The Hospitality Industry Tamilnadu Tourism Essay

The Hospitality Industry Tamilnadu Tourism Essay This study has analysed the trends of the hospitality industry with special importance on Tamilnadu where the researcher has aimed at helping and growing the family business. This is done to get a better understanding of the Chennais market place, along with many other important cities in the state making it possible to go on board on selected strategies to effectively reach the local consumers. As Mohanty (2008) says, Hospitality is all about offering and comforting someone by all means to their needs. Good support from customers can be achieved by receiving and entertaining each and every single guest. In commercial context point of view, the word Hospitality refers to hotels, resorts, restaurants, clubs, catering etc. In todays world Economic Growth of a country depends on Hospitality industry along with Industrial and Agriculture. Tourism and Hotel sector is a widely expanding and booming segment in the market, and this industry offers huge job prospects to Indians. Due to globalisation there has been immense growth in Hospitality segment in India, especially in the metro and cosmopolitan cities. This has resulted in demand for well qualified and experienced candidates from this field in India and Overseas. India has become a ideal place of tourism and is the only country in the world with different cultures, languages and diverse topography along with political stability. India has become the place for Information technology companies and as Purushottaman (2005) says India has propelled to the top of the world in both Information Technology (IT) and Information Technologies enabled Services sector (ITES). Many MNCs from all around the world have opened their operations throughout India especially in South India. Initially Bangalore served as the Indian operations head office for many companies but then later on Chennai, capital of Tamilnadu state is becoming a business hub for major MNCs. This is due to involvement of many foreigners coming to India for business development. As a part of business development, business travels boomed to high and due to this the Hospitality sector developed along with more profitability. Nearly 50% of occupancy in all the hotels in major cities of Tamilnadu like Chennai, Madurai, Coimbatore, Trichy, Tuticorin, Tirunelveli have come from business travellers. In this particular research, the author has evaluated the devel opment of the hotel industry with a focus on above mentioned cities in Tamil nadu, India. The performance of Hotel Industry is back on its development and growth path as it had been in decline for the past two years (i.e.) 2008 2009 due to global economic recession, which affected the hospitality business in India. According to HVS 2009 report, the foreign arrivals have declined by 20% in 2008 2009, resulting in decline of occupancy and performance of hotel industry throughout India. All the major cities in India like Mumbai, Chennai, Delhi, Bangalore, and Kolkata had an average of 10% marginal decline in occupancy rate. According to FHRAI and HVS 2009 report, though the industry has faced decline in performance, the demand for the industry will immensely grow from 2010 and has reported that an average 5% growth will be recorded from 2010. In Tamilnadu though the industry faced decline in its capital, Coimbatore and Ootacamand has raised its status to become one of the 12 major cities in India after the metro cities. According to HVS 2009 report, the occupancy rate of H otels at Coimbatore, Madurai in Tamilnadu has increased by 5% respectively, though the industry on a whole has faced decline. So this clearly indicates the rise of demand for Hotel industry in Tamilnadu. In Industrial aspect all the cities in Tamilnadu has developed along different businesses. In last year several new projects have been announced in Chennai, Coimbatore, Madurai, Ootacamund which is due to higher growth market and more are required to ease the current situation. General occupancy rate and cost of rooms is high in major cities as the demand for rooms have increased but then the number of available rooms is less than the demand (HVS International survey, 2004 ). India economy has boomed in the last 5 to 6 years which is due to flourishment in IT sector, Finance, Banking, Telecom , Biotechnolgy, Real estate, Retailing etc. As Joshi (2005) denotes many major hubs in the country lacks quality hotels and rooms. Though the industry has developed a lot in the previous decade still there is demand for number of rooms required is under lack. He also denoted that India will become one of the worlds fastest growing tourism market and as suggested by him, the number of foreign tourists have increased in the year 2006 and 2007. SWOT ANALYSIS of Hotel Industry in Tamilnadu. STRENGTHS Natural and cultural diversity: India on a whole is very rich in cultural heritage and values. While considering the state of Tamilnadu, its heritage and history dates back to B.C., it has many historic places and monuments. The state pocess three main tourist spots in the country namely Oatacamund, Kodaikanal, Courtrallam and its the place where Rameswaram lies, one of two most spiritually important places in India for Hindus community. The state is along the southern coastal line of the country and has got many beautiful and sunny beaches along is shore. The state has become the region for business as it has got all the transportation means required and the state capital has one of the busiest ports in India. The state has got 8 national sanctuaries, and it has got many hills station including Ootacamund Kodaikanal. Demand Supply gap: There has always been a mismatch between demand and supply of rooms in Indian Hotel Industry. This has been the reason for higher room tariffs and the level of occupancy. The demand is raised a lot as India is hosting the 2010 Commonwealth games, and most importantly the demand for Chennai will increase due to 2011 Cricket World Cup in India. Many star categorized hotels have come in important cities of Tamilnadu in the last decade. Economical Growth: Indias economy is growing to new heights and been predicted to be second after China by 2050. India has now become a part of G20 nations which in turn denotes the growth of the Indian economy. Chennai city being one of the major business hubs of India is Bourne to immense growth in near future due to increase IT firms, growing Industry in numbers, government tourism development, and other business activities. Coimbatore, the other city in Tamilnadu which was initially a hub for textile industry has now turning out to be IT hub with many MNCs started to have their operations there. Due to industrial and automobile growth, the state of Tamilnadu has now become more occupied with the state having 6 different automobile company plants. Overall the International and domestic economic growth has brought in huge opportunity for Hotel Industry in Tamilnadu. Many huge player in the global market with global chain have started to walk in to Chennai market and along the state (tamilnadu). Weakness Slow Implementation- Growth in the tourism sector is considerably slow when compared to other departments. Though the market needs have increased, the adequate infrastructure facility for Hotel Industry is still lacking. Lack of proper manpower has always been an issue in the industry. Regional Imbalance: Regional Imbalance of hotels is prevailing a lot throughout India and that prevails in Tamilnadu also. Still some of the tourist spots in Tamilnadu, there isnt adequate number of rooms for to increase the demand and develop that region to be major tourist spot. Due to this, those tourist spot regions are still under developing schemes and they lack the actual demand which they are capable of producing. Capital Intensive: Initial cost involved in Hotel construction project (i.e.) cost of land is very high and contributes 50% of the total project cost, whereas in other countries it is around 15%. This operates as a major restriction to the Indian hotel Industry, with Tamilnadu being no exemption to this context. Long Gestation Period: Due to lack of proper government development scheme being actuated many rural tourist spots with cultural importance and heritage places lack hotels. This is due to long gestation period for the hotel to get back its breakeven point and also the future growth of the firm is under immense doubt. As mentioned earlier land cost being high in India, time period for