering integrate physical and digital channels so customers can buy where and when they want.

A metric is a measuring system that quantifies a trend, dynamic or characteristic. Metrics measure performance, explain why results occurred, and allow comparison across time, regions and products. Managers should only be held accountable for what they control because poor results can come from a bad strategy, poor execution or external forces such as the economy. No single metric tells the whole story, so firms track financial, competitive (market share) and social responsibility results.

The Boston Consulting Group matrix is a portfolio analysis tool. Stars have high growth and high share and need heavy investment. Cash cows have low growth and high share, generate more cash than they use and fund other products. Question marks (problem children) have high growth and low share; they need heavy investment with uncertain outcomes, so the firm invests to make them stars or withdraws. Dogs have low growth and low share, rarely become strong and are often divested unless strategic.

D. Cash cows fund the stars and question marks (the notes name Microsoft Office as an example).

It is a question mark (problem child). The firm can invest heavily to turn it into a star or withdraw. The Toshiba HD DVD against Sony Blu-ray battle is the slide's example, since Blu-ray won and moved toward star.

Market penetration (current product, current market), market development (current product, new market), product development (new product, current market) and diversification (new product, new market). Diversification is the riskiest because both the product and the market are new.

(a) Market development: the same product reaching new (international) markets. (b) Product development: a new product (streaming series) for the current market (existing fans). (c) Market penetration: the same products to the same market, getting current users to consume more.

A. Related diversification has some commonality with existing products or markets; unrelated diversification has none.

D. Sequential planning is not a growth strategy.

The consumer sits at the centre. Around the consumer is the microenvironment or immediate environment (company capabilities, competition and corporate partners). The outer ring is the macroenvironment, summarized as CDSTEP (culture, demographics, social and natural trends, technological advances, economic situation, political and legal environment). Anything that affects consumers affects marketers, a change in any environment likely requires adjusting the marketing mix, and spotting trends lets a firm be proactive.

B. The immediate environment is company capabilities, competition and corporate partners.

A core competency is something the firm does especially well that comes from its knowledge, facilities, patents, technology and people. Successful firms focus on satisfying customer needs that match their core competencies. Apple began by designing, manufacturing and distributing Macintosh computers and used that competency to move into the iPod, iPhone and iPad.

Competitive intelligence (CI) is used to collect and synthesize information about competitors, which shows the firm's position in the market against its competitors. It helps answer: Should we compete? If so, in what markets? How should we compete? The firm should respect confidentiality, since insider information is a grey area and firms use non-disclosure agreements.

Few firms work in isolation. They form alliances with suppliers, manufacturers, part makers, unions, transport firms and dealerships. Walmart's success is attributed to its close supplier relationships, and Nau works with corporate partners to develop socially responsible apparel.

Culture, Demographics, Social and natural trends, Technological advances, Economic situation, Political and legal environment. Cues: values, age, green and privacy trends, AI and the Internet of Things, inflation and interest, laws and regulations.

(a) Economic situation (interest rates and exchange rates). (b) Political and legal environment (it also relates to the social and natural trend of greenwashing). (c) Technological advances (AI and robotics). (d) Demographics (a generational cohort). (e) Culture (a regional subculture).

Culture is the shared meanings, beliefs, morals, values and customs of a group of people, transmitted by words, literature and institutions, passed through generations and learned over time. Country culture is shared across a nation (Coca-Cola can run nearly identical ads in several countries), while regional subcultures differ within a country (Quebec residents are about 25% less likely than Ontario residents to buy a hot prepared meal because they cook from scratch more; people say "soda", "pop" or "Coke" in different regions).

B. Demographics are the characteristics of human populations and segments (age, gender, income, education, ethnicity). Demographic segmentation is the most common because data are widely available.

B. Baby boomers were born from 1946 to 1964 and Gen X from 1965 to 1981; both like casual lifestyle products for different reasons, so marketers combine age with other characteristics. The five cohorts on the slides run from Gen Alpha and Gen Z through Gen Y (millennials), Gen X and baby boomers.

Canadians are grouped by income into upper, middle and working or low income, which are income classes (not fixed social classes) because education and income allow mobility. The middle class can afford a good life most of the time, spends carefully and is value conscious, earns between $41,707 and $100,260, and is about 38% of households. The median after-tax family income is $68,400.

About 23% of Canadians are foreign-born, and immigration drove over 75% of population growth since 2016; Indigenous peoples are 5% of the population, and by 2036 visible minorities are projected at nearly 39%. Responses: Sephora featured an all-Indigenous cast and crew for National Indigenous History Month, Harley-Davidson's "Tough Turban" protective headgear for Sikh riders, and Sobeys/FreshCo target ethnic consumers with multilingual signs and flyers.

Gender roles are blurring, so marketers should design and position beyond traditional male-female boundaries, focus on inclusivity and shared decision-making, and avoid stereotypes. Rona designed stores with women in mind (brighter spaces, open floor plans), and Bandai Namco ran mixed-gender gaming tournaments to broaden its appeal.

