Resume Marketing Management, 14th Edition – Kotler & Keller

KOTLER RESUME Marketing Management Philip Kotler – Kevin Lane Keller SUMMARY PART 1 Understanding Marketing Management4 Defining Marketing for the 21st Century4 Developing Marketing Strategies and Plans5 PART 2 Capturing Marketing Insights13 Collecting Information and Forecasting Demand13 Conducting Marketing Research16 PART 3 Connecting with Customers18 Creating Long-term Loyalty Relationships18 Analyzing Consumer Markets21 Analyzing Business Markets25 Identifying Market Segments and targets28 PART 4 Building Strong Brands31 Creating Brand Equity31 Crafting the Brand Positioning34Competitive Dynamics36 PART 5 Shaping the Market Offerings39 Setting Product Strategy39 Designing and Managing Services41 Developing Pricing Strategies and Programs46 PART 6 Delivering Value53 Designing and Managing Integrated Marketing Channels53 Managing Retailing, Wholesaling, and Logistics58 PART 7 Communicating Value60 Designing and Managing Integrated Marketing Communications60 Managing Mass Co mmunications : Advertising, Sales Promotions, Events and Experiences, and Public Relations63 Managing Personal Communications : Direct and interactive Marketing, Word of Mouth, and Personal Selling68PART 8 Creating Successful Long-term Growth72 Introducing New Market Offerings72 Tapping into Global Offerings86 Managing a Holistic Marketing Organization for the Long Run93 PART1: UNDERSTANTING MARKETING AND MANAGEMENT CHAPTER 1: DEFINITNG MARKETING FOR THE 21st CENTURY THE IMPORTANCE OF MARKETING Marketing is a significant dimension of any business in today’s highly competitive environment and financial success is often dependent on marketing ability. Marketing is crucial for business success. THE SCOPE OF MARKETING Marketing is about identifying and meeting human and social needs.One of the shortest definitions of marketing is the process of meeting needs profitably. Marketing management is the art and the science of choosing target markets and getting, keeping and increasing customers though creating, managing, communicating and delivering superior customer value. UNDERSTANDING MARKETS Marketing can be used for: Services, products, services and products, events, experiences, people, places ideas Marketing managers seek to influence the level, timing, and composition of demand to meet the organization’s objectives. Eight states of market demand are possible: Full demand: consumers buy all services or products brought to market. – Overfull demand: there are more consumers demanding the service or product than can be satisfied. – Irregular demand: consumer purchases vary on a seasonal, monthly, weekly†¦ – Declining demand: consumers begin to buy services or products less frequently or not all. – Negative demand: consumers dislike the service or product and may even pay a price to avoid it. – Nonexistent demand: consumers may be unaware of or uninterested in the product or service. – Latent demand: consu mers may share a strong need that cannot be satisfied by an existing product or service. Unwholesome demand: consumers may be attracted to services or products that have undesirable social consequences. In each case, marketers must identify the underlying causes of the demand state then determine a plan of action to shift the demand to a more desirable state. HOW IS MARKETING PRACTICED? Marketing practice can be viewed in many perspectives. The traditional view is the KOTLERIAN marketing management view of managing the marketing mix after selecting target market and positioning. TRANSACTIONAL, RELATION AND SERVICE MARKETINGTransaction marketing is defined as attracting and satisfying potential buyers by managing the elements in the marketing mix. Interaction marketing: implies face to face interaction between individuals. Network marketing is with the consumers but occurs across and among organization. The concept was developed by the Nordic school from northern Europe and developme nts from the USA. Relationship marketing in its simplest form is a progression from the dominant and often criticized the 4 P focus. The relational is focus on building long-term relationships with consumers CHAPTER 2 : DEVELOPING MARKETING, STRATEGIES AND PLANMarketing is about satisfying consumers' needs and wants. The task of any business is to deliver customer value at a profit. I. The value Delivery Process The traditional view of marketing is that the firm makes something and then sells it. Companies that subscribe to this view have the best chance of succeeding in economies marked by goods shortages where consumers are not fussy about quality, features, or style-for example, basic staple goods in developing markets. There, the â€Å"mass market† is actually splintering into numerous micro markets, each with its own wants, perceptions, preferences, and buying criteria.The smart competitor must design and deliver offerings for well-defined target markets. II. The value C hain Michael Porter of Harvard has proposed the value chain as a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to design, produce, and market, deliver, and support its product. The value chain identifies nine strategically relevant activities-five primary and four support activities-that create value and cost in a specific business. He firm's infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.The firm's task is to examine its costs and performance in each value-creating activity and to look for ways to improve it. Managers should estimate their competitors' costs and performances as benchmarks against which to compare their own costs and performance. The firm's success depends not only on how well each department performs its work, but also on how well the company coordinates departmental activities to conduct core business processes. †¢ The market-sensing process. †¢ The new-offering realization process. †¢ The customer acquisition process. †¢ The customer relationship management process. The fulfilment management process. To be successful, a firm also needs to look for competitive advantages beyond its own operations, into the value chains of suppliers, distributors, and customers. III. Core competencies Many companies today outsource less-critical resources if they can obtain better quality or lower cost. The key, is to own and nurture the resources and competencies that make up the essence of the business. A core competency has three characteristics: 1. It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits. 2.It has applications in a wide variety of markets. 3. It is difficult for competitors to imitate. Business realignment may be necessary to maximize core competencies. It has three steps: 1. Defining the business concept or à ¢â‚¬Å"big idea† 2. Shaping the business scope 3. Positioning the company's brand identity. IV. A holistic marketing Orientation and Customer Value A holistic marketing orientation can also help capture customer value. The holistic marketing framework is designed to address three key management questions: 1. Value exploration- How can a company identify new value opportunities? 2.Value creation- How can a company efficiently create more promising new value offerings? 3. Value delivery—–How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently? A. Value exploration Understanding the relationships among three spaces: – The customer's cognitive space – The company's competence space – The collaborator's resource space. B. Value Creation To create new customer benefits, marketers must understand what the customer thinks about, wants, does, and worries about and observe whom customers admire and i nteract with, and who influences them.C. Value Delivery The company must become proficient at customer relationship management, internal resource management, and business partnership management. Customer relationship management allows the company to discover whom its customers are, how they behave, and what they need or want. V. The central role of the strategic planning Successful marketing thus requires companies to have capabilities such as understanding customer value, creating customer value, delivering customer value, capturing customer value, and sustaining customer value.To ensure that they select and execute the right activities, marketers must give priority to strategic planning in three key areas: managing a company's businesses as an investment portfolio, assessing each business's strength by considering the market's growth rate and the company's position and fit in that market, and establishing a strategy. For each business, the company must develop a game plan for achi eving its long-run objectives. The marketing plan is the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical.All corporate headquarters undertake four planning activities 1. Defining the corporate mission 2. Establishing strategic business units 3. Assigning resources to each SBD 4. Assessing growth opportunities I. Defining the corporate mission To define its mission, a company should address Peter Drucker's classic questions:What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our business be? These simple-sounding questions are among the most difficult a company will ever have to answer.The good mission statements have five major characteristics. First, they focus on a limited number of goals. †¢ Industry. Some companies will operate in only one industry; some only in a set of related industries; some only in industrial goods, c onsumer goods, or services; and some in any industry. †¢ Products and applications. Firms define the range of products and applications they will supply. †¢ Competence. The firm identifies the range of technological and other core competencies it will master and leverage. †¢ Market segment. The type of market or customers a company will serve is the market segment. Vertical. The vertical sphere is the number of channel levels, from raw material to final product and distribution, in which a company will participate. †¢ Geographical. The range of regions, countries, or country groups in which a company will operate defines its geographical sphere. II. Establishing Strategic Business Units Large companies normally manage quite different businesses, each requiring its own strategy. General Electric has classified its businesses into 49 strategic business units, SBlls. An SBU has three characteristics: 1.It is a single business, or a collection of related businesses, that can be planned separately from the rest of the company. 2. It has its own set of competitors. 3. It has a manager responsible for strategic planning and profit performance, who controls most of the factors affecting profit. III. Assigning Resources to Each SBU Once it has defined SBUs, management must decide how to allocate corporate resources to each. Management would want to grow, â€Å"harvest† or draw cash from, or hold on to the business. IV. Assessing growth Opportunities A. Intensive GrowthCorporate management's first course of action should be are view of opportunities for improving existing businesses. B. Integrative Growth A business can increase sales and profits through backward, for- ward, or horizontal integration within its industry. Media companies have long reaped the benefits of integrative growth. C. Diversification Growth Diversification growth makes sense when good opportunities exist outside the present businesses-the industry is highly attractive a nd the company has the right mix of business strengths to be successful. D. Downsizing and Divesting Older BusinessesWeak businesses require a disproportionate amount of managerial attention. Companies must carefully prune, harvest, or divest tired old businesses in order to release needed resources to other uses and reduce costs. VI. Organization and Organizational Culture Five key strategies for managing change in an organization: 1. Avoid the innovation title-Pick 2. Use the buddy system-Find 3. Set the metrics in advance- 4. Aim for quick hits first- 5. Get data to back up your gut-Use testing to get feedback and improve an idea The Business Unit Strategic Planning I. The Business MissionEach business unit needs to define its specific mission within the broader company mission. Therefore, a television-studio-lighting-equipment company might define its mission as, â€Å"To target major television studios and become their vendor of choice for lighting technologies that represent the most advanced and reliable studio lighting arrangements. † II. SWOT ANALYSIS The overall evaluation of a company's strengths, weaknesses, opportunities, and threats is called SWOT analysis. It's a way of monitoring the external and internal marketing environment. A. External Environment (opportunity and threat) AnalysisThe business unit should set up a marketing intelligence system to track trends and important developments and any related opportunities and threats. Good marketing is the art of finding, developing, and profiting from these opportunities. A marketing opportunity is an area of buyer need and interest that a company has a high probability of profitably satisfying. Opportunities can take many forms, and marketers need to be good at spotting them. To evaluate opportunities, companies can use market opportunity analysis (MOA) to determine their attractiveness and probability of success by asking questions like: To articulate the benefits convincingly to a define d target market(s)? – To locate the target market(s) and reach them with cost-effective media and trade channels? – To possess or have access to the critical capabilities and resources we need to deliver the customer benefits? – To deliver the benefits better than any actual or potential competitors? 5. To rate of return meet or exceed our required threshold for investment? B. Internal Environment (strengths and weaknesses) It's one thing to find attractive opportunities, and another to be able to take advantage of them.Each business needs to evaluate its internal strengths and weaknesses. C. Goal Formulation This stage of the process is called goal formulation. Goals are objectives that are specific with respect to magnitude and time. The unit's objectives must meet four criteria: 1. They must be arranged hierarchically, from the most to the least important. 2. Objectives should be quantitative whenever possible. 3. Goals should be realistic. Goals should arise from an analysis of the business unit's opportunities and strengths, not from wishful thinking. 