Hotel development needs to be very fast in order flourish in the market. As of now this long growth period is making a full stop to Hotel Industry development in those areas. Oppurtunities Rising Income: The tendency of spending has increased among Indians due to rise in income levels. People of different age groups are bound to spend on different purchases and are more bound to spend on leisure tourism on a whole. Economy Rise: As stated in The Financial express (2008), Overall Indian Hotel Industry is going through a healthy growth phase due to rising economy which has made many foreign companies and investors to enter India, which in turn has raised the occupancy in Hotels. Thus due to economy rise government have implied many schemes to develop tourism. It has also stated that in Conde Nast Travaller ranking, India is been ranked 4th among 167 countries in most preferred travel destinations. This denoted that India has making its mark on global tourism sector. Threats Global Recession: In the last couple of years though the market for Hotel Industry has increased, the occupancy level has decreased due to global recession. Due to this situation, the percentage of business travellers dropped heavily as the companys restricted the travel expense for its employees. The dependency level on foreign tourists is always risky, as the economic depression has affected in all the developed companies and developing countries across the world. Hence there has been a huge fluctuation in International tourism. Rising Competition: Major International Hotel chains are entering Indian market as it is becoming the destination for economical growth. The existing market players are also bringing in lot of new facilities and offers to attract customers. Hence striving a place in customer mind will prove to be a hectic job. Thus there will be a rise in competition among the exciting Hotel market. . Aim: The main of this research is to explore the fundamental factors influencing the performance of the Hotel Industry in India, with special emphasis on Tamilnadu. Personal aims include: Preparation for myself in this hospitality line which will guide me to develop my family business to new heights in the market. To encourage Hoteliers make best use of the information resources gathered in this research. The need for the study emerges as more and more Hotel chains have started involving themselves in different type of complex business models and also they emphasize the need for cost-efficiency. Objectives: To assess the past and present performance of Hotels in Tamilnadu. To categorize the core factors of the identified trends. To understand the future growth opportunities for the hospitality sector in Tamilnadu. To provide proposals for the further development on this sector with regards to the state of Tamilnadu. Literature Review The term Hotel in British law is defined as the place where a bonafide traveller can receive food and shelter provided he is in a position to for it and is fit condition to receive (Yashroy.U, 2008). The origin of hotels came to India from British people. Until late 1920s all the hotels in India were maintained by British and Swiss people. The fact of Chennai being a metropolitan city dates back to 1639 when Chennai was used as main port for trading by East India Company which was maintained by British (Chennai Hotels, 2007). In current industrial world, one of the most successful industries is Hotel Industry. Demand has always been more than supply in all the cities. As FDI restrictions been eased off by government many MNCs have opened their operation in India especially in Tamilnadu. Indian economy rise in global market and rise of business activities in India has insisted for a need of quality hotel rooms for corporate and industrial people. This trend of hospitality development is significant all over India. Leisure travelling has increased in India, which also contributes to the factor of growth in Hotel Industry. Almost all the major hotel players in the world have their operations in India, which itself indicates the growth of Hotel Industry in India. While considering the state of Tamilnadu Chennai, Coimbatore, Madurai, Trichy, Tuticorin are the major cities and Ootacamund, Kodaikanal, Courtrallam, Yercaud, Kanyakumari are the main tourist spots in the state. Demand supply mismatch has increased along all the above mentioned places in terms of Hotel rooms. In the last few years the number of inbound tourists (foreign tourist) has increased and has been around 4.9 million in 2007, while outbound tourists (Indian going on foreign tour) have been around 8.3 million in 2006 (ITOPC, 2008). In the outbound tourists segment lot of travel has been business travel while others have been leisure travel segment. Since both the inbound and outbound tourism has increased, the need for quality hotels in India has been rising. India being a country of wide culture and composite of world class heritage is the main reason for its tourist attraction in the global arena. Considering the tourism in Tamilnadu, the domestic leisure travel is based on seasonality for the tourist spots and for cities is based on full swing business travel. Beside the rise in income level of the people has been a main reason for rise of leisure tourism in Tamilnadu. But still the majority of Star class hotels are used for business travels and Budget hotels are used for leisure travel. Inbound Tourism Statistics Foreign Tourists In India (Number) 2001 2002 2003 2004 2005 2006 2007 2008 January 283750 228150 274215 337345 385977 459489 532088 584765 February 262306 227529 262692 331697 369844 439090 498806 560658 March 248965 225558 218473 293185 352094 391009 444186 509926 April 185338 155378 160941 223884 248416 309208 333945 369677 May 151098 132998 141508 185502 225394 255008 267758 290785 June 176716 143100 176324 223122 246970 278370 310104 344526 July 224432 186432 225359 272456 307870 337332 377474 August 196517 161477 204940 253301 273856 304387 360089 September 162326 151721 191339 226773 257184 297891 325893 October 181605 212191 260569 307447 347757 391399 440715 November 209685 243566 290583 385238 423837 442413 510987 December 319271 417527 479411 541571 575148 Total 2282738 2073025 2726214 3457477 3918610 4447167 4977193 2660337 Source: Ministry of tourism, Govt.of India (ITOPC, 2008). Domestic Travel Statistics Tourists Statistics Tamil Nadu Year Domestic Tourists 2004 42279838 2005 43213228 2006 58340008 Source : Ministry of tourism, Govt. of India (ITOPC, 2008). Outbound Tourism Statistics Statistics of Indian National Going Abroad Year No of Outbound Indians Percentage Change over the previos year 2000 4415513 7.3 2001 4564477 3.4 2002 4940244 8.2 2003 5350896 8.3 2004 6212809 16.1 2005 7184501 15.6 2006 8339614 16.1 Source: Ministry of tourism, Govt. of India (ITOPC, 2008). The categories of hotels in India are of five segments. Those segments are Premium Luxury segments, Mid Market Segment, Heritage Hotels, Resorts, Budget Hotels, and Unclassified Hotels. Premium and Luxury Segment This segment is based on major players in the local and International market. The whole slot in this segment comprises of 5 -star and 5 -star deluxe hotels which mainly serves business travellers and upmarket foreign travellers. These hotels fall into luxury segment and they offer a high quality and higher range of services. They tariffs and other service cost in considered to be expensive and is situated only in metro cities and major tourist spots. This segment alone contributed 30% of total number of rooms back in 2004. When comparing with Tamilnadus context, it contributes 15 % of total number of rooms which is nearly half to the national segment ratio (Bhatia, 2004). Mid-Market Segment This segment is based on local players in the market and small chain of hotels within the domestic market. The 3star and 4star hotels falls under this segment, and they mainly cater to the average domestic and foreign leisure traveller, along with domestic business travellers as they nearly offer all the services as of premium hotels under low cost than the premium as the tax component for this sector is less than that of luxury and premium segments. This segment contributes 30% of the total number of rooms in Chennai, Coimbatore, and Madurai major cities in Tamilnadu (HVS International, 2009). Budget Segment This segment has emerged due to liberalisation in economy and is been mainly catered to middle class people with higher disposable income. This class comprises of 1 star and 2 star