ADMN 201 — Ch12: Understanding Marketing Principles and Developing Products
This chapter builds the full marketing framework — from the foundational philosophy (Marketing Concept) through strategy tools (segmentation, research, mix) to product decisions (value package, PLC, branding, packaging).
mindmap root((Ch12: Marketing)) Marketing Concept Value = Benefits / Costs Whole firm serves customers Relationship Marketing + CRM 5 External Forces Marketing Plan + Mix Mission → Objectives → Strategy → Mix 4 Ps Product Price Place - Distribution Promotion Market Segmentation 5 Variables Demographic Geographic Geo-Demographic Psychographic Behavioural Target Marketing Positioning Marketing Research 4 Methods Observation Survey Focus Group Experimentation Consumer Buying Process 5 Steps Need Recognition Info Seeking + Consideration Set Evaluation Purchase - Rational + Emotional Post-Purchase Organizational Markets Industrial - Makers Reseller - Movers Institutional/Government - Servers B2B Rational Motives Product Development Value Package - Features to Benefits Product Classification Product Life Cycle NPD + Speed to Market Branding + Brand Equity Packaging - 3 Functions
Learning Objectives Map
| LO | Topic | Key Concept Page |
|---|---|---|
| LO1 | Marketing concept + 5 external forces | MarketingConcept |
| LO2 | Marketing plan + 4 Ps | MarketingMix |
| LO3 | Market segmentation, targeting, positioning | MarketSegmentation |
| LO4 | Marketing research — purpose and methods | MarketingResearch |
| LO5 | Consumer buying process + influencing factors | ConsumerBuyingProcess |
| LO6 | Organizational markets + B2B behaviour | OrganizationalMarkets |
| LO7 | Product as value package; goods/services classification | ProductDevelopment |
| LO8 | NPD, PLC, branding, packaging | ProductDevelopment |
Section 1 — Marketing Concept & External Environment (LO1)
Marketing = organizational function for creating, communicating, and delivering value; managing customer relationships to benefit the firm and stakeholders.
Marketing Concept = the entire firm (not just marketing department) is coordinated to serve present and potential customers at a profit.
Relationship Marketing: Building lasting bonds with customers rather than one-off transactions.
CRM: Organized methods + data warehousing + data mining to build client information connections.
Five External Forces
| Force | What It Is |
|---|---|
| Political/Legal | Laws/regulations governing marketing (e.g. Consumer Packaging and Labelling Act) |
| Sociocultural | Shifting values, demographics, lifestyle trends (e.g. meatless meat) |
| Technological | New tech creating/destroying products (e.g. IKEA + Pinterest) |
| Economic | Business cycle, inflation, interest rates — determine spending power |
| Competitive | Brand competition, substitute products, international competition |
Substitute products are the most-missed type: a different product that solves the same need (fitness program vs. cholesterol medication).
Section 2 — Marketing Plan & Marketing Mix (LO2)
Planning hierarchy (order matters — exam target):
Business Mission → Marketing Objectives → Marketing Strategy → Marketing Mix
The 4 Ps
| P | What it covers | Example |
|---|---|---|
| Product | Good, service, or idea; value package; differentiation | Lululemon’s yoga-inspired identity |
| Price | Best price to sell; signals value | Rolex at thousands of dollars |
| Place | Distribution — getting the product to the customer | Rolex sold only through exclusive retailers |
| Promotion | Communicating information about the product | Advertising, PR, buzz marketing, viral marketing |
- Product Mix = everything the firm sells; Product Line = a related subset
- All 4 Ps must be internally consistent — misaligned Ps destroy positioning
Section 3 — Market Segmentation, Targeting & Positioning (LO3)
Segmentation = dividing the market (analysis). Targeting = choosing the segment (decision). Positioning = fixing the product in the consumer’s mind relative to competitors (perception).
5 Segmentation Variables
| Variable | Based on |
|---|---|
| Demographic | Age, income, gender, ethnicity, marital status |
| Geographic | Region, climate, urban/rural |
| Geo-Demographic | Combined geographic + demographic |
| Psychographic | Lifestyle, opinions, interests, attitudes |
| Behavioural | Benefits sought, usage rate, loyalty status, user status, occasion |
- Sniper approach (targeted) outperforms Scatter Gun (mass) in ROI
- Psychographics explain why people buy; demographics just tell you who
- Positioning is psychological — it is about the consumer’s mind, not the store shelf
Section 4 — Marketing Research (LO4)
Purpose: Reduce risk by studying what customers need/want; clarify stakeholder interactions.