4. Objectives must be consistent.It's not possible to maximize sales and profits simultaneously. III. Strategic Formulation A. Porter Generic Strategies – Overall cost leadership. Firms pursuing this strategy work hard to achieve the lowest production and distribution costs so they can price lower than their competitors and win a large market share. – Differentiation. The business concentrates on uniquely achieving superior performance in an important customer benefit area valued by a large part of the market. – Focus. The business focuses on one or more narrow market segments. B. Strategic Alliances Product or service alliances-One company licenses another to produce its product, or two companies jointly market their complementary products or a new product. – Promotional alliances One company agrees to carry a promotion for another company's product or servic e. – Logistics alliances One company offers logistical services for another company's product. – Pricing collaborations One or more companies join in a special pricing collaboration. Hotel and rental car companies often offer mutual price discounts. D. Program Formulation and ImplantationThe unit has decided to attain technological leadership, it must plan programs to strengthen its R department, gather technological intelligence, develop leading-edge products, train the technical sales force, and develop ads to communicate its technological leadership. Businesses are also increasingly recognizing that unless they nurture other stake- holders-customers, employees, suppliers, distributors-they may never earn sufficient profits for the stockholders. E. Feedback and Control The company has to point out that it is more important to â€Å"do the right thing†-to be effective-than â€Å"to do things right†-to be efficient.The most successful companies excel at b oth. Product Planning: The Nature and Contents of a Marketing Plan What, does a marketing plan look like? What does it contain? – Executive summary and table of contents. The marketing plan should open with a brief of the main goals and recommendations. A table of con- tents outlines the rest of the plan and all the supporting rationale and operational detail. – Situation analysis. This section presents relevant background data on sales, costs, the market, competitors, and the various forces in the macro environment.How do we define the market, how big is it, and how fast is it growing? What are the relevant trends? What is the product offering and what critical issues do we face? Firms will use all this information to carry out a SWOT (strengths, weaknesses, opportunities, threats) analysis. – Marketing strategy . Here the product manager defines the mission, marketing and financial objectives, and groups and needs that the market offerings are intended to sati sfy. The manager then establishes the product line's competitive positioning, which will inform the â€Å"game plan† to accomplish the plan's objectives.All this requires inputs from other areas, such as purchasing, manufacturing, sales, finance, and human resources. – Financial projections. Financial projections include a sales forecast, an expense fore- cast, and a break-even analysis. On the revenue side, the projections show the forecasted sales volume by month and product category. On the expense side, they show the expected costs of marketing, broken down into finer categories. The break-even analysis shows how many units the firm must sell monthly to offset its monthly fixed costs and average per-unit variable costs. – Implementation controls.The last section of the marketing plan outlines the controls for monitoring and adjusting implementation of the plan. Typically, it spells out the goals and budget for each month or qU31ter, so management can review each period's results and take corrective action as needed. PART 3 : CAPTURING MARKETING INSIGHTS CHAPTER 3 : COLLECTING INFORMATION AND FORECASTING DEMAND Three developments make the need for marketing information greater now than at any time in the past: – Rise of global marketing – New emphasis on buyers’ wants, preferences and behaviour – Trend toward non price competitionTo carry out their analysis, planning, implementation, and control responsibilities, marketing managers need a Marketing Information System (MIS). The MIS’s role is to assess the managers’ information needs, develop the needed information, and distribute that information in a timely manner. It is really easiest and effective with this method to collect information of various countries as it gives: – Quick information – Competitive advantage – Guides the marketing decision It relies on internal company records, marketing intelligence activities & res earch. INTERNAL RECORDS & MARKETING INTELLIGENCESpot important opportunities & problems THE ORDER-TO-PAYMENT CYCLE = the heart of the internal records system Favored firms are those which can promise timely delivery so they have to improve: o Speed o Accuracy o Efficiency This will save costs as well and it is the MIS role! SALES INFORMATION SYSTEMS Reports on current sales are indispensable for marketing managers. Inventory data warehouse is a great tool to capture all important data This will help to be aware of every kind of situation and manage it! Cookies are also a useful tool to provide information to companies.Technological gadgets are revolutionizing sales information systems but sales dta must be carefully interpret. DATABASES, DATA WAREHOUSING, AND DATA MINING Databases are essential to companies to organize their information. This is used in several areas for different information: customer, product, sales person†¦ Advantages: Save mailing expenses Help and make eas y access to decision makers Can be used for statistical methods for usefukl information Managers can yield still deeper insights using its own in-house technology THE MARKETING INTELLIGENCE SYSTEMIt is a set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment. It can also be called HAPPENINGS DATA. Several steps can be taken by companies to improve the quality of its marketing intelligence: – Train & motivate the sales force to spot and report new development – Motivate distributors, retailers, and other intermediaries to pass along important intelligence – Network externally: giving an immediate competitive advantage – Set up customer advisory panel – Take advantage of government data resources Purchase information from outside suppliers: lower costs – Use online customer feedback systems to collect competitive intelligence Competitive intelligence function work s bests when intelligence operations collaborate closely with key users in the decision-making process! Needs and Trends A trend is a direction or sequence of events that have some momentum and durability. We can draw distinctions among fads, trends, and megatrends. Trends are more predictable and durable. A trend reveals the shape of the future. Trends and megatrends merit marketers’ close attention.Identifying the Major Force In the economical arena, companies and consumers are increasingly affected by global forces. Substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth trade and investment, especially tripolar trade. – The rising economic power of several Asian countries in world markets. – The rise of trade blocs such as the European Union and the NAFTA signatories. – The severe debt problems of a numbers of countries, along with the increasing fragility of the international financi al system.Successful companies realize that the marketing environment presents a neverending series of opportunities and threats. The major responsibility for identifying significant changes in the macroenvironment falls to a company’s marketers. More than any other group in the company, marketing managers must be the trend trackers and opportunity seekers. 1. Within the rapidly changing global picture, marketers must monitor six major environmental forces: demographic, economic, natural, technological, political-legal, and social-cultural. 2.In the demographic environment, marketers must be aware of worldwide population growth; changing mixes of age, ethnic composition, and educational levels; the rise of non traditional families; large geographic shifts in population; and the move to micromarketing and away from mass marketing. 3. In the economic arena, marketers need to focus on income distribution and levels of savings, debt, and credit availability. 4. In the social-cult ural arena, marketers must understand people’s views of themselves, others, organizations, society, nature, and the universe.They must market products that correspond to society’s core and secondary values, and address the needs of different subcultures within a society. 5. In the natural environment, marketers need to be aware of raw-materials shortages, increased energy costs and pollution levels, and the changing role of governments in environmental protection. 6. In the technological arena, marketers should take account of the accelerating pace of technological change, opportunities for innovation, varying R&D budgets, and the increased governmental regulation brought about by technological change. . In the political-legal environment, marketers must work within the many laws regulating business practices and with various special-interest groups. CHAPTER 4 : CONDUCTING MARKETING RESEARCH The components of a modern marketing information system A marketing informatio n system (MIS): consists of people, equipment, and procedures to gather, short, analyze, evaluate and distribute needed, timely, and accurate information to marketing decision makers. Internal Records System It is the most basic information system used by marketing managers. (Sales, prices, inventory levels†¦)The order-to-payment cycle Sales reporting system MARKETING INTELLIGENCE SYSTEM Is a set of procedures and sources used by managers to obtain their everyday information about pertinent developments in the marketing environment? MARKETING RESEARCH SYSTEM Are the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company? SUPPLIERS OF MARKETING RESEARCH Many ways: engaging students or professors to design and carry out marketing research projects; using online information services; checking out rivals.THE MARKETING RESEARCH PROCESS Step 1 : Define the problem and research objectives Step 2 : devel oping the research plan. Decisions on the data sources, research approaches, research instruments, sampling plan, and contact methods Step 3 : Collect the information. The data collection phase of marketing research is the most expensive and the most prone to error. Step 4 : Analyze the information. Extract pertinent findings from the collected data. Step 5 : Present the findings. Major findings are pertinent to the major marketing decisions facing management.MARKETING DECISION SUPPORT SYSTEM Is a coordinated collection of data, systems, tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action? FORECASTING AND DEMAND MEASUREMENT †¢ A VOCABULARY FOR DEMAND MEASUREMENT Market demand Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period i n a defined marketing environment under a defined marketing program.Market potential Is the limit approached by market demand as industry marketing expenditures approach infinity, for a given environment? Company demand Is the company’s estimated share of market demand at alternative levels of company marketing effort? Forecast Is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment? A sales quota Is the sales goal set for a product line, company division, or sales representative? It is primarily a managerial device for defining and stimulating sales effort. A sales budgetIs a conservative estimate of the expected volume of sales and is used primarily for making current purchasing, production, and cash-flow decisions. Company sales potential ESTIMATING CURRENT DEMAND Total market potential Area market potential †¢Market-build-up method †¢Multiple-factor index method 3. Industry sales and market shares Estimating i ndustry sales and market shares (Identifying competitors and estimating their sales ESTIMATING FUTURE DEMAND Survey of buyers’ intentions Composite of sales force opinions Expert opinion Market test method PART 3 : CONNECTING WITH CUSTOMERS CHAP 5 CREATING LONG TERM LOYALTY RELATIONSHIPSBuilding customer value, satisfaction and loyalty Customer-perceived value (CPV) is the difference between the entire perceived customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Applying value concepts The customer value analysis reveals the company’s strengths and weaknesses relative to those of various competitors. Delivering high customer value Loyalty is a deeply held commitment to rebuy a preferred product and service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.The value proposition consists of the whole cluster of benefits the company promises to deliver. The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering. Total customer satisfaction Satisfaction is the difference between expectations and the product’s perceived performance. Product and service quality Quality is the totality of features and characteristics of a product or service which satisfy explicit or implicit needs. Maximizing customer lifetime value Customer profitabilityA profitable customer is a person, household or company that revenues are higher than the company’s costs for attracting, selling and servicing that customer. But it is a very difficult task, even for banks. Customer profitability analysis is an accounting study which estimates all revenue coming from a customer less all costs (distribution, phone calls, traveling to meet the client, gifts). Measuring customer life time value Customer lifetime value estimates future profits over customer’s lifetime purchases . You can find it p. 172. Cultivating customer relationshipsCustomer relationship management (CMR) Customer relationship management is the process of carefully managing detailed information about individual customers and all customer â€Å"touch points†to maximize customer loyalty. A touch point is any occasion on which a customer meets a brand and a product. One-to-one marketing Identify your prospects and customers, don’t go after everyone. 1. Differentiate customers in terms of (1) their needs and (2) their value to your company. Spend more efforts on the most valuable customers. Do the customer profitability analysis. 2.Interact with individual customers to improve your knowledge about their needs and build a stronger relationship. 