hotel. This type of hotels holds the major percentage of existence in the state of Tamilnadu. This segment caters for domestic travellers who prefer reasonably priced accommodation with limited luxury, and offers special seasonal discounts for domestic tourist packages. Low cost and good service is the main forefront of this hotel segment. Heritage Segment This segment is classified in the recent years to denote the hotels in palaces, castles, forts, and other buildings which were constructed before 1950. These traditional structures symbolise the ambience and luxury lifestyle of the past golden era (Ghosh, 2005). They have come to limelight with their lesser initial capital and for mirroring the traditional lifestyle of the past. These values have proved to be a major point of attraction and business for these hotels. While considering the context of Tamilnadu there are more than 10 hotels in existence (HHIMT, 2006). Unclassified or Other Segments This segment of hotels and motels are spread out throughout the country. If taken into account these contribute 50% of rooms occupancy in India. Their main point of sales income is low pricing policy. However some of them came into prominence on account due to increase in tourist congestion in major cities and tourist spots. These hotels officially now contribute 19% of the Industry. Performance measures in hotel management The performance of hotel property and chains can be measured in several ways. The simple method would be evaluating room rates and occupancy ratios. Another important measure with regards to occupancy rates is the Average Daily Room Rate (ARR). This is manipulated by dividing the revenue with the total number of rooms occupied. This occupancy ratio is also relatively important as that of ARR because it is an important indicator of profitability. The rate of occupancy is manipulated with number of rooms occupied by number of rooms available (Sola et.al, 1997, p.85). Market concept of Hotels As mentioned by many authors, Hotel is an commercial hospitality institution which offers services and loads of facilities to its customers on various cost factors aspects (Ghosh, 2005). Facilities Service Location Price Image (Source: Ghosh, 2005, p.131) All the five factors denoted in the factor are the terms related to hotel marketing concept. The term Location refers the geographic location of the hotel whether is the hotel is present in a city, rural area, or a tourist spot etc. It denotes to attractive features of the form, accessibility to the hotel, convenience factor, along with the surroundings. The term facilities refers to classy rooms, restaurants, leisure features, bars, banquet halls and recreation facilities (Weissinger, 2000).  . The term Service refers to the quality of the facilities offered and the extent to which it reaches to the consumers, availability of that service offered (Hoque, 2002).  Price factor implies the value given to its facilities and services offered to customers. The Image is a vital marketing factor as it portrays the hotel in the market and to the customers. This image is obtained from the above mentioned factors. For to maintain this factor all other factor have to be streamlined (Ghosh, 2005). Performance of Hotels in Tamilnadu The main focus the occupancy patterns of hotels two major metropolitan cities and two major tourist spots of Tamilnadu. The two major cities to be discussed are Chennai and Coimbatore and the two major tourist spots are Ootacamund and Kodaikanal. The percentage of occupancy rate in Chennai has risen by 12% in the current 2009 -2010 financial year after a decline in 2008 09 by 13% due to global recession. While in the case of Coimbatore, though the industry was also affected by recession in 2009, it dropped only by 5 % considering its growth ratio for the past decade with an average rise of 6% per year. The industry has also risen in current 2009 10 financial year by 10%. Both the cities are expected to have 16 new hotels, commercial serviced apartments for MNCs over the next 5 years. Both the cities have become an IT hub in the southern part o India. Chennai is amongst the seven major metropolitan cities, while Coimbatore and Ootacamund has become one amongst the twelve other major cities in the Hospitality and Industrial growth list (HVSFHRAI survey, 2009). The performance of Hotel Industry in Chennai city saw a decline in first half of 2009 as there was cost cutting activities taken by IT ITeS sectors and other business sectors along with decline in travel and entertainment. Though there was decline the city had the opening of two new star hotel property Taj Mount road Lemon Tree. The industry by the end of 2009 saw a rise in occupancies as the businesses boomed again and many new projects associated with travel and occupancy was announced. As mentioned earlier Chennai has always had a steady rise in Hotel Industry (HVSFHRAI survey, 2009). The performance of Hotel Industry in Coimbatore has been growing with steady Growth phase and Demand. Coimbatore is popularly known as Manchester of the south. The city itself is based on diversified economy consisting auto ancillary sector, textile sector, textile manufacturing and majorly in the past 6 years service sector has boomed in the city. The lower cost business operations have raised the city to prominence as a business destination in Tamilnadu and now across India. The occupancy rate has risen from 64 % in 2005 to 79% in 2009 though had a drop to 72% in the start of 2009 due to global recession. Coimbatore also has close proximity to Nligiris which implies that the demand for the Leisure segment will rise in the next few years. The current Star rated occupancy of 350 rooms is expected to rise to nearly 875 rooms which add pressure to the need of upgrade with the performance of hotels in a short term (Times, 2009). The existence of Ootacamund or in short term called Ooty, one of the major tourist destinations in India and has clearly marked as one amongst the other twelve major cities in India with its tourism Industrial growth. It is one of the primary hills station in South India. It is easily accessible via road and railways from Coimbatore, Chennai Bangalore. Ooty has retained its name as a Hills station tourist destination and hence many innovative and eco friendly hotels have come up nearby to the wildlife destinations. It is surrounded by natural sceneries, lakes, wildlife sanctuaries and many others. Domestic travel to this destination is being increasing at a higher pace (Kumar, 2010). The hotel occupancy has increased from 44% in 2005 to 59% in 2009 (HVSFHRAI survey, 2009). Kodaikanal is another major hill station in Tamilnadu. Tough Kodaikanal is categorised under developing urban areas, it still remains untouched by urban development and dense population as that of Ooty. It has got access from all the major cities in Tamilnadu and from Kerala as well. Though the number of Hotels in Kodaikanal is less than that of Ooty, they offer iunparelled experience in terms of comfort and services. It is surrounded by hills, huge lake, and number of parks, museums, and heritage places. There are two five star hotels, three four star hotels, more than 10 three star hotels in Kodaikanal. It is an intense developing tourist spot in India (Agarwal, 2007) Principle factors for growth of Hotels in India (Tamilnadu) The factors which influence the occupancy rate of Hotels , and their average room cost across the country are Domestic travel, International Arrivals, Health and Medical tourism, Business travel, MICE Meetings. Incentives. Conferences. Exhibitons. The Domestic travel is the vast growing market in India. Domestic Guests market is considered to be the most important segment for Indian hotel Industry, which accounted to 71.7 % of all guests in 2004- 05 (HVS, 2006). The effective guidance role for domestic travel is played by Budget airline, or low cost carriers. These have played a vital role in short business trips, short visits etc. Due to this a person from Chennai can go to Delhi in the morning, do his work over there and come back in the same day evening. This has made peoples work more convenient and easier than before, initially the cost factor played a vital role in choosing airlines. They were only used by higher business people as the ticket fare was costlier but then after the entry budget airlines in the market the frequency of air travel and the number of domestic travellers has been increasing from the initial entry period. The number of destinations has increased due to