A. Greenwashing means false or exaggerated green claims, which stricter laws now require firms to prove. Related trends: 90%+ of Canadians believe individuals can reduce pollution, 69% would pay a premium for products that benefit society or the environment, and the LEGO "Rebuild the World" campaign encourages repurposing sets.

The slides cover (1) greener consumers, (2) privacy concerns (80% globally want more control over their data; the Tim Hortons app collected location data when not in use and led to investigations), (3) efficient distribution of food and reducing food waste (Unilever and Hellmann's initiatives), and (4) health and wellness concerns (a US$1.8 trillion global wellness industry). The UN's 17 Global Goals of Sustainable Development frame basic needs such as food, water and health care.

A. The Internet of Things (IoT) links smart, sensor-enabled devices to collect and share data (iRobot, Samsung, Nest Labs). Artificial intelligence is software that learns from data and does tasks that used to require human decisions, and robotics is machines performing tasks in retail, warehouses, farms and health care.

Inflation is a persistent increase in the prices of goods and services (it erodes purchasing power; the target is about 2%). An exchange rate is how much one currency is worth in another. An interest rate is the cost of borrowing money. A recession is a period of economic downturn. Example: a weak Canadian dollar raises the cost of imported goods for a retailer but helps tourism and exports, and high household debt (about 180% of income) limits discretionary spending. During downturns consumers shift to essentials and low-cost luxuries.

Examples are the Competition Act, the Consumer Packaging and Labelling Act, the Food and Drugs Act, PIPEDA (privacy), the Trade-Marks Act, the Copyright Act and the Canada Human Rights Act. Competition and fair-trade laws prevent monopolies, misleading advertising and unsafe products. Regulation can restrict a market (environmental rules, taxes) or enable one, and compliance raises costs but can create opportunities such as car seats, hands-free devices and eco-friendly products.

Artificial intelligence lets machines and software learn from data and perform tasks that used to need human decisions (speech recognition, translation). Marketers use it for personalization, automation, chatbots and faster content. Wealthsimple handles about 70% of inquiries with a chatbot, and Stitch Fix blends AI fit data with human stylists; Coca-Cola Freestyle machines use AI and big data to track mixes and predict new flavours.

Example for a Canadian coffee chain. Culture: regional tastes differ (opportunity to localize menus). Demographics: an ageing population and a growing ethnic mix (opportunity to widen the menu and signage). Social and natural trends: demand for compostable cups (opportunity) and criticism of single-use plastic (threat if ignored). Technological advances: mobile ordering and AI personalization (opportunity), but privacy backlash if the app tracks users (threat). Economic situation: high household debt reduces discretionary spending (threat), though a weak dollar helps tourism. Political and legal: a tax on single-use cups or tougher privacy rules (threat that raises costs, but also an opportunity for firms that comply early).

(1) Need recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, (5) postpurchase behaviour.

B. Maya sees a gap between her current phone and the one she would like. Marketers trigger need recognition with reminders, awareness campaigns, image appeals and strategic product placement.

Functional needs relate to the performance or utility of a product (plain bleach cleans). Psychological needs relate to the personal gratification consumers associate with the product, such as status, emotions and self-image (a Dior clutch, or Evian over ordinary water). Most products satisfy both, but one usually dominates.

In an internal search the buyer examines their own memory, knowledge and past experiences. In an external search the buyer looks to information outside personal knowledge: friends, reviews, influencers, online sources. Search effort rises with importance, cost and perceived risk (buying a car versus an everyday item).

D. The "kind of search" is not one of the factors (the slide's notes show "A", but A is a listed factor, so the explanation points to D). Locus of control: people with an internal locus believe they control outcomes and search more, while those with an external locus search less.

(a) Performance risk (poor performance). (b) Financial risk (initial cost plus the cost of using the item). (c) Social risk (others will not regard the purchase positively). (d) Physiological (safety) risk (actual physical harm). (e) Psychological risk (how people feel if the product does not convey the right image).

In the slide's example, the grab bag has little at stake, a mother's birthday gift matters more, and a gift for a future mother-in-law carries the highest psychological risk because the buyer is concerned about how the recipient will see them. Higher risk leads to more information search.

B. The evoked set is the smaller group of alternatives the consumer actually considers (Macy's is in the retrieval set for women's business apparel, but Banana Republic is in the evoked set for young women looking for business apparel).

Evaluative criteria are the set of important attributes used to compare alternatives (for a TV: features, price, looks). Determinant attributes are the features that are important to the buyer and on which competing brands are perceived to differ, so they decide the choice.