3. Customize products, services, and messages to each customer. Increasing value of the customer base †¢ Reducing the rate of customer defection. †¢ Increasing the longevity of the customer relationship. †¢ Increase sells with new offerings and opportunities, like accessories for motorcycles if you sell Harley-Davidson. †¢ Making low-profit customers more profitable or terminating them. Like low-cost flying companies which charge customers for drinks or food. †¢ Focusing disproportionate efforts on high-value customers.Building loyalty Developing loyalty programs Frequency programs are design to provide rewards to customers who buy frequently and in substantial amounts. Many companies have created club membership programs. Customer databases and database marketing A customer database is an organized collection of comprehensive information about individual customers and prospects that is current, accessible and actionable for marketing purposes (sells, maintain relationships). Database marketing is the process of building, maintain and using customer databases to contact, transact and build customer relationships. Customer databasesCustomer database contains customers past purchases, demogra phics (age, birthday, and family members), psychographics (activities, interests), media graphics (preferred media) and other useful information. A business database contains past purchases, volumes, prices, profits, buyer team member names, assessment of competitors their strengths and weaknesses. Data warehouse and dataminig Companies use databases to: 1. Identify prospects 2. Decide which customer should receive a particular offer 3. To deepen customer loyalty 4. To reactivate customer purchases 5. To avoid serious customer mistakes CHAP 6 ANALYZING CONSUMER MARKETSWhat influences consumer behavior? Consumer behavior is the study of how individuals, groups and organizations select, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Cultural factors Culture is the fundamental determinant of a person’s wants and behavior because of values. Subcultures provide more specific identification and socialization for their members. Subcultur es include nationalities, religion, racial groups†¦ Social classes are relatively homogeneous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests, and behaviors.Reference groups A person’s reference groups are all the groups that have a direct or indirect influence on their attitudes or behavior. Membership groups have a direct influence. Primary groups are in constant contact with the person (family, friends, neighbors, coworkers). Secondary groups are religious, professional, trade-union groups. Aspiration groups are those a person hopes to join. Dissociative groups are based on individual reject. Opinion leader is the person who offers informal advice or information about a specific productor product category. FamilyFrom family a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love. It is a more direct influence on everyday buying beha vior. Role and status A role consists of the activities a person is expected to perform. Each role carriers a status Personal factors Personality is a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli (including buying behavior). Brand personality is defined as the specific mix of human traits that we can attribute to a particular brand.Lifestyle is person’s pattern of living in the world as expressed in activities, interests, and opinions. Key psychological processes Motivation  : Freud, Maslow, Herzberg A need becomes a motive when its intensity drives us to act. Perception Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. Selective attention is the screening of stimuli and marketers must work hard to attract consumers’ notice. People are more likely to notice stimuli that relate to a current need Peop le are more likely to notice stimuli they anticipateSelective distortion is the tendency to interpret information in a way that fits our preconceptions. Because of the selective retention, we are pore likely to remember good points of a product we like and forget good points about competing products. Learning Learning comes from experiences and makes us changing our behavior. A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where, and how a person responds. Discrimination means that we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly.The hedonic bias says people are more likely to attribute failure to external causes and success to themselves. Memory Associative network memory model explains that information are stored and linked with a different level of strength. Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, at titudes, and so on that become linked to the brand information stored. Memory encoding describes how and where information gets into memory. Memory retrieval is the way of the information gets out of the memory.The buying decision process Marketers must identify who makes the buying decision: people can be initiators, influencers, deciders, buyers, or users. Problem recognition Information search Personal: family, friends, neighbors. Commercial: advertising, web sites, salespersons, packaging, displays. Public: mass media. Experiential: handling, examining, is using the product. Market partitioning is the process of identifying the hierarchy of attributes that guide consumer decision making for the marketer to understand different competitive forces and how this various sets get formed.Evaluation of alternatives Belief is a descriptive thought that a person holds about something. Attitudes are a person’s favorable or unfavorable evaluations, emotional feelings, and action ten dencies towards some object or idea. Expectancy-value model of attitude formation shows that consumers evaluate products and services by combining their brand beliefs according to importance. Purchase decision Heuristics are rules of mental shortcuts in the decision process. With the conjunctive heuristic the customer looks for every attribute and chooses the irst alternative that meets the minimum standard for all attributes. With the lexicographic heuristic the customer chooses the best brand on the basis of its perceived most important attribute. With the elimination-by-aspects heuristic the customer compares brands and eliminates those which don’t correspond to the minimum acceptable cutoffs. The perceived risks can modify, postpone or avoid a purchase decision. Functional risk: the product does not perform up to expectations. Physical risk: the product could threat health or well-being of the user or others.Financial risk: the product is not worth the price paid. Social risk: the product results in embarrassment from others. Psychological risk: the product affects the mental well-being of the user. Postpurchase behavior Other theories of consumer decision making Level of consumer involvement Consumer involvement is the level of engagement and active processing responding to a marketing stimulus. Decision heuristics and biases The availability heuristic means that for example a customer who had troubles with a product would be more likely to purchase a future product with warranty.The representativeness heuristic means that the customer buy a product to be seen as representative of a whole category. The anchoring and adjustment heuristic means that the first impression determines the interpretation of the further information. That is why it is very important to make a first good impression for a salesperson, for instance. Mental accounting Mental accounting refers to the way consumers code, categorize, and evaluate financial outcomes of choices. Pro spect theory maintains that the consumers frame their decision alternatives in terms of gains and losses according to a value function.CHAPTER 7 ANALYSING CONSUMER MARKETS A The study of consumer behavior Consumer behavior is the study of when, why, how and where people do or do not buy products. It tries to understand the buyer wants and decision making process both individually and in groups. It also attempts to evaluate influences on the consumer from groups such as family, friends, reference groups, and society in general. Its can be divided into three interdependent dimensions: – The study of culture – The study of social group – The study of the individual CultureCulture is the essential determinant of a person’s wants and behavior. Every culture can be divided in subcultures that include nationalities, religions, geographic region etc and offer more precise identification for their members. Multicultural marketing appear to satisfy the different su bcultures. We can also observe different social classes with people who have the same values, interests and behavior. Each social class show diverse product and brand preferences on different level. Social groups a. Reference group A reference group is a group that influences people attitudes and behavior.There are different categories of groups: – Membership groups: have a direct influence on people (family, friends, colleagues†¦) – Aspirational groups: are thosea person wish to join – Dissociative groups: are thosea person, does not belong b. Family Family is the most influential primary reference group. There are two families: – Family of orientation: parents and sibling – Family of procreation: wife /husband children The individual consumer A consumer’s decisions are influenced by personal characteristics such as the age and stage in the life cycle, the occupation and economic, the life style and values and the buyer’s person ality.So to study and understand consumer behavior it’s really important to start with the consumer herself or himself. Explore into all these factors can provide clues to attain and serve consumers more effectively. B Key psychological process Motivation: Freud, Maslow, Herzberg a. Freud’s theory For Freud people ‘s behavior are unconscious. People not only react to their affirmed aptitudes, but also to other. b. Maslow’s theory c. Herzberg’s theory For Herzberg there are two different factors: – Dissatisfiers: factors that cause dissatisfaction – Satisfiers: factors that cause satisfactionThe sellers should try to keep away dissatisfiers’ factors and identify the principal satisfiers or motivator of purchase in the market and then provide them. I. Perception Perception is the processes by which we select organize and interpret information. People have different perception of the same object because of three perceptual processe s: – Selective attention – Selective distortion: tendency to interpret information in a way that fits our preconception – Selective retention: only preserve information that support our manners and beliefs II. Learning People learn from their experiences and change their behaviour.Marketers should build demand for a product by associating it with strong drives (internal stimulus pushing action), cues (minor stimuli) and providing positive support. III. Memory Memory is distinguished between to type of memory short-term memory and long-term memory. Marketing is a good way to be sure that consumers have the right type of products and services experiences to build the good brand knowledge and keep it in memory. Four main psychological processes affect consumer behavior r motivation, perception, learning, and memory. C Perspectives on consumer behaviorNumerous perspectives on consumer behavior can be considered: – The behaviorist perspective: focus on the imp act of external influences on consumer behavior – The information processing perspective: appeared in the 60’s and 70’s thinks about how consumers mentally process, store, retrieve and use marketing information in the decision process – The emotional perspective: consumers affections should be included in the explanation of consumer decision making – The cultural perspective: culture show consumers view – A multiperspective approach: consumers do not have unlimited mental resources D The buying decision process the five stage modelTo understand how consumer make buying decisions, marketers should identify who makes and has contribute into buying decision. People can be initiators, influencers, deciders, buyers or users. The classical buying process consists of the following succession of events: 1. Problem recognition (the buyer recognizes a problem) 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post purchase be havior (post purchase satisfaction, action, use and disposal) Marketers’ have to understand the consumer behavior at each stage. It’s not always easy because many different factors influence the diverse behavior.CHAPTER 8 : IDENTIFYING MARKET SEGMENTS AND TARGETS I. The business market versus the consumer market Business marketers have numerous characteristics that contrast with those of consumer markets: – Fewer larger buyers: deal with much bigger buyer than the consumer market – Close supplier customer relationship: suppliers adapt their offering to individual business customer needs – Professional purchasing: goods are bought by trained purchasing agents – Multiple buying influence: more people typically influence business buying decisions – Multiple sales calls Derived demand: the demand for business goods resulting from the demand for consumer goods – Inelastic demand: the demand for goods won’t change even if pric es change – Fluctuating demand: the demand for business goods and services tend to be more unstable than the demand for consumer goods and services – Direct purchasing: business buyers buy directly for manufactures II. Buying situations The business buyer faces many decisions in making a purchase. The number depends on the buying situation: complexity of the problem being solved, newness of the buying requirement, number of people involved and time requirement.There are three types of buying situations: – Straight Rebuy: The purchasing department reorders supplies and chooses from suppliers on an approved list. The suppliers’ effort to maintain service and product quality. Their goal is to get a small order and then enlarge their purchase share over time. – Modify rebuy: the buyer wants to change products specifications – New task: the buyer buys the product for the first time III. Systems Buying and Selling Originally,  «Ã‚  system buying   Ã‚ » is a practice about government purchases of major weapons and communications systems.Thus, many business buyers prefer to buy a total solution to a problem from one seller. A system selling is a key industrial marketing strategy in bidding to build large-scale industrial projects, such as dams, steel factory, irrigation systems, sanitation systems, pipelines, utilities and even new towns. B. Participants in the business buying process I. The buying centre The buying center consists of all those individuals and groups who contribute in the purchasing decision making process. Its include all members of the organization who take part in any roles in the purchase decision process. Initiators: request something be purchased – Users: use the product, initiate the buying proposal – Influencers: people who influence the buying decision – Deciders: decide on product requirements or on suppliers – Approvers: authorize the proposed actions – Buyers: have formal authority to select the supplier and arrange the purchase terms – Gatekeepers: have the power to prevent sellers or information from reaching member II. Buying centre influences Buying center typically include several participants with diverse interest.If the business marketers want to influence these participants they should try to be attentive to many factors such as environment, organization, individual, motivations and interpersonal influences. III. Buying centre targeting Business marketers should answer at some questions to target their efforts appropriately. Who are the major decision participants? What decisions do they influence? What is their level of influence? The small sellers focus on reaching the key buying influencers and larger sellers the multilevel in depth selling to attain many participants. C. The Purchasing/Procurement Process a. Purchasing Department PerceptionsRecent competitive pressures have led many companies to upgrade their purchasing departments and elevate administrators to vice presidential rank. These new, more strategically oriented purchasing departments have a mission to seek the best value from fewer and better suppliers. b. Purchasing Organization and Administration Some companies have started to centralize purchasing. Headquarters identifies materials purchased by several divisions and buys them centrally, gaining more purchasing clout. At the same time, companies are decentralizing some purchasing operations by empowering employees to purchase small-ticket items.D. Stages in the buying process The buying process consists of: 1. Problem recognition: the company recognizes a need that can be fixed by purchasing a good or service. 