rising air trafiic. So connectivity to various destinations from one single destination is now very much possible. Now all the major private carriers, government carriers, and other small players in the market deal with budget airlines. They are Jetlite, Jetkonnec t, Spice Jet, Simplifly deccan, Air India Domestic formerly Indian Airlines, Go air, Paramount, Indigo and other new players which are in the queue for launch (Goyal, 2009). Tourists Statistics Tamil Nadu Year Domestic Tourists 2004 42279838 2005 43213228 2006 58340008 Source: Ministry of tourism, Govt. of India (ITOPC, 2008) International arrivals have been increasing steadily as the Business travels due to MNCs, leisure trips, and other trips have increased. Many Private and Government Indian carriers are now been operated to various destinations in the world which plays a vital role for the rise in International arrivals. Governments tourism scheme Incredible India is the most successful plan implemented by tourism ministry. This campaign has brought in many foreigners. This particular scheme has offered many advantages for tour packages. Hence the tour operators are doing aggressive marketing and attractive package offers to attract foreign tourists to India. The table below suggest that year 2008 has attracted around 5.4 million tourists from around the world, which is 5.6% more than previous year. The estimated foreign exchange earnings generated in the year 2008 was 50730 crores which are 14.4 % more than that of the previous year. The foreign exchange earning in terms of US dollars was 11747 US mi llion$ which is 9.3% rise than the previous year. Hence the rate of tourists arrival and the income has increased which in turn has resulted in growth of Indian hotel industry. In accordance to an official review the impressive inflow is one of the main reason for the rise in airline passengers, which in turn as the result of intensive advertising campaign done by the Ministry of tourism (Travel Tourism, 2005). Year Foreign Tourists Arrivals (in nos.) Percentage Change Over Previous Year Estimated Foreign Exchange Earnings (Rs. In Crore) Percentage of Change Over Previous Year Estimated Foreign Exchange (in Million US$) Percentage Over Previous Year 1999 2481928 12951 - 3009 2000 2649378 6.7 15626 20.6 3460 15.0 2001 2537282 -4.2 15083 -3.5 3198 -7.6 2002 2384364 -6.0 15064 -0.1 3103 -3.0 2003 2726214 14.3 20729 37.6 4463 43.8 2004 3457477 26.8 27944 34.8 6170 38.2 2005 3918610 13.3 33123 18.5 7493 21.4 2006 4447167 13.5 39025 17.8 8634 15.2 2007 5081504 14.3 44360 13.7 10729 24.3 2008 5366966 5.6 50730 14.4 11747 9.3 Source: Ministry Of Tourism India (2009). Medical tourism has now become one of the developing concepts whereby people from foreign countries come to India for medical treatment and relaxation. Major surgery treatments include Heart surgery, Plastic surgery, transplant surgery, Cosmetic surgery and Dental care. Patients from all

Importance of Corporate Governance

Importance of Corporate Governance 1. INTRODUCTION This chapter provides a definition of corporate governance and examines importance of, and the principles underpinning corporate governance. It also reviews prior research examining corporate governance disclosures and in particular, those which have investigated corporate governance disclosure in ECMs. 2. DEFINITIONS OF CORPORATE GOVERNANCE Modern corporations have dispersed ownership structure (Jenkinson and Mayer, 1994). Due to this, these corporate entities are characterised by contractual relationships between (shareholders) owners and managers (agents). Management is hired by owners (i.e. investors) to run the business on their behalf (Sarpong, 1999). Within the agency theory framework, it is theorised that managers may seek to maximise their wealth to the detriment of shareholders and bondholders through the consumption of perquisites (Jensen and Meckling, 1976). Decisions of agents have the tendency of unfavourably transferring wealth from one principal to another i.e. from bondholders to shareholders (Watts and Zimmerman, 1978). John and Senbet, (1998 p. 372) define corporate governance â€Å"as a means by which stakeholders of a corporation exercise control over corporate insiders and management such that their interest will be well protected†. Similarly, it is proposed that â€Å"corporate governance i ssues arise in an organization whenever two conditions are present. First, there is an agency problem, or conflict of interest, involving members of the organization these might be owners, managers, workers or consumers. Second, transaction costs are such that this agency problem cannot be dealt with through a contract† (Hart, 1995, p. 678) To avert the agency problem, there is the need to ensure that adequate and effective corporate governance structures are put in place to prevent abuse of power by managers (Cadbury, 1992). Corporate disclosure through annual reports is one of the essential instruments for the monitoring of managerial behaviour (Watts, 1977; Watts and Zimmerman, 1978). This requires frequent evaluation of managerial activities and performances particularly, through independent non-executive directors (Roberts et al 2005). Berle and Means (2003) view corporate governance as a relatively new concept in both the public and academic domains, although the central issues the concept seeks to address have been in existence for a longer period. The most common definition of the concept has been provided by the Organization for Economic Cooperation and Development (OCED). It defines Corporate governance as: ‘ a system by which business corporations are directed and controlled. Corporate governance structures specify the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the companys objectives are set and the means of attaining those objectives and monitoring performance (OECD, 1999 p. 11). The influential Cadbury report defines corporate governance fundamentals and somewhat simplistically as ‘ the systems by which companies are directed and controlled (Cadbury 1992). This will require putting in place appropriate mechanisms which will ensure that corporate resources are safeguarded. Johnson and Scholes (1998) explained that corporate governance is concerned with both the functioning of organizations and the distribution of powers between different stakeholders. They argue that corporate governance determines whom the organization is there to serve and how the purpose and priorities of the organization should be decided. Thus, among other things, corporate governance is concerned with structures and processes for decision making, ensures accountability and controls managerial behaviour. It therefore, seeks to address issues facing board of directors, such as the interaction with top management and relationship with owners and others interested in the affairs of a company. The definitions outlined, directly or indirectly, share common elements. They all acknowledge the existence of conflict of interest between managers and shareholders as a result of the existence of separation of ownership and control in corporate activities. They further recognize the need to put in place effective corporate governance mechanisms to ensure that shareholders and investors interest are well protected. 1. IMPORTANCE OF CORPORATE GOVERNANCE As a result of globalization and the increasing complexity of business there is a greater reliance on the private sector as the engine of growth in both developed and developing countries. Organizations do not exist in a vacuum; they rather interrelate with a number of interest groups, known as stakeholders (Freeman, 1984). These stakeholders include shareholders, governments, regulatory bodies, creditors and the general public (Pease and Macmillan, 1993). Stakeholders are impacted by the activities of companies. In this regard, and in the context of this study, adequate and effective corporate governance disclosure becomes relevant to investors and other stakeholders from a number of standpoints. Effective corporate governance disclosure promotes transparency in corporate structures and operations. It strengthens accountability and oversight among managers and board members to shareholders (Bosch, 2002). This oversight and accountability combined with the efficient use of resources, improved access to lower-cost capital and increased responsiveness to societal needs and expectations leads to improved corporate performance. Many studies exist linking good corporate governance with better Performance. Fianna and Grant (2005) explains that good corporate governance helps to bridge the gap between the interests of those that a company, by increasing investor confidence and lowering the cost of capital for the company. Furthermore, they also add that it also helps in ensuring company honours, its legal commitments and forms value-creating relations with stakeholders. Coles et al. (2001) and Durnev and Han (2002, also found that companies with better corporate governance enjoy high er valuation. These studies results, helps in confirming the idea of good corporate governance, result in better decisions at all levels of the organization, not at top-management and board levels, but also in the better performance of the organization Again adequate and effective corporate governance disclosure ensures that corporate activities are run in an open and transparent manner (Brain 2005). Last, corporate governance practices boost market confidence and ensure effective allocation of capital in the market (Greenspan, 2002). From the forgoing discussions, the realization of the importance of good corporate governance practices is largely dependent on a number of internal factors. As a way of achieving this, a number of principles have been established. 