(a) X = 0.4×9 + 0.3×5 + 0.2×7 + 0.1×8 = 3.6 + 1.5 + 1.4 + 0.8 = 7.3. Y = 0.4×7 + 0.3×9 + 0.2×6 + 0.1×7 = 2.8 + 2.7 + 1.2 + 0.7 = 7.4. Z = 0.4×6 + 0.3×8 + 0.2×9 + 0.1×9 = 2.4 + 2.4 + 1.8 + 0.9 = 7.5. Laptop Z wins at 7.5. (b) On price alone, Laptop Y has the best price rating (9), so Y wins.

Toyota = 4.0 + 0.8 + 1.8 + 1.6 = 8.2. Honda = 3.2 + 0.9 + 2.4 + 0.6 = 7.1. Nissan = 2.4 + 0.8 + 3.0 + 1.0 = 7.2. The compensatory rule picks the Toyota (8.2). Choosing on price alone picks the Nissan (price rating 10).

Thai = 4.5 + 1.2 + 1.5 = 7.2. Pizza = 3.5 + 1.6 + 2.7 = 7.8. Sushi = 5.0 + 0.6 + 1.2 = 6.8. Pizza wins at 7.8, even though Sushi is best on taste, because its strengths on price and distance compensate. (A non-compensatory rule on taste alone would pick Sushi.)

Decision heuristics are mental shortcuts that help consumers narrow down choices quickly. Three types are price (a higher price means better quality, or choose the middle option as a compromise), brand (familiar or national brands feel safer) and product presentation (how a product is displayed or packaged). Lululemon's distinctive design and premium branding act as quick quality cues.

A conversion rate is the percentage of consumers who actually buy after considering or visiting. Abandoned carts are lost sales, so retailers send reminders, low-stock alerts and limited-time offers, and reduce friction with easy checkout, multiple payment options and fast delivery.

B. It is a psychologically uncomfortable state from inconsistency between beliefs and behaviour. Marketers reduce it with follow-ups, guarantees, clear instructions and reassurance.

B. Expectations must be realistic, neither too high nor too low. (The slide's notes show "A" for one version, but the explanation confirms B.)

Dissatisfied customers either simply stop buying and recommending (passive) or spread complaints as negative word of mouth, which travels faster than praise and is amplified by social media. Firms limit damage with proactive service, open feedback channels and visible remedies (Whirlpool's Facebook pages for appliance brands keep negative comments in the open).

Psychological: motives, attitudes, perception, learning and lifestyle. Social: family, reference groups and culture. Situational: purchase situation, shopping situation and temporal state.

Physiological (food, drink, shelter; a Subway sandwich), safety (secure employment, health, protection; insurance), love and belonging (family and friends; a family restaurant), esteem (confidence, image; a Tiffany necklace) and self-actualization (personal growth; a course or travel that reflects one's values). A single product can serve several levels, like a magazine.

D. The three parts are cognitive (beliefs), affective (feelings) and behavioural (actions); situational is a separate group of factors. Example: a person believes yoga improves health (cognitive), feels relaxed (affective) and attends classes (behavioural).

Perception is the process by which we select, organize and interpret information to form a meaningful picture of the world. The four parts are selective exposure, selective attention, selective comprehension and selective retention. Two consumers can view the same brand differently (Volvo is perceived as safe; a Starbucks-style atmosphere is perceived as a premium "third place").

A reference group is one or more persons that an individual uses as a basis for comparison regarding beliefs, feelings and behaviours (family, friends, coworkers, famous people and influencers). It influences by offering information, providing rewards for specific purchasing behaviours and enhancing self-image (Birkenstocks signal a casual, earthy lifestyle).

Situational factors. The purpose (a friend's birthday) is the purchase situation, the store atmosphere (lighting, displays, attentive staff) is the shopping situation, and the sale ending today is the temporal state (time pressure).

D. Habitual decision making takes the least time and effort; consumers automatically repurchase familiar brands.

Involvement is how much consumers care about and consider a purchase. High involvement leads to extended problem solving (buying a vehicle: research and comparison). Low involvement leads to limited problem solving (grabbing lunch at Subway: moderate effort, relying on past experience), impulse buying (spontaneous items near the checkout) or habitual decision making (a daily coffee). Under the elaboration likelihood model, involved buyers process an ad by the central route (message and attributes) and less involved buyers by the peripheral route (music, celebrities, images).

Need recognition: the old laptop crashes during exams (gap between current and desired state). Information search: the student recalls past experience (internal) and reads reviews and asks friends (external), searching more because the purchase is expensive and risky. Alternative evaluation: from an evoked set of three brands, compares battery, price and weight using criteria and a compensatory rule. Purchase decision: buys, unless the item is out of stock or checkout is awkward. Postpurchase: satisfaction if it meets realistic expectations; dissonance if doubts arise about the cost, which a warranty and follow-up reduce. Factors: psychological (attitude: believes a well-known brand is reliable), social (reference group: friends recommend a brand), situational (a back-to-school sale ends this weekend). Marketers help by providing reviews and guarantees during the search and by easy checkout and follow-up afterward.

(1) Establish the overall strategy or objectives, (2) choose segmentation bases, (3) evaluate segment attractiveness, (4) select the target market and a targeting strategy, (5) identify and develop a positioning strategy.