2. General need description and product specification:general characteristics and required quantity 3. Supplier search: identify the most appropriate suppliers 4. Proposal solicitation: invite the qualified suppliers to suggest proposals 5. Supplier selection: the buying center usually use a supplier evaluation to identify the most attractive suppliers 6. Order-routine specification: negotiations 7. Performance review: review of the chosen supplierE. Managing business to business relationship Business marketers must form strong bonds and relationships with their customers and provide them added value. Some customers, however, may prefer more of a transactional relationship. a. The Benefits of Vertical Coordination Much research had advocated greater vertical coordination between buying partners and sellers, so they can transcend merely transacting and instead engage activities that create more value for both parties. Building trust is one prerequisite to healthy long-term relationships. b. Business Relationships: Risks and OpportunismResearchers have noted that establishing a customer-supplier relationship creates tension between safeguarding and adaptation. Vertical coordination can facilitate stronger customer-seller ties but at the same time may increa se the risk to the customer’s and suppliers specific investments. Specific investments, however, also entail considerable risk to both customer and supplier. Transaction theory from economics maintains that because these investments are partially sunk, they lock the firms that make them into a particular relationship. I. Transactions cost economics F. Institutional and government marketsPART 4 : BUILDING STRONG BRANDS CHAPTER 9 CREATING BRAND EQUITY I. What is a brand equity A. Role of brand Permit to consumers evaluate products (of specific brands), in order to find their needs. Brand signal a certain level of quality. Brand offer security for customers and firms B. The scope (ampleur) of branding A brand resides in the minds of consumer as an identity One of the first branding strategy is: consumers must be convinced their meaningful differences among brands in products or services C. Defining brand equity -is the added value endowed on product and service customer based br and equity: the customer brand knowledge is + when he reacts more favorably to a product and –when reacts less favorably 3 keys for favorably react: different responses about consumer needs associated the brand of something (image†¦), and ensuring consumer has great experiences with products. D. Brand equity as a bridge -brand knowledge (decide by customer) dictates future direction of the brand – Brand promise: is what the brand is and must do for consumers So, money spend for marketing is an investment for consumers’ brand knowledge E. brand equity model 4 models of B. equity models brand asset valuator (p 283) 5 categories: differenciation,energy, revelance, estum, knowledge -brandz: (p 284) relationship with brand (pyramid) -AAKER model: typically elements (value, uses, meaning, origin country, personality, symbols) -brand resonance model (p 285): development, building objectives II. Building brand equity This is the creating to have the right brand kno wledge of consumers F. Choosing brand elements -It’s that identify and differentiate the brand -6 criteria: memorable, meaningful, likable, adaptable, transferable (for a new product, geography), protectable (not become generic as Kleenex, scotch).G. Designing holistic marketing activities Brand contact with the consumer, there are 3 phase: Personalization: -stop mass market, throwback to personalizing marketing. – Each customer is unique: one to one marketing -build a strong consumer’s relationship Integration: -traditional mix marketing isn’t adequately, now we need variet of marketing to reinforce the brand. (Sponsoring, communication, promotion, events†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. ) Internalization: -companies must adopt an international perspective Choose the right moment, link internal and external marketing and bring the brand alive for employees H.Leveraging (influence) secondary association Linking the brand with others information (p290), a brand can build equity by linking with others entities. III. Measuring brand equity 2 basic approaches: -Brand audit: uncover sources of brand equity, suggest way to improve its equity. Brand audit is use to prepare marketing plan -brand tracking studies: understanding thank to quantitative data from consumers, to facilitate day to day decision marketing. IV. Managing brand equity Brand management requires a long term view of marketing actions I. Brand reinforcement -Brand need to be carefully managed to surviveImprove product, service, and marketing Needs innovations/relevance throughout marketing program (p295) -marketing need some change to be competitive -brands need activities to awareness (new products, creatively design, ad campaign†¦) J. Brand revitalization New competitors can affect a brand, so brand have to be refresh Solution: -understanding the source of brand equity -bad association loosing the brand -create new positioning -change marketing program -come back to basic ima ge V. Devising (concevoir) a brand Strategy -Brand extension: establish brand with introduce a new one sub brand: new brand combine with existing brand -brand line: all product -License product: brand name has been licensed to make the product K. Branding decision Develop a brand name for a product: 4 strategies Individual name:(old el Paso) advantage, if the product is low quality brand is not hurt Blanket family name: development cost is lower because we don’t need research/add, to create recognition Separate family name for all products: ex: craftsman for tools Corporate name combined with individual product name: Kellogg: kellogg’scorn flakes L. Brand extension Advantages: -customers know parent brand don’t need to create awareness for marketing, communication Feed back effect: knowledge Disadvantages: -confusion with new product -harm, hurt parent brand with bad a product (Success characteristic f 9. 8 p301) M. Brand portfolio Marketers need multiple brands to pursue these segments. Aim goal of brand portfolio is maximize brand coverage. -low end entry: attract customers to brand franchise -high end prestige: prestige of brand with adds CHAPTER 10 CRAFTING THE BRAND POSITIONING SEGMENT MARKETING A market segment consists of a group of customers who share a similar needs and wants.Rather than creating the segments, the marketer’s task is to identify them and to decide which one to target. Market segments can be characterized in different ways, one approach is to: Identify preference segment categorized them by: Homogeneous preferences: if the customers have the same preferences Diffused preferences: the customer preference vary greatly in their requirement Clustered preferences: when natural market segment emerge from groups of customers with shared preferences NICHE MARKETING A niche is marketing is narrowly defined customers group seeking a distinctive mix of benefits or values.Marketers usually identify niches by dividing a m arket into subsegments. Niche markets are generally fairly small is term of volume but constitute a sufficientetly attractive size, profit and growth potential. Also they are less likely to attract many other powerful competitors †¢ Focusing their resources to gain economies though specialization LOCAL MARKETING Customizes merchandise to match the perceived demand of local areas The risk associated with localized marketing includes: †¢ A tendency to drive up the manufacturing costs and to reduce economies of scale Grassroots marketingINDIVIDUAL MARKETING Marketing one to one The researches seek to define segment by looking at descriptive characteristics: geographic, demographic and psychographic. GEOGRAPHIC SEGMENTATION Divide the market into different geographical units such as nations, states, regions†¦ DEMOGRAPHIC SEGMENTATION The market is divided into groups on the basic of variable such as ages, family size, occupation, race†¦ PSYCHOGRAPHIC SEGMENTATION Psy chographic profiles are typically developed with reference to three variables know as the AIO factors that describe individual lifestyle: 1. Activities 2. Interests . opinions BEHAVIOURAL SEGMENTATION Marketers place buyers into groups on the basic of their knowledge of, attitude towards, use of or response to a product. To compete more effectively many companies are now adopting target marketing. Instead of scattering their marketing efforts they are focusing on customers they have the greatest chance of satisfying. Target marketing includes three activities: market segmentation, market targeting and market positioning. STEPS IN SEGMENTATION PROCESS 1. Needs-based segmentation Group customers into segments based on similar needs 2. Segment identificationSegment by behavior, psychographic, individual, demographic and geographic 3. Segment attractiveness: Determine the attractiveness of each segment 4. Segment profitability: Determine segment profitability 5. Segment positioning: for each segment create a value proposition and product-price positioning strategy based on that segment’s unique customer need and characteristics 6. Segment â€Å"acid test†: create segment storyboard to test the attractiveness of each segment’s positioning strategy 7. Marketing mix strategy: Expand segment positioning strategy to include all aspects of the marketing mix: the 4PEFFECTIVE SEGMENTATION CRITERIA An effective segmentation must be: 1. Measurable: size, purchasing power†¦ 2. Substantial: the segment are large and profitable enough toserve 3. Accessible: the segment can be effectively reached and seved. 4. Differentiable: the segment are distinguishable 5. Actionable: effective programs can be formulates for attracting and serving the segments Positioning is the act of designing the company offering and image to occupy a distinctive place in the minds of the target market. The goal is to establish the brand in the mind of the consumers.The result o f positioning is the successful creation of a consumer- focused value proposition CHAPTER 11 : COMPETITVE DYNAMICS Without customers, you don’t have business Creating loyal customers is at the heart of every business, the only value your company will ever create is the value that comes from the customers. Managers who believe that costumer is the company’s only true â€Å"profit center† consider the traditional organization chart (first figure), successful marketing companies invert the chart (second figure) At the top the customer, the front line is the people who meet, serve and satisfy customersMany companies recognize the importance of satisfying theirs consumer in order to develop brand reputations that can deliver a sustainable competitive advantage The concept of costumer-perceived value enables marketers to discover what consumers want though the medium market research CUSTOMER-PERCEIVED VALUE (CPV) The CPVis the difference between the prospective custom er’s evaluation of all benefits and all the costs of an offering and the perceived alternatives. Total costumer benefit is the perceived monetary value of the bundle of economic, functional and psychological benefits consumers expect from given market offering.Total costumer cost is the perceived bundle of costs costumers expect to incur in evaluating, obtaining, using and disposing of the given market offering BUILDING CUSTOMER SATISFACTION Customers want loyalty, not perfection Customer can sense when a companies are consistently more loyal to investors, employees and regulators than to people who buy their products and services, customers are not being disloyal; they are being discriminating. The question is not how can we radically increase customer loyalty, but how can we radically increase our own loyalty to customers.To increase our sellers, we need to develop consumer’s loyalty Total customer satisfaction Whether the buyer is satisfied after purchase depends on the offer’s performance; if the performance falls short of expectations, the customer is dissatisfied, if the performance match the expectations, the customer is satisfied, if the performance exceeds expectations, the customer is highly satisfied or delighted. Customer assessments of product performance depend on many factors, especially the type of loyalty relationship the customer has with the brand.Although the customer-centre firm seeks to create a high customer satisfaction, that is not only his ultimate goal. Company might be able to increase its profitability by means other than increased satisfaction. Monitoring satisfaction Many companies are systematically measuring how well they treat their customers, identifying the factors shaping satisfaction and making changes in their operations and marketing as a result Customer satisfaction Companies should measure customer satisfaction regularly, because an important key to customer retention is customer satisfaction.A hig h customer satisfaction brings high profits, the customer stay longer; the customers are less sensitive to the price and pay less attention to the competing brand. Measurement techniques A number of methods exist to measure customer satisfaction for example periodic surveys, customer loss rate. Influence of customer satisfaction For customer-centre companies, customer satisfaction is both a goal and a marketing tool. Companies need to be especially concerned today with their customer satisfaction level.MAXIMIZING CUSTOMER LIFETIME VALUE Customer profitability A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream for attracting, selling and servicing that customer. CULTIVATING CUSTOMER RELATIONSHIPS Maximizing customer-perceived value means cultivating long-term customer relationship. Companies are now moving away from wasteful mass marketing to precision marketing designed to build strong customer relationships.Customer relationship management Customer relationship management (CRM) is the process of carefully managing detailed information about individual customers and all customer â€Å"touch point† to maximize