3. PRINCIPLES UNDERPINNING CORPORATE GOVERNANCE DISCLOSURE A number of principles underpin effective corporate governance. These principles are business probity, responsibility and fairness or equal opportunity. Corporate entities are expected to exhibit these qualities to ensure good governance. Embracing the outlined principles will improve relationships between companies, their shareholders and the overall welfare of every economy. These principles are briefly discussed. Business probity requires individuals in charge of companies to be open and honest in the discharge of their activities. According to Brain (2005) openness implies a willingness to provide information to individuals and groups about the activities of a company. In this regard, it is important to recognize that shareholders and investors need to know the position of a company in order to evaluate their performance. Timely delivery of information will enable them achieve this purpose. Good corporate governance disclosure requires handlers of companies to be honest in the discharge of their activities. Honesty requires managers to deliver factual information. A sign of honesty is that statements of companies are believed. However, Brain (2005 p. 26) contends that â€Å"honesty might seem an obvious quality for companies, but, in an age of spin, and the manipulation of facts, honest information is perhaps by no means as prevalent as it should be.† Corporate governance requires handlers of corporate entities to be responsible in the discharge of their duties. Investors require confidence that companys financial systems are secured and credible. Managers are therefore expected to work in this direction to meet investors expectation. Responsibility in the context of corporate governance includes other issues such as transparency and accountability. These principles are vital to the survival and welfare of every company. Thus, managers have a duty to explain their actions to shareholders as well as investors so as to enhance their understanding of the direction of the companys activities. The principle of fairness requires impartiality and a lack of bias in corporate activities. In the context of corporate governance, the quality of fairness is achieved when managers behave in reasonable and unbiased manner. In this sense, to ensure good governance shareholders are expected to receive equal consideration. This means minority shareholders should be treated the same way as majority shareholders. References Berle, A.A. and G.C. Means (2003). The Modern Corporation and private property, New York, Macmillan Company. Bosch, H. (2002), The changing face of corporate governance, UNSW Law Journal, Vol. 25 No.2, pp.270-93. Brain, C. (2005) Corporate Governance, ICSA text Cadbury A. (1992) Financial Aspect of corporate governance Coles JW, Mcwilliams VB, Sen N. An examination of the relationship of governance mechanisms to performance. Journal of Management 2001; 29 (1):23-50. Durnev A, Han KE. The interplay of firm-specific factors and legal regimes in corporate governance and firm valuation. In: Paper Presented at Dartmouths Center for Corporate Governance Conference: Contemporate Governance; 2002. p. 12-3. Fianna J, Grant K. The revised OECD principles of corporate governance and their relevance to non-OECD countries, vol. 13. Blackwell Publishing Ltd; 2005. p. 2. Freeman, R.E (1994). The Stakeholder Theory of Modern Corporations. Concepts, evidence and implications, Academy of Management Review Vol. 20, 65-91 Greenspan, A. (2002) Corporate Governance in Emerging Markets Hart, O. (1995), â€Å"Corporate Governance, Some Theory and Applications, The Economic Journal 105: 687-689 Jenkinson T. and Mayer C.P. (1994). Hostile takeovers defense attack and corporate performance. McGraw Hill. Jensen, M. C. and Meckling, W. H (1976). Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial economics 3(3): 305-60 John, K., and L. Senbet (1998), â€Å"Corporate Governance and Board Effectiveness†, Journal of Banking and Finance 22: 371-403. OECD (2005), Guidelines on Corporate Governance of State Owned Enterprises Roberts, J. T. McNulty, et al (2005). â€Å"Beyond agency conceptions of the work of the non-executive director: creating accountability in the boardroom†. Special Edition. British Journal of Management 16:S5-S26 Sarpong, K.K. (1999) Financial Reporting in Emerging Capital Markets: A Case Study of Ghana, PHD Thesis, The University of Warwick Watts, R. L. 1977. Corporate Financial Statements, a Product of the Market and Political Processes. Australian journal of Management: 53-75. Watts, R. L. and J. L. Zimmerman. 1978. Towards a Positive Theory of the determination of Accounting Standards. Accounting review: 112-34

Essay --

CHAPTER 3 RESEARCH METHODOLOGY The purpose of this study is to investigate the relationship between types of compensation towards employee’s loyalty among administrative support personnel in selected banking industry at Klang Valley. Other than that, this section briefly described the processes and included research questions regarding the relationship between types of compensation towards employee’s loyalty among administrative support personnel in selected banking industry at Klang Valley. In addition, this chapter will described the technique and methods that was used to accomplish the objectives of this research, which include the research design, sampling frame, population, sampling technique, sample size, unit of analysis, data collection procedures, instrument, validity of instrument and data analysis. Research Design The research design used for this research is descriptive, using nonexperimental research method. According to Salkind (2003) descriptive research describes the characteristics of an existing phenomenon. Descriptive research design is used when one wants to get information on the present status of a person or an object. It is used to describe what is in presence in respect to conditions or variables that are found in a given situation. In addition, Salkind (2003) also stressed that several benefits of descriptive design such as enables a more in-depth examination of particular situation compared than other research design. In this research, the researcher focus on the relationship between types of organizational fringe benefits towards employee loyalty among administrative support personnel in selected banking industry of Klang Valley. Sampling Frame The sampling frame that the researcher will u... ...formation had been received will make more strong result. The other part that had been include during distribute the questionnaire is a cover later. The cover letter is one of important information that had been including in the questionnaire. The purpose for include the cover letter is to explain the objective of this research. The questionnaire had been distributed to every staff in the organization. Plan for data analysis Each result of the questionnaire response will be examined for completeness before being entered into data analysis system. After that, the data collected will be analyzed using Statistical Package for Social Science (SPSS) version 20.0. SPSS will be used as the analysis tool because this research used a structured questionnaire and it is also purposely used to provide a broad range of capabilities for the entire analytical processes.