The goal is similarity within segments and clear differences across segments. Firms often combine several bases to build richer profiles of each segment (the Wild Lot Farm Distillery designs products and messages for different groups instead of one drink for everyone).

Geographic (where they live: country, region, province, city, climate), demographic (measurable traits: age, gender, income, education, ethnicity, family life cycle, generational cohort), psychographic (how they live and see themselves: lifestyle, values, personality and self-concept) and behavioural (benefits sought, usage rate, loyalty and the occasion).

C. MEC appeals to self-concept ("I'm like them, so I should buy their products"). The VALS lifestyle types are innovators, thinkers, achievers, experiencers, believers, strivers, makers and survivors.

(a) Demographic (age). (b) Psychographic (lifestyle and self-concept). (c) Behavioural (usage rate and loyalty). (d) Geographic (climate and province).

A. (The slide's note shows a different letter, but the explanation groups consumers by country, region, province, city, neighbourhood or climate, which confirms region.) Wild Lot started around Prince Edward County and expanded through the LCBO; Sobeys and Loblaws stock regional products.

Geodemographic segmentation combines geographic, demographic and lifestyle characteristics to describe how consumers segment themselves, on the idea "birds of a feather flock together": people in the same neighbourhoods buy similar cars, shop at similar retailers and respond similarly to media. The tool is PRIZM, which groups Canadians into 67 lifestyle clusters (for example Urban Digerati, Keep On Trucking and Cosmopolitan Elite).

Urban Digerati (cluster #11) is younger, tech-savvy, upper-middle-income, highly educated and culturally diverse singles living in downtown high-rises in Toronto and Montreal. Marketers use clusters like this to decide where to advertise and which products and media suit a neighbourhood.

Benefits sought: a food brand targets people who want convenience, while another targets those who want prestige. Usage: airline mileage programs and hotel points reward heavy users. Loyalty: points and rewards try to make customers completely loyal, although true brand loyalty is extremely rare.

Identifiable (who is in the segment, and are segments unique so each needs its own mix?), reachable (can the firm reach it with communication and distribution?), responsive (will customers react positively and accept the value proposition?), substantial (big enough, with growth potential?) and profitable (will it earn enough profit to justify the marketing mix?).

C, responsive. (Nike's personal care products raise a responsiveness question; La Senza wins with intimate apparel.)

(a) Substantial: the segment was too small and then declined as fuel costs and environmental concerns grew. (b) Reachable: the firm cannot easily communicate with the group through traditional media. (c) Identifiable: each group is unique and needs its own mix.

Homeowners: 75,000 × 0.01 = 750 customers; $100 × 12 = $1,200; revenue 750 × $1,200 = $900,000; × 0.60 = $540,000; − $400,000 = $140,000. Businesses: 1,000 × 0.20 = 200 customers; $500 × 20 = $10,000; revenue 200 × $10,000 = $2,000,000; × 0.80 = $1,600,000; − $1,000,000 = $600,000. Businesses are more profitable by $460,000 even though there are far fewer of them, because of higher price, frequency and margin. Choose the segment with the strongest return, not the biggest market.

Students: 20,000 × 0.04 = 800 customers; $30 × 10 = $300; revenue 800 × $300 = $240,000; × 0.50 = $120,000; − $20,000 = $100,000. Professionals: 5,000 × 0.10 = 500 customers; $60 × 12 = $720; revenue 500 × $720 = $360,000; × 0.70 = $252,000; − $40,000 = $212,000. Pursue the professionals: $212,000 against $100,000, which is $112,000 more, despite the segment being a quarter of the size.

20,000 ÷ (20,000 × $300 × 0.50) = 20,000 ÷ 3,000,000 = 0.67% (about 133 customers). Any adoption above that makes a profit. (For the professionals the break-even adoption rate is 40,000 ÷ (5,000 × $720 × 0.70) = 1.59%.)

C. The three factors are market growth (current size and growth rate), market competitiveness (number of competitors, entry barriers, substitutes) and market access (ease of reaching distribution channels, brand familiarity). Purchase behaviour (price × frequency) feeds the profit formula but is not on that list.

Undifferentiated: the same product and message for the whole market (salt, sugar, fuel). Differentiated: different offerings and mixes for several segments (Condé Nast's 26 niche magazines; Nike across many sports). Concentrated (niche): one clearly defined segment (Newton Running for forefoot runners; Cora's with breakfast and lunch only). Micromarketing: tailored to individual customers (Reebok Impact, Amazon's real-time recommendations, personalized M&M's).

A. Sugar is a basic item that provides the same benefit to everyone. (McDonald's is highly standardized in processes but does not consider itself a mass marketer.)

B. Different segments receive different offerings and marketing mixes, which widens coverage and diversifies risk but raises the costs of multiple products and campaigns.