Heuristics

Heuristic can be defined as a method of argument in which postulates or assumptions are made that remain to be proven or that lead the arguers to discover the proofs themselves. Examples could be an educated guess or common sense. Educated guess because a person considers what they have observed in the past, and applies that history to a situation where a more definite answer has not yet been decided. Common sense because it is practical approaches that right and wrong nswers seem relatively clear cut.One out of three examples is the representativeness. Also considered the rule of thumb; when people are asked to Judge the probability that an object or event A belongs to class or process B, probabilities are evaluated by the degree to which A is representative of B, that is, by the degree to which A resembles B. Are used mainly in algorithms which is a program that doctors use to diagnose their patients by putting n their symptoms and following the questions and leads to more question s until the computer can say what is issue is and how to cure it.Two out of three examples is the availability. This is defined as a cognitive heuristic in which a decision makes relies upon knowledge that is readily available rather than examine other alternatives or procedures. This example shapes the way we view our world. The probability does make a difference in availability whether it be lives, whether or statics. Three out of three examples is the anchoring and adjustment.Anchoring and adjustment is what people use to make quantitative estimates. The primary effect and anchoring may combine, for example in regards to a Jury opinion can be swayed by an anchor by the first opinion. First impressions are everything but people are better at relative thinking than absolute thinking. Relative thinking is more conclusive because the truths are altered and absolute thinking is more of a common sense thing in todays functioning society.