A Tale of Two Cities Essays: A Sad Tale Of Two Cities :: Tale Two Cities Essays

A Tale Of Two Cities The focus of A Tale Of Two Cities concerns the impetus and fervor of 18th century European socio-political turmoil, its consequences, and what Dickens presents as the appropriate response of an enlightened aristocracy and just citizenry. The tale opens with Dr. Manettte having spent the last 18 years of his life in the Bastille - innocent of all crimes save his disdain for the base actions of a French Marquis. The heinous nature of his confinement induced a madness remedied only by the devoted love of his Lucie. We next encounter these characters five years later attending the trial of Charles Darnay - a nobly born French immigrant who relinquished his station rather than partake in the barbarous class structure of 18th century France. The beautiful and virtuous Lucie Manette is admired by both Sydney Carton and his repugnant legal partner, C.J.Stryver. It is the inherently ethical Carton, not the aristocratic (and bellicose) Stryver who realizes that marriage to Charles Darnay would bring the greatest happiness to Lucie. Their bliss is short lived however,as the honor bound Darnay returns to Paris. His prosecution is propelled by a vengeful and newly empowered Madame Defarge a "patriot of the revolution" who utilizes the revolutionary "People's Tribunals" to redress grievances committed by the Evremonde clan. Aided by her cohort (aptly given the code name of "Vengeance") retribution, not justice, is her sole concern. "...I have this race a long time on my register, doomed to destruction and extermination."(370). This savage character - "Madame's resolute right hand was occupied with an axe,...and in her girdle were a pistol and a cruel knife"(244) - exhibits an anger so resolute and ferocious that its like may be comparable only to newly divorced female students here at N.Y.U. - but that is simply my experience. Dickens does not portray Madame Defarge and her compatriots as morally bankrupt but rather depicts their inevitable creation in the oppressive aristocratic class structure of 18th century Europe. A Tale Of Two Cities is written in a perfectly linear progression of this theme. It initially portrays the oppressive nature of the aristocracy (the imprisonment of Dr. Manette, the accidental death of a child and the trite response of the Marquis - among other graphic illustration) which leads to the fervor of revolutionary assassins seeking justice.

Dramatic changes in the London areas

Whilst working on this project I have collected a series of results. My results consist of how the Central Business District (CBD) shows us the Burgess Model. As you can see by the map below London clearly shows the rings of the Burgess Model. This is just one of many maps of London that shows the Model. I found that what I intended to find from research such as maps and graphs was correct. 1) Danecourt Gardens 16 2. Carnforth Gardens 4 3. Gale Street 9 4. Harold Road -3 5. Queens Road West 4 6. Wellington Way -15 7. Bow road 4 One of the first destinations we visited was Danecourt Gardens, as you can see my results show that this location was the highest point on my graph. Danecourt Gardens showed high quality, well-designed detached properties in good condition. The range of properties in this area command high prices. This area demonstrated a safe environment consisting of uncongested streets, which resulted in easy parking and access that in turn creates little pollution. The area was attractive in design and of a good reputation; there was plenty of open space and greenery. In general this is a desirable area to live in. On the other end of the scale my graph shows a completely different story. For instance on visiting Wellington Way, which was one of my last places to visit, this graph will show expensive but badly designed and in poor condition properties. From my observations the majority of properties I saw were tower block flats. As a result of these designs it is commonly described, as a Concrete jungle. Due to this area of design parking for non-residents was difficult, parking for residents was provided by way of designated car parks. In general there was little open green space, the majority being tarmac and paving. I also observed a large amount of vandalism consisting of graffiti and damage to street furniture. Of all the locations I visited in my opinion I found Wellington Way was the poorest. Key Question: The environmental areas vary as we go further out of the Burgess Model. Going from the CBD the first type of housing you come to would be terraced housing. The last section of the burgess model would be luxury high class residential, so from the first housing section to the last you can clearly see how much the type of housing improves. Hypothesis The environmental quality clearly has an improved change with the further you travel from the CBD. My Conclusion In my conclusion I found dramatic changes in the London areas, starting with the CBD and travelling out to the more high-class residential areas. I found that this study highlighted the environmental quality within the east London areas starting with Upminster working our way down to Plaistow. I would say that quality housing usually attracts a different class of people compared to the central areas of London's terraced housing. I found that the number of detached properties greatly out numbered that of semi and terraced houses. Working my way towards the CBD the pattern of housing changed dramatically there was the occasional detached property but in main it was dominated by semi detached properties. One of the problems of this type of housing is that off road parking is poor. This makes a problem of congested streets. Eventually on reaching the centre of London all property was either terraced of flat accommodation. These particular types of properties provide no parking other than permit holders or at payment metres. The further I progressed into London the more obvious that parking was a serious problem. Gardens eventually became non-existent; the only means of relaxation was by way of balconies or rooftops. Graffiti is an environmental problem of which London has its fair share. Graffiti is wide spread over almost everything. London can be a nice place to live in, it all depends on your financial position.