Concentrated: deep customer understanding, loyalty and efficiency for a start-up or small budget; risky if the segment declines. Micromarketing: highly personalized value, enabled by data, AI and digital tools and more feasible online; but higher cost and complexity.

Positioning is the mental picture or perception people have of a company, its products and brands relative to competing products. The strategies are value (price relative to quality), product attributes, benefits and symbolism, competition (against a competitor or product class) and market leadership.

(a) Value. (b) Product attributes. (c) Benefits and symbolism. (d) Competition (against Hertz). (e) Market leadership.

A perceptual map displays the position of products or brands in the consumer's mind on two or more dimensions. The steps: (1) determine consumers' perceptions and evaluations of the product versus competitors, (2) identify competitors' positions, (3) determine consumer preferences, (4) select the position and (5) monitor the strategy. Repositioning changes a brand's focus to target new markets or to realign its emphasis with changing preferences (baking soda has been repositioned many times through new uses).

Segmentation: demographic (students) with a geographic element (campus). Targeting: concentrated (one clear segment) or differentiated if each campus gets its own tailored offer. Positioning: value (price relative to quality). It should check that the segment is substantial (enough students at each campus) and profitable (customers × price × frequency × margin must exceed fixed costs).

(1) Define the research problem and objectives, (2) design the research plan, (3) collect data, (4) analyze data and develop insights, (5) present the action plan. The steps are not always strictly linear, since researchers sometimes go back and forth, and planning the whole process in advance avoids unnecessary changes.

B. Research provides a crucial link between the firm and its customers and competitors, which keeps the firm customer oriented. It supports decisions on segmentation, positioning, pricing, promotion, product and distribution.

Step 4 (analyze data and develop insights): raw data have limited value until they are organized, analyzed and interpreted to describe, explain, predict or evaluate, and the analysis must be objective. In step 5 the report should be short and to the point, interesting and suited to its audience, free of technical jargon and include recommendations. A written report has an executive summary, a body (objectives, methodology, findings), conclusions and appendices.

Secondary data are pieces of information collected before the start of the focal project, from internal sources (invoices, customer lists, reports) or external sources (census data, trade journals, purchased research). They are free or inexpensive and fast, but may be outdated, not specific, collected for a different purpose or of unknown reliability. Primary data are collected to address the specific needs of the current project (focus groups, interviews, surveys, observation, experiments). They are tailored to the decision but cost more and take longer, and poor samples, biased questions or unrepresentative respondents can produce wrong conclusions.

D. That describes secondary data.

Internal: invoices, customer lists, firm reports, loyalty program data. External: Statistics Canada and census data, trade journals and periodicals (Canadian Business, Financial Post, Marketing Magazine), databases (CANSIM, Factiva, LexisNexis, SEDAR), trade sources (Nielsen, Conference Board of Canada) and online sources (competitors' websites, Google Alerts).

B. Scanner data are quantitative data from UPC readings and are a form of syndicated data. Panel data come from the same group of consumers recording purchases over time. Syndicated data are external secondary data sold for a fee by commercial research firms such as Nielsen and Léger.

Data mining uses statistical analysis tools to uncover previously unknown patterns in data or relationships among variables (for example which items shoppers buy together, so they can be promoted and displayed together, or reducing customer churn). Big data are data sets too large and complex for conventional data management software, analyzed with data mining tools; the usual five Vs are volume, variety, velocity, veracity and value. Netflix's use of big data helped its original content reach about an 80% success rate against 30 to 40% for traditional television.

Qualitative research is exploratory and informal and gives initial information to help formulate the problem or objectives (observation, social media research, in-depth interviews, focus groups). Quantitative research uses numerical data to verify those insights, test hypotheses and help decision makers choose a course of action (surveys, panels and scanner data, experiments). Both must be reliable (the same result when repeated), valid (measuring what they are meant to measure) and use a sampling plan that represents the population.

A. Quantitative research verifies insights with numbers.

(a) Focus group (A&W learned that many consumers thought a quarter-pound burger was larger than a third-pound burger, because 1/4 sounds bigger than 1/3). (b) Observation, including ethnography (useful when consumers cannot explain their behaviour). (c) In-depth interview (rich insight but time-consuming and expensive). (d) Social media research.

B. Social media research is large, current and accessible, and has no interviewer bias. Limits: not a representative sample, anonymity may encourage extreme opinions, little depth, no probing and no consent (so potential ethical issues).

A survey is a questionnaire designed for specific objectives, delivered online, by phone, by mail or in person. Panel and scanner research use ongoing data from the same consumers and checkout data. An experiment manipulates one or more variables to find the causal effect (McDonald's tests different prices for a new combo in different markets). Structured (closed-ended) questions give fixed answers and are easier to tabulate; unstructured (open-ended) questions let respondents answer freely.

