Chapter 3 and 4 Test Review Slides Know these slides, do well. You’re welcome. -Mr. Fortuna

Free Market Free Market – Businesses can make a profit (eg. Canada, USA) Profit drives business –Businesses want to maximize the amount of profit they make What if business people could not keep their profits?

Benefits of Competition Did you try harder when you know you were competing for a prize? Businesses compete for our money Improves the quality of goods or services they provide –Better for consumers (lower prices, better product)

Competitive Advantages Business look for advantages over competition –Some may be temporary Eg. Rock Band/Guitar Hero, Coke Zero/Pepsi Max, Quiznos/Subway True competitive advantage is sustainable

Sustainable Competitive Advantages Methods by which a business holds on to its customers in spite of competition How? –Unique selling proposition –Lower production costs –Servicing a niche market –Creating customer loyalty

Unique Selling Proposition Why would a customer buy from me instead of others? –Must be something a competitor could not duplicate easily Eg. Patent, licensing.

Price Features being equal, price is only a competitive advantage if it is lower –Not sustainable. Competitors can always lower their prices as well. Image pricing – people may not want lower prices. –Eg. Cadillac, Mercedes

Retail businesses we shop at are part of the service sector, even though they sell us a tangible product They do not make the products or add anything to the products they resell We actually pay for the service they provide

Increasing Market Share Expand the pie? Or take a bigger chunk of the pie? Difficult to expand the pie –Medical discoveries cause this to happen

Business must tailor competitive efforts to fit foreign market Customers react differently in different markets Research is the most important activity

Test Marketing Some companies will produce a limited quantity of a product and introduce it to a test market to see how well it will sell –Find areas that have demographic profiles that mirror the country as a whole Eg. Peterborough Movie sneak previews? Grocery items? Kept a secret –Avoid skewing information, avoid competition

What is Marketing Research? Systematic collection, analysis and interpretation of information Used to develop marketing strategy or solve a marketing problem

Gathering Primary Data Primary data is unanalyzed, current information collected by a researcher for a specific purpose Two types of primary research: –Quantitative –Qualitative

Quantitative Examples of quantitative analysis include: –Test Marketing –Internal Information Sources –Surveys –Observation –Focus Group Interviews

Observations Recording actions of people without interacting or communicating –Hidden camera? One way mirrors? See how people behave More accurate than surveys, but more expensive –Less effective in large groups –People are influenced by others, and tough to see one person out of a group

4.2 Secondary Data Secondary Data – marketing research collected and published by others e.g. Statistics Canada Census dataSecondary Data – marketing research collected and published by others e.g. Statistics Canada Census data Secondary Research – using secondary data for marketing purposes. This is much cheaper although less effective.Secondary Research – using secondary data for marketing purposes. This is much cheaper although less effective. Types of Secondary Data – books, periodicals, indexes, databases, the Internet, consultants, market research firmsTypes of Secondary Data – books, periodicals, indexes, databases, the Internet, consultants, market research firms

Consumer Research Consumer-Tracking Devices – where consumers shop, what they buy. Data is collected by bar- code scanners, coupons, ‘points’ cards e.g. AirmilesConsumer-Tracking Devices – where consumers shop, what they buy. Data is collected by bar- code scanners, coupons, ‘points’ cards e.g. Airmiles

Free Market Private Property – We can buy things and keep them, sell them or give away. –Can be used to make a profit –Eg. Using equipment to make things to sell for a profit Or buy something at one price and sell it at a higher one to make a profit Risky! We should be rewarded for our risk. –Eg. Hockey or concert tickets

Promotion Place brands in minds of consumers –Eg. Roll Up the Rim to Win Top of the Mind Awareness: Consumer is most likely to think about one brand of product or service before another. Can you think of any examples?

Degree of Service Competitive advantage can be gained from the quality of services offered –Eg. Customer support – Laptops? Electronics? –Hotels/Air Travel? Some offer fewer services to keep costs low for the customers

3.4 The Product/Service Mix

Competitive Market Market Size: Amount of money consumers spend annually on these specific products –Eg. Dragons Den – Underwear Market Market Share: the % one company’s product takes of the total dollars spent by consumers on products within a specific category

Must know tariffs on the product Tariffs: taxes placed on goods imported into a country to protect local industries from foreign competition Landed Cost: takes into account shipping costs, currency exchange, tariffs –Can product be sold at a competitive cost?

Free Market Private Property – We can buy things and keep them, sell them or give away. –Can be used to make a profit –Eg. Using equipment to make things to sell for a profit Or buy something at one price and sell it at a higher one to make a profit Risky! We should be rewarded for our risk. –Eg. Hockey or concert tickets

Types of Competition Perfect Competition Large number of small companies, none of whom have an opportunity for market control. Monopolistic Competition Large number of companies, each with some market control Oligopoly Small number of large companies. Great deal of price control Monopoly Single company has complete market control

Non Sustainable Competitive Advantages Promotion Placement Quality Benefits of Use Price Design Features

Service Competition Some business set up to perform specific services for customers Value-Added Services: Activities performed to support the sale of a product or other service Intangibles – these things cannot be touched

How Do Service Businesses Compete? Convenience Degree of Service Selection Reputation Price

Selection Offering greater selection of services –Eg. Blockbuster vs. Local Convenience Store –Convenience store vs. Sobeys or Fortinos Wide Selection: large number of different brands or types of merchandise Deep Selection: large quantities of one specific product or type of product

Example: Old Navy Provides variety and size selection Fitting rooms Return or exchange policies Different payment options Convenient locations Old Navy acts as middleman between consumer and manufacturer

Regulation of coupons and contests Media censorship –More or less restrictive Cultural differences –Portrayal of women –Religion (Liquor/Muslim countries)

Remainder of Ch 4 That has not been covered in these slides. Good luck.