Dress code

Have you ever found yourself walking through the halls of a school and stretched out far beyond the sight of your eyes, you notice nothing but masses of students conformed into a single color or uniform? School dress codes have long since been a subject of debate amongst both students and faculty alike. In one school district after another, school uniforms are proposed as the solution. The real question is whether or not they actually serve a functional purpose, and the cost/extent of having those rules in place. School dress codes impose on freedom of expression, is time consuming, can be very costly and serve no functional purpose outside of school. Having a dress code (such as a uniform) is expensive and has no use outside of school. Poor families may not have the money to pay uniforms and having that as a dress code may be more of a hassle for them. They may depend on hand me downs or may buy clothes from second hand stores that do not provide uniforms. Buying clothes that follow a dress code may also be more expensive because children may still want clothes that they can wear outside of school. Uniforms have no use out of school. It is not a casual outfit for going to the mall or park. It is not a business suit that could be used for interviews and other occasions. Having a dress code causes the school to misuse its time. Dress codes are not enforced very well. Some teachers enforce following the dress code and others do not which presents miscommunication with students. Some students can get away with not following the dress code and others do not. When the dress code is enforced it wastes class time. It takes time away from the teacher and instructing the class. It takes away from the child’s learning experience and the rest of the child peer’s learning experience. Dress codes have not been proving to help students academically, behaviorally, or socially which means there is no valid reason to have one. Having a dress code infringes on an individual’s personal right. The first amendment states that â€Å"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. Implementing a dress code on someone violates their right of the first amendment. Clothing is a way of expressing yourself. It allows people to experiment with their identities and a way to discover your inner self. Self expression is very important to a child’s development emotionally. In an effort to allow students their rights of expression, avoid costly and wasteful time spending the use of school dress codes should be avoided. Dress codes are simply a way to give schools more power over students and to infringe on their creativity and freedom of expression. Dress code Have you ever found yourself walking through the halls of a school and stretched out far beyond the sight of your eyes, you notice nothing but masses of students conformed into a single color or uniform? School dress codes have long since been a subject of debate amongst both students and faculty alike. In one school district after another, school uniforms are proposed as the solution. The real question is whether or not they actually serve a functional purpose, and the cost/extent of having those rules in place. School dress codes impose on freedom of expression, is time consuming, can be very costly and serve no functional purpose outside of school. Having a dress code (such as a uniform) is expensive and has no use outside of school. Poor families may not have the money to pay uniforms and having that as a dress code may be more of a hassle for them. They may depend on hand me downs or may buy clothes from second hand stores that do not provide uniforms. Buying clothes that follow a dress code may also be more expensive because children may still want clothes that they can wear outside of school. Uniforms have no use out of school. It is not a casual outfit for going to the mall or park. It is not a business suit that could be used for interviews and other occasions. Having a dress code causes the school to misuse its time. Dress codes are not enforced very well. Some teachers enforce following the dress code and others do not which presents miscommunication with students. Some students can get away with not following the dress code and others do not. When the dress code is enforced it wastes class time. It takes time away from the teacher and instructing the class. It takes away from the child’s learning experience and the rest of the child peer’s learning experience. Dress codes have not been proving to help students academically, behaviorally, or socially which means there is no valid reason to have one. Having a dress code infringes on an individual’s personal right. The first amendment states that â€Å"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. Implementing a dress code on someone violates their right of the first amendment. Clothing is a way of expressing yourself. It allows people to experiment with their identities and a way to discover your inner self. Self expression is very important to a child’s development emotionally. In an effort to allow students their rights of expression, avoid costly and wasteful time spending the use of school dress codes should be avoided. Dress codes are simply a way to give schools more power over students and to infringe on their creativity and freedom of expression.

Mkt100 Textbook – Chapter 1

SECTION ONE Assessing the Marketplace CHAPTER 1 Overview of Marketing CHAPTER 2 Developing a Marketing Plan and Marketing Strategies APPENDIX 2A Writing a Marketing Plan CHAPTER 3 Analyzing the Marketing Environment CHAPTER 1 Learning Objectives After studying this chapter, you should be able to 1. LO1 Define marketing and explain its core concepts 2. LO2 Illustrate how marketers create value for a product or service 3. LO3 Summarize the four orientations of marketing 4. LO4 Identify the role of customer relationship management in creating value 5.LO5 Explain the importance of marketing both within and outside the firm M arketing is essentially about creating value for consumers and the company's shareholders. As you will learn throughout this book, creating value for consumers and the firm requires that marketers develop and nurture long-term, profitable relationships with consumers. This means that marketers must understand consumers' needs and wants and try to satisfy them through the goods and services they offer, the prices they charge, and the way they promote and deliver the goods and services.Let's take a look at how one of Canada's most successful and profitable high-tech companies, Research In Motion (RIM), is creating and delivering value to its consumers and shareholders with its BlackBerry. 1 The BlackBerry is one of Canada's most successful and innovative products. It changed not only the way business executives and professionals communicate, but also the speed and timeliness with which decisions are made. Users around the world attest that the BlackBerry enhances their ability to access key corporate information and connect with co-workers anywhere, anytime.The resulting efficiency means that business deals are made more quickly and key decisions are communicated to stakeholders even when they are on the golf course. The BlackBerry smartphone has become the one device that many business people can't live without. The BlackBerry was designed for w ireless email use. Within a few years of its release, it became the dominant device in the market. Not surprisingly, BlackBerry's market position is consistently challenged by new rivals, such as Apple's iPhone, HTC's Droid Incredible, and Palm's Pre.The iPhone, launched in 2007, created huge buzz and took the smartphone market by storm, gaining more than 25 percent market share in less than three years and becoming the second most popular smartphone. Google's Android, a recently launched operating system (OS) for smartphones, has more than doubled its market share in 2 less than a year. Page 4 To consolidate and grow its market position, RIM successfully entered into the consumer market segment 3 with two hugely popular smartphones, the BlackBerry Curve and the BlackBerry Torch.Consumers quickly adopted both of these smartphones, challenging the market segment where the iPhone is the current favourite. In response, Apple is now trying to gain a foothold in RIM's lucrative business market. The battle between the BlackBerry and the iPhone has many industry analysts pointing to the BlackBerry's weaknesses, such as a lack of applications and a challenging user interface. To silence its critics, RIM released the BlackBerry 6, with a new OS, user interface, and WebKit browser, while also 4 revamping its BlackBerry App World.Although apps and web browsing are all the rage, email access is what drives many voice-only customers to upgrade their plans to include data services, and this area has been the BlackBerry's strength. The BlackBerry also uses wireless networks more efficiently than competing devices, which means that carriers such as Rogers and Bell can offer data services to BlackBerry customers for less money than customers pay to use competing products. In fact, telecom carriers are feeling the squeeze from data 5 hungry smartphones and have responded by introducing usage-based billing for data services.This change could affect consumers' monthly bills, whic h could, in turn, influence their buying decision. RIM co-CEO Jim Balsillie has said that carriers are well aware of how profitable the BlackBerry is for their business and how strategically RIM is aligned with them. Clearly, the BlackBerry has some unique advantages over its competitors. Despite fierce competition, RIM's sales grew from US$85 million in 2000 to US$19. 9 billion in 2011. W ithin this same period, the company increased its workforce from about 1000 employees to more than 17 500 employees, of which 3200 are in sales, marketing, and customer support.RIM spent US$1. 