Cash payment made on quarterly or semiannual basic by company to its shareholders.

The dividend decision is important because it affects the amount of internally sourced finance available and also affects the return received by shareholders on the shares. Once the company decided to pay dividends, they may establish a somewhat permanent dividend policy, which may show the impact of the investors and the financial markets. Establishing a specific dividend policy is to the advantage of both the company and the shareholder. The distribution of dividends requires the approval of the board of directors and paid out to shareholders a few weeks later. There are several dates between the times the board declares the dividend until the dividend is actually paid. The first date of note is the declaration date which the board of director declares the time or date is announced. The next date of note is ex-dividend date which time investors must have bought the stock to receive the dividend. The investor, who buying the stock after ex-dividend date is not receiving any dividend , record date, is a few days after the ex-dividend date the company close its stock transfer books and make up a list of the shareholder, who will receive the dividend. The final step is payment date which the checks of dividend will send to the shareholders. There are different types of dividend, which are cash or as additional stock which increase the number of shares outstanding and generally reduce the price per share, regular dividend which is paid at regular intervals, or a special dividend which is paid in addition to regular dividend and liquidating dividend which are excess of the retained earning they show on their book. There exist four main types of dividend policy theories Modigliani and Miller (1961) dividend Irrelevancy theory, Linter and Gordon (bird-in-the-hand) Theory, Signalling properties of dividend and clientele effect. Is the company’s dividend policy irrelevant to its market value? One of the financial theorists (Miller and Modigliani, 1961) provides a proposition for dividend policy irrelevance. They assume that perfect capital markets, meaning no taxes or transaction costs exist, the market price has many buyer or seller, and there is costless and feely access to information. Modigliani and Miller state that dividend policy was not one of the determinants of share price .Share value is independent of the level of dividend paid. A firm pay dividend is irrelevant and those stockholders are indifferent about receiving dividend. For example, from the aspect of investor, that the company paid too big dividend, investor could buy more share with the dividend that is over the investor’s expectations. Similarly if the company paid too little dividend, an investor could sell some of the company’s share to reflect the cash flow their expected. Market value of company its cost of capital is independent of its capital structure. According to their argument dividend policy is unaffected and irrelevance of market share price .Should the company pay out to its shareholders or retain that money to make new project. Modigliani and Miller’s dividend-irrelevance theory says that investors can affect their return on a stock regardless of the stock’s dividend Residual Policy Modigliani and Miller argued that financial objective is maximise shareholder wealth when the share price is maximised. Shareholders are indifferent between dividends and capital gain. Company is used M M Residual dividend policy when a company undertake all positive NPV project and paid out the residual as dividend. Alternatively a company with not enough funds to invest new project, paid no dividend and the additional funds can obtain from outside sources. They were arguing that if company followed the best investment policy the value of company is irrelevance to its dividend policy. They also argue that shareholders are also indifferent to the timing of dividend payment because if there were no dividends the market value of company would increase to reflect as future dividend and share price is also increasing resulting from the returns of investment. A dividend policy is irrelevant because shareholders have the ability to create â€Å"homemade† dividends that mean that ca pital gain is not perfect suitable for dividend in cash flow terms. This income is achieved by individuals adjusting their personal portfolios to reflect their own preferences. For example some shareholders prefer to get steady of income are more likely to invest in bonds, which interest payment don’t change ,rather than dividend –paying stock, which value can fluctuate. Bird-in-the-hand On the other hands, Lintner (1962) and Gordon (1963) believe that company dividend policies are relevant to their share price. Under conditions of uncertainty and imperfect capital market ,he argued â€Å"bird-in-the-hand† theory that investor can reduce the financial risk associated with their investment if the return is received in the form of dividend earlier, rather than capital gain or higher dividends later. On this analysis, current dividend represent less risky than future capital gain. Therefore, company paying higher dividend will be more worth than company paying lower dividend. Dividend policy is one of the importance factors of determining share price. Gorden argued that the payment of current dividends â€Å"determine investor uncertainty†. The key assumption, as argued by Lintner and Gordon, is that because of the less risky nature dividends, shareholders and investors will discount the firm’s dividend stream at a lower rate of return, â€Å"râ₠¬ , thus increasing the value of the firm’s shares. According to dividend growth model, the value of an ordinary share, Po is given by: Po=D1/(r-g) Where the constant dividend growth rate is denoted by g, r is the investor’s required rate of return and D1, represent the next dividend payments. Thus the lower r is in relation to the value of dividend payment D1, the greater the share’s value. In the investor’s view, according to Linter and Gordon, r the return from the dividend, is less risky than the future growth rate g. http://www.oppapers.com/eassys/Bird-In-Hand/536314 Signalling effect of dividend This theory argued that financial information is asymmetric and managers will always know more than shareholders about the future financial prospects of the company. The dividend declared can be interpreted as a signal from directors to shareholders about the strength of underlying project cash flows. Increasing dividend is usually seen as good news, indicating that the company has positive prospects. The theory of dividend signalling has usually refers to a cash distribution of retain earnings. http://www.jstor.org/pss/2328393 Reference Watson, D. and Head, A. (2010) Corporate finance Principles Practice.5th edition. Essex: Pearson Education Limited. Cash payment made on quarterly or semiannual basic by company to its shareholders. The dividend decision is important because it affects the amount of internally sourced finance available and also affects the return received by shareholders on the shares. Once the company decided to pay dividends, they may establish a somewhat permanent dividend policy, which may show the impact of the investors and the financial markets. Establishing a specific dividend policy is to the advantage of both the company and the shareholder. The distribution of dividends requires the approval of the board of directors and paid out to shareholders a few weeks later. There are several dates between the times the board declares the dividend until the dividend is actually paid. The first date of note is the declaration date which the board of director declares the time or date is announced. The next date of note is ex-dividend date which time investors must have bought the stock to receive the dividend. The investor, who buying the stock after ex-dividend date is not receiving any dividend , record date, is a few days after the ex-dividend date the company close its stock transfer books and make up a list of the shareholder, who will receive the dividend. The final step is payment date which the checks of dividend will send to the shareholders. There are different types of dividend, which are cash or as additional stock which increase the number of shares outstanding and generally reduce the price per share, regular dividend which is paid at regular intervals, or a special dividend which is paid in addition to regular dividend and liquidating dividend which are excess of the retained earning they show on their book. There exist four main types of dividend policy theories Modigliani and Miller (1961) dividend Irrelevancy theory, Linter and Gordon (bird-in-the-hand) Theory, Signalling properties of dividend and clientele effect. Is the company’s dividend policy irrelevant to its market value? One of the financial theorists (Miller and Modigliani, 1961) provides a proposition for dividend policy irrelevance. They assume that perfect capital markets, meaning no taxes or transaction costs exist, the market price has many buyer or seller, and there is costless and feely access to information. Modigliani and Miller state that dividend policy was not one of the determinants of share price .Share value is independent of the level of dividend paid. A firm pay dividend is irrelevant and those stockholders are indifferent about receiving dividend. For example, from the aspect of investor, that the company paid too big dividend, investor could buy more share with the dividend that is over the investor’s expectations. Similarly if the company paid too little dividend, an investor could sell some of the company’s share to reflect the cash flow their expected. Market value of company its cost of capital is independent of its capital structure. According to their argument dividend policy is unaffected and irrelevance of market share price .Should the company pay out to its shareholders or retain that money to make new project. Modigliani and Miller’s dividend-irrelevance theory says that investors can affect their return on a stock regardless of the stock’s dividend Residual Policy Modigliani and Miller argued that financial objective is maximise shareholder wealth when the share price is maximised. Shareholders are indifferent between dividends and capital gain. Company is used M M Residual dividend policy when a company undertake all positive NPV project and paid out the residual as dividend. Alternatively a company with not enough funds to invest new project, paid no dividend and the additional funds can obtain from outside sources. They were arguing that if company followed the best investment policy the value of company is irrelevance to its dividend policy. They also argue that shareholders are also indifferent to the timing of dividend payment because if there were no dividends the market value of company would increase to reflect as future dividend and share price is also increasing resulting from the returns of investment. A dividend policy is irrelevant because shareholders have the ability to create â€Å"homemade† dividends that mean that ca pital gain is not perfect suitable for dividend in cash flow terms. This income is achieved by individuals adjusting their personal portfolios to reflect their own preferences. For example some shareholders prefer to get steady of income are more likely to invest in bonds, which interest payment don’t change ,rather than dividend –paying stock, which value can fluctuate. Bird-in-the-hand On the other hands, Lintner (1962) and Gordon (1963) believe that company dividend policies are relevant to their share price. Under conditions of uncertainty and imperfect capital market ,he argued â€Å"bird-in-the-hand† theory that investor can reduce the financial risk associated with their investment if the return is received in the form of dividend earlier, rather than capital gain or higher dividends later. On this analysis, current dividend represent less risky than future capital gain. Therefore, company paying higher dividend will be more worth than company paying lower dividend. Dividend policy is one of the importance factors of determining share price. Gorden argued that the payment of current dividends â€Å"determine investor uncertainty†. The key assumption, as argued by Lintner and Gordon, is that because of the less risky nature dividends, shareholders and investors will discount the firm’s dividend stream at a lower rate of return, â€Å"râ₠¬ , thus increasing the value of the firm’s shares. According to dividend growth model, the value of an ordinary share, Po is given by: Po=D1/(r-g) Where the constant dividend growth rate is denoted by g, r is the investor’s required rate of return and D1, represent the next dividend payments. Thus the lower r is in relation to the value of dividend payment D1, the greater the share’s value. In the investor’s view, according to Linter and Gordon, r the return from the dividend, is less risky than the future growth rate g. http://www.oppapers.com/eassys/Bird-In-Hand/536314 Signalling effect of dividend This theory argued that financial information is asymmetric and managers will always know more than shareholders about the future financial prospects of the company. The dividend declared can be interpreted as a signal from directors to shareholders about the strength of underlying project cash flows. Increasing dividend is usually seen as good news, indicating that the company has positive prospects. The theory of dividend signalling has usually refers to a cash distribution of retain earnings. http://www.jstor.org/pss/2328393 Reference Watson, D. and Head, A. (2010) Corporate finance Principles Practice.5th edition. Essex: Pearson Education Limited.