C. Mail is 1 to 2% and phone is 10 to 15%; rates are higher in B2B.

(a) Double-barreled (two issues, one set of responses): ask about each politician separately. (b) Leading (steers the answer): use neutral wording such as "Rate how safe you believe a Volvo is, 1 to 10." (c) One-sided (presents only one side): ask "To what extent does fast food contribute to adult obesity? 1 to 5." (d) Hard to answer accurately: ask "When was the last time you went to the grocery store?" Other mistakes: sensitive questions, implicit assumptions and complex or unfamiliar questions.

An implicit assumption. The premise (caffeine is a stimulant) is built into the question; remove it and ask "Should children be allowed to drink Coca-Cola in school?"

C. Descriptive analytics summarizes past data, predictive forecasts future outcomes, prescriptive recommends optimal actions, and active analytics uses AI and Internet-of-Things data for real-time insights.

Marketing analytics uses advanced models and technologies to turn big data in data warehouses (billions of data points) into insights that support better marketing decisions, combining qualitative and quantitative methods. It is used to transform large datasets into insights, not just to store data. Tesco analyzes descriptive data for each product across 4,700 stores using up to 45 attributes, then uses purchase patterns to infer household characteristics and offer targeted incentives.

Ethical research protects consumer privacy and confidentiality, uses data only for legitimate research purposes and avoids misleading practices or disguising selling as research. Smart devices like the Roomba can collect sensitive information such as home layouts, and selling or sharing it without informed consent damages trust, so firms must obtain informed consent, disclose how the data are used and protect the data.

Frito-Lay used neuromarketing and found that shiny chip bags evoked guilt, so it switched to matte bags and sales grew.

A study is reliable if it produces the same result when repeated under identical conditions and valid if it measures what it is supposed to measure. A sampling plan must also represent the whole population of interest.

(1) Define the problem and objectives: do enough students want plant-based items and would they pay a price that covers costs? (2) Design the plan: decide the data needed (demand, price tolerance, competitors) and the methods. (3) Collect data: secondary (campus enrolment and Statistics Canada food spending data, the shop's own sales records) plus primary (a short online survey with structured questions, a small focus group, and possibly a price experiment on two campuses). (4) Analyze data: compare willingness to pay with costs and develop insights. (5) Present the action plan: a short, jargon-free report with the recommendation, for example launch three items with a sampling promotion.

(1) Changing customer needs (Dyson redesigned the century-old vacuum so it will not lose suction). (2) Market saturation (continuous innovation sustains growth; niche markets and diversified portfolios reduce risk, which is called risk diversification; General Mills labelled Chex gluten-free for a growing niche). (3) Fashion cycles (fashion, entertainment and software have short life cycles and depend on constant new products). (4) Improving business relationships (new products can strengthen supplier relationships, as with video game sequels). Without innovation a firm's value would ultimately decline.

A. Strong categories offset weak ones.

Pioneers (breakthrough products) create markets or radically change existing ones, and first movers can gain strong brand awareness and a lasting share lead. Not all succeed: Google Glass failed because of privacy concerns, bugs and being banned from public spaces, and followers can improve on pioneers' weaknesses. A disruptive innovation is a simpler, cheaper alternative that changes an industry (Netflix versus Blockbuster).

As many as 95% (one slide shows 50 as a wrong key letter, but the explanation says 95%). Reasons: poor market assessment (no proper testing, the wrong segment, poor positioning), too few benefits, too much complexity or learning effort, bad timing, and overextending the brand into things inconsistent with its image or value proposition.

B. (The slide's key letter is mislabelled, but the notes' own definition confirms B.) Diffusion follows a bell-shaped curve across categories of adopters.

Innovators 2.5%, early adopters 13.5%, early majority 34%, late majority 34%, laggards 16%. Innovators plus early adopters make 16%, and through the early majority is 50%.

(a) Innovators, (b) early adopters (social leaders), (c) early majority (drive profitability once risk is reduced), (d) late majority (the product has reached its full potential when they enter), (e) laggards (resist change and rely on traditional products until unavailable).

Innovators 2.5% = 50,000; early adopters 13.5% = 270,000; early majority 34% = 680,000; late majority 34% = 680,000; laggards 16% = 320,000 (total 2,000,000). By the end of the early majority 50% have adopted: 50,000 + 270,000 + 680,000 = 1,000,000.

B. Early adopters (13.5%) wait for reviews but influence others.

Relative advantage (products seen as better than substitutes diffuse faster; the phone replaced the telegraph because it carried voices). Compatibility (fits existing values and lifestyles; Starbucks spread faster in coffee-drinking Canada than in tea cultures). Observability (visible benefits; Blendtec's "Will It Blend?" videos). Complexity (simpler products diffuse faster). Trialability (easy trial reduces uncertainty; Dyson in-store displays).

Complexity: pairing the app takes too long, so simplify setup. Trialability: buyers cannot test it, so offer in-store demonstrations or a trial period. Observability or relative advantage: the benefits are not visible or clearly better than an ordinary bottle, so publicize visible results and show the advantage. Compatibility with daily habits is another valid factor.