Process: Study situation → Select method → Collect/analyze data → Prepare report
Four Research Methods
| Method | How | Best For |
|---|---|---|
| Observation | Watch behaviour (in-store, cameras, loyalty data) | Actual behaviour — no stated intent bias |
| Survey | Question a representative sample | Specific, quantifiable answers |
| Focus Group | 6–15 people + moderator discussion | Qualitative depth — the “why” |
| Experimentation | A/B test under controlled conditions | Isolating causal variables |
- Only Experimentation can establish cause-effect; others reveal patterns
- Representative sample: must accurately reflect the population; biased sample = useless data
- Modern: Crowdsourcing, data mining, electronic observation
Section 5 — Consumer Buying Process (LO5)
Consumer Behaviour = study of the decision process by which people buy.
5 Steps
- Problem / Need Recognition — the trigger; without it the process never starts
- Information Seeking — internal (memory) + external (search) → forms Consideration Set
- Evaluation of Alternatives — attribute analysis; product differentiation works here
- Purchase Decision — Rational motives (cost, quality, usefulness) + Emotional motives (sociability, aesthetics, imitation) — most decisions are both
- Post-Purchase Evaluation — satisfaction → loyalty; dissatisfaction → detraction + negative social media
- Consideration Set is the gatekeeper — if you’re not in it, you can’t be bought
- Brand equity can compress the evaluation stage by creating loyalty before comparison
- Marketing does not end at the sale
Section 6 — Organizational Markets & B2B Behaviour (LO6)
B2B does more than 2× the volume of consumer markets annually.
Three Categories
| Market | Who | What they do with the product |
|---|---|---|
| Industrial | Manufacturers, farmers | Convert into other products or use during production |
| Reseller | Wholesalers, retailers | Buy finished goods and resell unchanged |
| Government/Institutional | Federal/provincial/municipal + hospitals, charities, museums | Serve clients or citizens |
Canadian federal government spent ~$303.6B in 2020 — a massive buyer.
B2B Buying Behaviour
- Professional, specialized, well-informed buyers
- Decisions driven by rational motives (cost, efficiency, performance, maintenance)
- Long-term buyer-seller relationships; bulk orders
- Classification depends on buyer intent — same coffee beans can be consumer or industrial
Section 7 — Product as Value Package (LO7)
Value Package = bundle of tangible + intangible attributes that satisfy a want or need.
Features = qualities of the product (what). Benefits = results the customer achieves (why). Customers buy benefits.
Product Classification
- Consumer goods (B2C — personal use): Convenience / Shopping / Specialty
- Industrial goods (B2B — production/operations)
- Services (intangible)
- Ideas (causes, concepts)
Dual identity: Same item → consumer or industrial depending on buyer intent (coffee bean rule).
Section 8 — NPD, Branding & Packaging (LO8)
Product Life Cycle
Introduction → Growth → Maturity → Decline — products must be replaced or extended.
NPD: R&D → high mortality rate (most ideas fail) → Speed to market is the key success factor.
Alternatives to new products: Product Extension (same globally) · Product Adaptation (modify for local) · Reintroduction (old product, new market)
Brand Equity
- Added value a brand name provides beyond functional benefits → allows premium pricing
- Coca-Cola brand value: 12.1B
- Fragile: unethical corporate behaviour destroys equity and pricing power
Brand types: National brands (manufacturer’s name), Private brands (retailer’s name), Generic brands (category name, no brand)
Packaging — Three Functions
- Marketing: Attractive, differentiating, feature-identifying — “the silent salesman”
- Logistical: Physical protection, theft prevention
- Legal: Consumer Packaging and Labelling Act — bilingual (French/English) required in Canada
Key Terms Quick Reference
| Term | Definition |
|---|---|
| Marketing Concept | Entire firm serves present/potential customers at a profit |
| Value | Benefits / Costs (functional + emotional on both sides) |
| CRM | Organized methods to build client information connections |
| Marketing Mix | The 4 Ps: Product, Price, Place, Promotion |
| Market Segmentation | Dividing market into customer categories with similar needs |
| Target Market | Specific customer group chosen as marketing focus |
| Positioning | Product’s place in the consumer’s mind vs. competitors |
| Consumer Behaviour | Study of the decision process by which people buy |
| Consideration Set | The shortlist of brands a consumer actually compares |
| Rational Motives | Cost, quality, usefulness — logical purchase reasons |
| Emotional Motives | Sociability, aesthetics, imitation — feeling-based reasons |
| Industrial Market | Firms that buy goods to convert into other products |
| Reseller Market | Intermediaries that buy and resell finished goods unchanged |
| Value Package | Bundle of features and benefits that satisfies a customer need |
| Product Life Cycle | Introduction → Growth → Maturity → Decline |
| Speed to Market | How quickly a firm introduces new products; key success factor |
| Brand Equity | Added value a brand name provides beyond functional benefits |
| Product Adaptation | Modifying product for different markets/cultures |
| Packaging (legal) | Must be bilingual (French/English) in Canada |