Budgettting Assignment Example | Topics and Well Written Essays - 500 words

Budgettting - Assignment Example That is; the key members involved in the project did estimate the costs related to materials, equipments, utilities, and resources needed to perform the required to complete the Germantown tree planting activity. The cost estimates of this project was done basing on a vendor bid analysis, where the receptive bids from skilled and qualified vendors provided the baseline cost estimate for every particular component integrated with the budget. Nevertheless, these costs estimate will be refined during the course of the project to include any additional details as it becomes available. The direct costs include the costs that are related to the project. These costs include cost incurred while buying tree seedling, supplies such as fertilizers and planting shovels. These costs account to more than a half of the budget spending. Indirect costs include costs that enable successful completion of the project. For instance, the personnel will require utilities such as water during the event. The tree planting exercise will call upon the outsiders and they will be given refreshments hence adding to the cost of the project. The cost associated with the promotion and advertising will be indirect costs to the project. In the variable costs changes with the level of activity being undertaken, one of the variable costs is the cost of the personnel. The more personnel turn for the activity, the higher the costs that will be incurred during the event. Similarly, the more the costs of food will tend to be higher hence making the cost of the budget to be higher. In such a program, the theme touches on a global phenomenal: Climate change. If the organization applied for grants, the application has a higher chance of being successful. Some of the organization that provides likelihood for sponsoring the project includes, United Nations Environmental Program, World Forest Service, Food and Agriculture

The Necessity for Ethical Behavior in the Project Management Essay

The Necessity for Ethical Behavior in the Project Management - Essay Example Therefore, ethical behaviors are crucial in the management of projects. Moral philosophy or ethics concerns the defense and recommendation of the concepts of wrong or right behavior. The philosophy of ethics is divided into operational areas such as normative ethics, applied ethics and meta-ethics. Meta-ethics involves the reference and theoretical meaning of moral values, and the determination of their truth (Ashrafi, 2007). Normative ethics involves the practical means of establishing a moral plan of action, while applied ethics involves the achievement of moral outcomes in different situations with different ethical requirements. The characteristics of ethical behaviors are fairness, honesty, and equity in professional, interpersonal and research, scholarly and academic relationships. Ethical behaviors compliment the diversity, rights and dignity of individuals or people in the society. The standards upheld in enhancing the attributes of responsibility and honesty is ethical behav iors. These standards are applicable to all individuals regardless of the facets of life, and the position held in commerce. The hallmark of ethical behavior is the application of these standards in situations that are inconvenient for their application (Long, & Spuma, 2005). Project Management Project management involves organizing, planning, managing, securing, controlling and leading resources towards the achievement of objectives and goals. Projects are provisional endeavors that have a defined starting and end points. They are mostly time and funding constrained. Projects are carried out to meet objectives and goals, characteristically for addition of value or for beneficial changes. Projects because of their temporary nature are in contrast to operations or businesses that are permanent and repetitive (Long, & Spuma, 2005). The management of projects is thus challenging and different and requires distinct management strategies and technical skills. The major challenge in proje ct management is the achievement of the objectives and goals while honoring or considering the preconceived limitations. Typical limitations are budget, scope and time. Another challenge with project management is the ability to maximize the allocation of inputs and incorporate the necessary inputs to meet the predefined goals and objectives (London, 2006). The management of projects involves elements, process groups and control systems. Regardless of terminology and methodology used, project management processes involve the same processes, with different ethical requirements. Project management involves the initiation of the project, planning for development, production and execution, monitoring and controlling, and the final phase which is the end or closure of the project. These phases in most cases are undertaken by one person-the project manager. Project management environment that require exploration; research and development must be supplemented with points for decision makin g. These points are essential for the continuation of the project as they involve debating and decision making. Ethical practices and behaviors are necessary to ensure the diligent and progressive completion of each phase, hence movement to the next phase. Ethical behaviors in project management involve the simultaneous management of the basic elements which are money, time, resources and scope. These elements, which are interrelated, must be effectively

The application of Task-based Approach in English Reading Teaching Essay

The application of Task-based Approach in English Reading Teaching - Essay Example The processes of material design, task demonstration and evaluation are covered in this essay, while relevant teaching theories or principles are subsequently treated. The process of foreign language acquisition in China is, to some extent, still based on the traditional educational system that emphasizes on the reading and writing of a foreign language like English with the hope of translating it. The students are primarily taught to learn English through reading various texts that could broaden their knowledge of the language (Adamson, 2004; Burkett, 2009; Dzau, 1990). As a result of this, teachers are saddled with the responsibility of making English seem understandable to their students. The current demand for English in China has also increased the pressure on primary school teachers to do more in the area of improving the reading skill of their students. The fundamental objective of adopting Task-Based Approach in the reading teaching at elementary level in China is to detect the reading competence of each student under the full watch of his or her Homeroom Teacher, who would provide the needed assistance to help the students become near-confident readers, if not totally-confident readers (Grellet, 1992). The students are given simple stories to read depending on their grades—the little harder reading comprehension goes to the farther end of the spectrum. The purpose of this is to improve their reading fluency, not necessarily to make them memorize their textbooks’ contents (Hiskes, 2007). Task-Based Approach lets the teachers perceive the students’ reaction to words they may have been taught before. For examples, showing the ability to identify and pronounce simple words about weather, food, fruits and colours as they appear on the textbooks used for this task. Most teachers believe that exposing children to th e words they had heard before may increase their ability to identify related words on

Impact of Labour Turnover in the Hospitality Industry on Guest Essay

Impact of Labour Turnover in the Hospitality Industry on Guest Satisfaction - Essay Example The aim was to prove that the hypothesis of acceptance of this culture leads to devastating consequences and that high turnover must be prevented, minimized, and managed. In order to meet the aims of the study, it was necessary to examine the causes and nature of turnover, whether it is considered to be bad or if it is considered to be good and necessary in the operation of companies. Existing arguments were examined as some believe that high turnover is desired in the hospitality industry yet some do not believe it to be a positive thing. Another argument included turnover as a culture of the industry. The Greek market was used as a case study to provide examples and illustrations which proved the writer’s hypotheses and aims. The Greek hospitality industry’s study also allowed the examination, evaluation, and findings of this study. In order to meet the objectives of this study, a literature review was conducted to define high turnover and various aspects of the topic in relation to the hospitality industry. Turnover is when employees stay only for a short time before moving on or becoming dismissed for one reason or another. (D’Announzio-Green, Maxwell, & Watson 2002, quote Barron and Maxwell, 1993, p. 5). â€Å"Turnover is the result of both quits and layoffs.   Thus, some turnover is a result of jobs in one firm being destroyed and jobs in another firm being created  Ã¢â‚¬â€ and hence due to the reallocation of jobs across the economy in response to changes in product demand.   A majority of job changes, however, are because workers reshuffle across the same set of jobs, and this worker reallocation occurs over and above job reallocation,† as written by Lane (2000).   Some hospitality industry sources report that turnover rate is between 100 and 150 percent each year.   This causes poor attitude amongst staff and affects the quality of service and care that is given to the customers.   (Crabtree, 2005.)   It is usually considered to be a bad thing; however, as Stark (2004) states â€Å"research has demonstrated that some turnover is healthy, indeed essential to organizational well being.†Ã‚   Scholtz (n.d.) reports that there are companies who have a turnover rate of ten percent or more and think it is a good thing because â€Å"they are replacing the bottom performers with new people will improve organizational performance.†