Six: (1) idea generation, (2) concept testing, (3) product development, (4) market testing, (5) product launch and (6) evaluation of results. Every firm starts with idea generation and finishes with evaluation. Real projects are iterative and cross-functional with feedback loops, and skipping stages raises risk.

Internal R&D (IBM, 3M, Pfizer; scientists solving problems, an investment in the firm's future). Reverse innovation (global firms turn to subsidiaries in less developed markets; Coca-Cola's Shanghai centre created Minute Maid Pulpy, later sold in 19+ countries). Licensing (buying the rights to another firm's technology; Qualcomm licensing 5G to Apple). Brainstorming (free idea generation without immediate criticism; Henson Shaving moved from aerospace parts to razors). Outsourcing (hiring specialists; SimpliSafe hired IDEO). Competitors' products (reverse engineering). Customer input (observation, social media and lead users).

A. Licensing saves R&D cost but relies on an existing, unmarketed solution, and it is most common for scientific and technological products with complex patents.

Reverse innovation. It happens when global firms turn to subsidiaries in less developed markets for new product ideas.

Reverse engineering. A rival's success signals demand, and copycat strategies are common.

Concept testing presents a concept statement or a visual of the imagined product to potential buyers representative of the target market and gathers reactions, mainly purchase intentions. Alpha testing checks inside the firm whether the prototype performs to design and satisfies the need (Ben and Jerry's uses employees). Beta testing has potential consumers use the prototype in a real-use setting (Microsoft beta-tested Vista two years early). Premarket testing is done by research firms before launch to estimate how many customers will try and continue to use the product, producing a sales estimate.

C. Alpha testing checks the product in-house.

Test marketing offers the product in a limited geographic area before national launch. It reveals the product to competitors, so it is a poor fit for small incremental changes (a new soda flavour), niche products and items that are easily copied.

D. Distribution is not one of the listed considerations. The balance of the four sets the product's form and features.

Introduction: low sales, negative or low profits, innovators, one or few competitors. Growth: rising sales, rapidly rising profits, early adopters and early majority, few but increasing competitors. Maturity: peak sales, peak to declining profits, late majority, high number of competitors and products. Decline: declining sales and profits, laggards, low number of competitors and products.

(a) Introduction, with initial losses. (b) Growth (the tipping point is the shift from introduction to growth). (c) Maturity (late majority adopts; many consumer packaged goods are here). (d) Decline (harvest or divest; firms do not add inventory).

Develop new uses (Arm and Hammer baking soda around the house). Modify the product (iPod's smaller models and new colours). Increase frequency of use (Campbell's soup recipes that use soup as an ingredient). Increase the number of users (Swiss Army Knife adds an LED light and USB key). Find new users (Rollerblade moved from teens to young children and older adults). Reposition the product (vitamin D marketed to ward off disease). Tweak the marketing strategy (Apple lowers the price of older models when new ones launch).

The bell-shaped curve is only theoretical, each product has its own individual curve shape, and time in each stage varies. Not every product follows a life cycle. Misdiagnosing the stage can create a self-fulfilling decline, since a product wrongly judged to be in decline will decline. It cannot pinpoint where a product is, but it is fairly predictive of consumer needs and behaviour, so managers use it to plan pricing, product, promotion and placement.

Ideas and investments (not "research and development", because these industries rely on internal ideas and investment rather than a formal R&D lab). The second blank is individual (or unique): the curve's speed and shape depend on how different and valuable the product is.

(1) Idea generation: customer input (students and commuters), observation of competitors' products and brainstorming. (2) Concept testing: show a concept statement and image to representative target buyers and measure purchase intention. (3) Product development: build a prototype, alpha test with employees, then beta test with real users in their daily routine, balancing engineering, manufacturing, marketing and economic considerations. (4) Market testing: premarket testing to estimate trial and repeat, then test marketing in one region. (5) Launch: confirm the target market and positioning, finalize the mix and first-year budget. (6) Evaluation: compare results with forecasts and adjust the mix. At launch the product is in the introduction stage, with low sales and losses, innovators as the main buyers and few competitors, so the emphasis is on building awareness and trial with a basic product and selective distribution, then adding models, features and wider distribution as it moves into growth.

A product orientation (the production era) assumes that a good product sells itself and focuses on developing and distributing innovative products with little concern for whether they satisfy customer needs (2 marks). A value-based orientation keeps the market orientation of starting with customer wants and adds a focus on giving greater value than the competition, where value is the relationship of benefits to costs (2 marks). To compete, firms pursue the triple bottom line: people (customer needs and wants), profits (long-term profitable relationships) and planet (social and environmental responsibility) (1 mark). Example: Starbucks analyzes customer data, builds loyalty through its app and reduces plastic with strawless lids and compostable straws (1 mark).