Website plan for dairy farm (dairy cows) Assignment

Website plan for dairy farm (dairy cows) - Assignment Example This is done through the online platform which includes websites. Other businesses like the sports industry have prospered as well through such platforms. In the current economy and business world, most of the advertising and marketing procedures are done online through websites. Besides being a cheaper marketing alternative, this method is also very efficient in that it reaches a wider number of people. Most of the people are actively logging in and staying on online platforms than on the normal media like TVs. This makes use of internet and websites an appropriate and efficient way of business marketing. This report focusses on the dairy cows business. This business is aimed at breeding the best dairy cattle for the purpose of production and selling milk. The dairy cows have already been purchased and are well taken care of. The cows are bred in a zero grazing architecture and feeds for the cows are purchased in large scale from wholesalers who also offer them at a given discount. The large scale purchase of feeds is a strategy to reduce production cost hence maximising profits. The market for the product (milk) is however a challenge to this business (Eckles, 2011). The marketing strategies currently used involve door to door campaigns, liaisons with daily products companies and advertising through posters which is a relatively expensive and less efficient method. The competitive factor for this business is that it is a large scale production hence much recognized by the general public and acquaintances than the other local milk producers. Distribution of dairy products from this b usiness is done by agents who operate on motorbikes and some even use cars. Extra services to customers like door delivery makes this business a more preferred choice to its customers. It is for this reason that the company wants to increase its coverage by embracing the powerful online marketing and business operation platform (Pride, Hughes, &

S facebook a good or bad example of participatory culture Explain by Essay

S facebook a good or bad example of participatory culture Explain by connecting these ideas to your own arguments- develop and justify your own view ( write both good and bad points) - Essay Example In simpler terms, it is easily accessible. This definition brings about what is termed as participatory media. Participatory media encompasses virtual communities, video blogs just to name but a few. In this paper, one type of a participatory culture or media which is a part of social network services shall be scrutinized. Its good and bad sides as a participatory culture will be examined. The participatory culture to be looked at is Facebook (Delwiche, 2013) What makes a thing to be regarded as good? Something is regarded as good if it falls into the morally accepted or the generally accepted ideas in a society. Since its development, Facebook has been a hit in the participatory media world. It has withstood the test of time and competition. What has made Facebook a giant as a participatory culture is its good. Jenkins note that good participatory cultures are regarded good as they avail virtually low hindrances to artistic expression and civil engagement. Facebook is a good participatory culture as it provides a platform where artistic expression and civil engagement are easily expressed to a large number of people. It does this through its rather simple user interface whereby people can easily understand how it is controlled. Also, Facebook has a sharing option (Jenkins, 2013).The advantage of such an option is that people on the social networking site can easily share it with other persons. It is through this sharing that artistic ex pression and civil engagements are easily expressed to a large group of people. Facebook also allows one person to have as many friends as possible provided they know each other through friends as such. This lack of limitation as to the number of friends one can have on Facebook allows for easier expression of artistic expression and civil engagements. Facebook is also a good participatory culture in cases where its members believe their contributions matter. This is quite true for Facebook users as

Grand foods, Ltd Case Study Example | Topics and Well Written Essays - 1500 words

Grand foods, Ltd - Case Study Example The product managers now bear the greatest responsibility of coming up with the best solution that could look into the matter. The discussion sparked some other issues that may be behind the poor performance. These issues include; the pricing structure, sales promotion, cooperative advertising and food distribution in market. Jessica Walters, the marketing manager isn’t against the solutions raised but is concerned with the possible effects that this would have on the company’s policies and its structure. Background Grand Foods Limited is a Canadian company and has its international headquarters in Minneapolis, in Toronto. The company has its subsidiary branches all over Canada and also in the U.S. Quebec and Ontario are the main largest markets of the company, where it accounts for 69 percent of the $350 million sales in Canada. The worldwide sales of the company in 1991 were more than $2 billion. Jessica Walters is the marketing manager of the company and has been in the position for four years. His efforts towards the success of the company are tremendous and this has seen an overall improvement in the company’s sales. Products from the Grand Foods Ltd are enjoyed by the people in the entire Canada and Quebec province. These products include cake mixes, pie fillings, puddings, and frozen dinners among others. To do away with monotony of the food preference, the company has introduced six new products into the market in the last six years. These products were gladly received by the consumers. Problem statement In the previous month, the company saw poor performances in some of its products. The main region hit by this problem is the Quebec province, which is largely dominated by the French. This means that the consumers did not buy the products and the reason behind this is subject to thorough investigation and coming up with necessary recommendations. According to Marie Lemans, a product manager, the problem was with the marketing of the products. Quebec, as stated before is largely dominated by the French speaking people. Leman suggested that this region should then be treated differently from the rest of the Canada population. This then would be done by coming up with an appropriate marketing plan for the French-speaking people. The company’s products would therefore be advertised in the French language in the Quebec region and in English in the rest of Canada. Jessica Walters needed to have a closer look and a bit of analysis on the implications of the matter before implementing it (Canada Business Network, 2012). Food distribution across the Quebec province is another problem discussed by the managers. They argued that most of the bigger supermarkets and big stores had low market shares. The only advantage that the company has on food distribution in Quebec province is that the products are stored on best selling stores. The managers raised concerns on including the big supermarkets in selling these item s since they have more customers. This, they said will help raise the sales. The company has also done less in boosting attraction of customers in the discount policies and pricing structure of the products. The prices need to be reviewed and at least introduce some discounts. This issue has made the customers to shun away and hence the drop in the amount of sales. Jessica Walter is the major player here since he is the manager. The issues raised might look simple and easy to implement but the effects that it will have on

World History Essay Example for Free

World History Essay Buddhism was founded in India during the 6th century and brought to China by the first century. Buddhism spread widely and cause china to have a period of political instability and disunity, but then later restored the imperial structure. By going from India to China, it had mixed results. Many Chinese accepted Buddhism and defended it while other observed Buddhism’s absence from past texts and used it as an excuse for political and social problems. Still others remained indifferent hoping that it would all work itself out and develop into a unified Chinese culture. Documents 2 and 3 defend and encourage Buddhism while 4 and 6 scrutinize and discourage its spread. Documents 1 and 5 neither encourage or discourage the religions spread, they simply state how it should be dealt with. An additional document that would be helpful would be a chart or graph that showed the number of people who converted to Buddhism. It would be helpful to see which group of documents was correct or who was just over-reacting. Documents 2 and 3 defend and support the spread of Buddhism. Document 2 speaks of the many joys, including Nirvana, of joining Buddhism. However, the author, Zhi Dun is part of the upper class and does not have a point of view from the lower class, which made up most of the population. Document 3 counters the scrutiny of anti-Buddhists with logic. However, since the author is anonymous, his influence in the document is difficult to pinpoint, yet his role as a scholar certainly dictates a slight upper class position, just like document 2. Documents 4 and 6 both discourage the spread and use of Buddhism. Document 4 ridicules Buddhism as â€Å"a cult of barbarian peoples,† saying how Confucianism is all truth and Buddhism is all lies. Of course Han Yu’s position in the imperial court makes his opinions 20 times more powerful than any peasants. Document 6 blames Buddhism for all of the problems in Chinese society. Since the author is Emperor Wu himself, it is very likely that his opinions carried a lot of importance in his nation, even though people sometimes adopt prohibited acts merely in attempt to rebel against the law. Documents 1 and 5 neither encourage or discourage Buddhism’s spread in China, but attempt to negotiate. Document 1 is directly from the Buddhist tradition, laying down the basic laws and guides to a happy and enlightened life. Since the document is taken straight from sacred texts, it was most likely the beliefs of all Buddhists. Document 5 attempts to make a compromise among the conflicts of belief systems in China. Although Zong Mi’s intentions may seem fair, he himself is a Buddhist scholar, so his ideas might just be an effort to defend Buddhism. The spread of Buddhism in China during the first century was met with different aspects and ideas. Many Chinese accepted Buddhism and defended it, as in documents 2 and 3, while other observed Buddhism’s absence from past texts and used it as an excuse for political and social problems, like documents 4 and 6. Still others remained indifferent hoping that it would all work itself out and develop into a unified Chinese culture, such as documents 1 and 5. Also, another additional document that could be helpful would be a text from peasants or the lower class, saying how they feel about Buddhism.