(a) Strength (internal): a loyal local customer base. Weakness (internal): little brand recognition outside the neighbourhood. Opportunity (external): growing demand for gluten-free and plant-based baked goods. Threat (external): rising ingredient costs and a competitor chain opening nearby (economic situation and competition). (b) Product development (new products, current market): launch gluten-free items to current customers, since its strength is the existing customer base and there is a current opportunity in demand. Market penetration (more purchases from current customers through a loyalty card) would be a lower-risk alternative, while diversification (a new product in a new market) is the riskiest. Each point earns marks when it is tied to the facts, so reference the specific strength and opportunity.

Social and natural trends: consumers want sustainable products and laws penalize greenwashing, so the brand should use recycled materials and prove its claims (2 marks). Technological advances: mobile shopping and AI personalization, so it should improve its app and use data analytics to personalize offers while protecting privacy (2 marks). Economic situation: high household debt and a weak dollar reduce discretionary spending and raise import costs, so it should emphasize value and review pricing and sourcing (2 marks). Other valid factors: demographics (an ageing population, new Canadians), culture (regional subcultures) or political and legal changes (labelling and privacy rules).

The buying decision is habitual (low involvement), so almost no conscious effort is spent and the student automatically repurchases a familiar brand (1 mark). Psychological factors: a positive attitude (the student believes the coffee is better, likes it and keeps buying it), perception (the store atmosphere and brand image suggest a premium "third place"), learning from repeated good experiences, and lifestyle, since the purchase signals who the student is (3 marks). Social factors: reference groups (friends and classmates drink the same brand) (1 mark). Situational factors: a morning rush (temporal state) and a convenient location (1 mark). Marketers reinforce the habit through loyalty programs and easy ordering.

(a) Gym-goers: 30,000 × 0.08 = 2,400 customers; $3 × 50 = $150; revenue 2,400 × $150 = $360,000; × 0.40 = $144,000; − $30,000 = $114,000. Office workers: 100,000 × 0.02 = 2,000 customers; $3 × 20 = $60; revenue 2,000 × $60 = $120,000; × 0.40 = $48,000; − $30,000 = $18,000 (6 marks). (b) Target gym-goers: $114,000 against $18,000, even though the segment is much smaller, because customers buy far more often. Targeting only one segment is a concentrated (niche) strategy. Position on product attributes or benefits (high protein, plant-based, natural ingredients) or on benefits and symbolism (fitness and performance), and check that the segment is identifiable, reachable (gyms, fitness apps), responsive, substantial and profitable (4 marks).

(1) Define the problem: identify why carts are abandoned and which fixes would raise conversion. (2) Design the plan: decide to analyze existing data first, then ask customers. (3) Collect data: secondary data from internal sources (website analytics, order records, abandoned-cart reports) and primary data (an online survey of recent abandoners, a few in-depth interviews, and an experiment that offers free shipping to half the visitors). (4) Analyze: find patterns by device, price and page, and turn the data into insights. (5) Present the action plan to decision makers in plain language with recommendations. The question is leading (it steers the answer) and has an implicit assumption. A better version: "What, if anything, made you leave your cart without buying? (select all that apply)" or "Rate the checkout speed from 1 to 5."

(a) Maturity: sales peak, many competitors and products exist, and firms defend market share (2 marks). (b) Develop new uses (smart home control, fitness coaching), modify the product (smaller or lower-priced models), find new users (older consumers) or tweak the marketing strategy (lower the price of older models when new ones launch) (4 marks). (c) The late majority (34% of the market), who adopt after the product is established and after most friends own one; the product has reached its full potential, and profits depend on defending share and controlling costs (2 marks).

(a) A is a cash cow: harvest the cash and use it to fund others. B is a question mark: invest to try to make it a star or withdraw. C is a dog: usually divest unless it is strategically important. D is a star: invest heavily to maintain momentum, and as the market's growth slows it will become a cash cow (6 marks). (b) Market development (current product, new market) (2 marks).

Privacy: the Tim Hortons app collected location data even when not in use, which led to investigations and lawsuits, and smart devices like the Roomba can collect sensitive home-layout data. A responsible firm obtains informed consent, discloses how the data are used and protects the data (3 marks). Greenwashing: false or exaggerated green claims. Stricter laws require proof, and firms such as Starbucks that adopt strawless lids must follow through on real environmental benefits and keep listening to customers, because consumers still criticized single-use plastic (3 marks). Other issues: sampling bias and disguising selling as research, and the Cayla smart doll's unsecured Bluetooth.

(a) The retrieval set is the brands a consumer can readily recall from memory; the evoked set is the smaller group of alternatives actually considered when deciding. (b) Differentiated targeting serves several segments with different offerings and marketing mixes (Condé Nast's 26 magazines); concentrated targeting focuses on one clearly defined segment (Cora's, breakfast and lunch only). (c) Alpha testing checks inside the firm whether the prototype performs to design and meets the need; beta testing has potential consumers use it in a real-use setting. (d) Secondary data were collected before the project started (census data, invoices); primary data are collected for the current project (surveys, focus groups, experiments).