9 billion on sales and marketing in fiscal year 2010. Currently, RIM has more than 41 million subscribers globally. In addition to meeting its customer needs with an impressive portfolio of innovati ve products, RIM has made excellent customer service a top priority. It has increased the number of employees providing customer care, improved the number of service contracts to users, and developed training pro grams for corporate customers. This customer focus helps RIM ensure that BlackBerry is â€Å"Always On, Always Connected,† satisfying users who demand information in real time. Page 5What Is Marketing? Unlike other subjects you may have studied, marketing is already very familiar to you. You start your day by agreeing to do the dishes in exchange for a freshly made cup of coffee. Then you fill up your car with gas. You attend a class that you have chosen and paid for. After class, you pick up lunch at the cafeteria, have your hair cut, download a few songs from iTunes, an online music store, and watch a movie. In each case, you have acted as the buyer and made a decision about whether you should part with your time and/or money to receive a particular service or type of merchandise.If , after you return home from the movie, you decide to auction a collectible item on eBay, you have become a seller. In each of these transactions, you were engaged in marketing because you were exchanging something of value that satisfies a need. This chapter will look at the definition of marketing and at how marketing is used to create value in products or in services. We will see how the interrelated marketing mix—or four Ps—create, transact, communicate, and deliver value. As well, we will look at where marketing happens and how it has evolved over the years into today's concept of value-based marketing.Lastly, we will discuss why m arketing is an important function for any successful firm. Refer to the chapter roadmap to guide you through the chapter contents. The Canadian Marketing Association states that â€Å" Marketing is a set of business practices designed to plan for and present an organization's products or services in ways that build effective customer 6 relationships. † What does this definition really mean? Good marketing is not a random activity; it requires thoughtful planning with an emphasis on the ethical implications of any of tho se decisions on consumers and society in general.Firms develop a marketing plan that specifies the marketing activities for a specific period of time. The marketing plan is broken down into various components —how the product or service will be conceived or designed, how much it should cost, where and how it will be promoted, and how it will get to the consumer. In any exchange, the buyer and the seller should be satisfied with the value they obtained from a transaction. In our earlier example, you sh ould be satisfied or even delighted with the song you downloaded, and Apple should be satisfied with the amount of money it received from you.The core aspects of marketing are shown in Exhibit 1. 1. Let's see how they look in practice. CHAPTER ROADMAP EXHIBIT 1. 1 Core Aspects of Marketing Page 6 1. LO1 Marketing Is About Satisfying Customer Needs and Wants Understanding and satisfying consumer needs and wants is fundamental to marketing success. A need is when a person feels de prived of the basic necessities of life, such as food, clothing, shelter, or safety. A want is the particular way in which the person chooses to fulfill his or her need, which is shaped by a person's knowledge, culture, and personality.For example, when we are hungry, we need something to eat. Some people want a submarine sandwich to satisfy that hunger, whereas others want a s alad and some soup instead. The topic of understanding customer needs is described in detail in Chapter 5, whichdeals with consumer behaviour. To understand customer needs and wants, the company must first identify the customers or market for its product or service. Generally, the market for a firm's offerings consists of all consumers who need or want a company's products or services and have the ability and willingness to buy them.Although marketers would prefer to sell their products and services to everyone, it is not practical to do so. Thus, marketers divide the market into subgroups or segments of peop le to whom they are interes ted in marketing their products, services, or ideas. For example, even though the marketplace for toothpaste users may include most of the people in the world, the makers of Crest could divide the market into adolescent, adult, and senior users, or perhaps into wine and coffee drinkers, people with sensitive gums, and denture users.If you manufacture toothpaste that bleaches and removes stains, you want to know for which market segments your product is most relevant and then make sure that you build a mark eting strategy that meets the needs and wants of the target groups or target market. The process of how companies segment the market for their products and services and then choose which segment to target and how best to reach that segment is described in Chapter 7. The process of identifying customer segments the company wants to target with its products and services requires market research.The types of market research that help marketers make good de cisions about various aspects of the marketing mix ar e discussed in Chapter 4. Page 7 Marketing Entails Value Exchange Video: The Bottled Water Industry Marketing is about an exchange—the trade of things of value between the buyer and the seller so that each is better off as a result. As depicted in Exhibit 1. 2, sellers provide goods or services, then communicate and facilitate the delivery of their offering to consumers.Buyers complete the exchange by giving money and information to the seller. Suppose you learn about a new Justin Bieber album when watching MTV, which gave a review of the album and mentioned that it was available online at iTunes. You go online and purchase the album. Along with gathering your necessary billing and shipping information, iTunes creates a record of your purchase: information that may be used in the coming months to inform you of the release of Bieber's next album or of his next concert in your area. Thus, in ddition to making money on this p articular transaction, iTunes can use the information you provided t o facilitate a future exchange and solidify a relationship with you —additional value for both you and iTunes. When you purchase a new Justin Bieber album, you are engaging in a marketing exchange. You get the songs, and the exchange partners get money and information about you. EXHIBIT 1. 2 Exchange: The Underpinning of Seller–Buyer Relationships Page 8 1. LO2 Marketing Requires Product, Price, Place, and Promotion Decisions Marketing traditionally has been divided into a set of four interrelated decisions known as the marketing 7 ix, or four Ps: product, price, place, and promotion, as shown in Exhibit 1. 3. Together, the four Ps comprise the marketing mix, which is the controllable set of activities that the firm uses to respond to the wants of its target markets. But what does each of them mean and how do they work together to create value for consumers? EXHIBIT 1. 3 Marketing Mix Decisions Active Exhibit: Exhibit 1. 3 – Marketing Mix Decisions Product: Creating Value One main purpose of marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.Take, for example, water. Not too long ago, consumers perceived this basic commodity as simply water. It came out of a faucet and was consumed for drinking and washing. But taking a cue from European firms such as Perrier (France) and San Pellegrino (Italy), several Canadian-based firms, such as Clearly Canadian, Canadian Springs, and Montclair, have created a product with benefits that cons umers find valuable. In addition to easy access to water, an essential part of this created value is the product's brand image, which lets users say 8 to the world, â€Å"I'm healthy,† â€Å"I'm smart,† and â€Å"I'm chic. Recently, however, there is growing opposition t o bottled water, which not only makes it seem socially unacceptable, but also has se en some organizations banning the sale of bottled water on their premises. For example, the University of Ottawa has banned the sale of bottled water on campus, declaring itself a bottled water–free zone; it has set aside $75,000 to 9 install new water fountains across the campus. Clearly Canadian has created a product with benefits that consumers find valuable. Many offerings are a combination of goods and services.At a Taylor Swift concert, you can enjoy the concert (a service) and buy her CD (a good). Page 9 Goods are items that you can physically touch. Roots clothing, Molson Canadian beer, Kraft Dinner, and countless other products are examples of goods. Carmen Creek Gourmet Meats, a small Calgary-based company specializing in the marketing and distribution of grade A Canadian bison, demonstrates how a company offers value to customers. It provides exquisite gourmet bison meat that is raised, processed, and delivered using appropriate animal health practices. (SeeEntrepr eneurial Marketing 1. later in this chapter. ) Unlike goods, services are intangible customer benefits that are produced by people or machines and cannot be separated from the producer. Air travel, banking, insurance, beauty treatments, and entertainment all are services. If you attend a hockey or football game, you are consuming a service. Getting money from your bank by using an ATM or teller is another example of using a service. In th is case, cash machines usually add value to your banking experience by being conveniently located, fast, and easy to use. Many offerings represent a combination of goods and services.When you go to Hakim Optical, for example, you can have your eyes examined (service) and purchase new contact lenses (good). If you enjoy Taylor Swift's music, you can attend one of her concerts, which can be provided only at a particular time and place. At the concert, you can purchase one of her CDs —a tangible good that provides you with a combination of a go od and a service. Ideas include thoughts, opinions, philosophies, and intellectual concepts that also can be marketed. Groups promoting bicycle safety go to schools, give talks, and sponsor bike helmet poster contests fo r the members of their primary target market: children.Then their secondary target market segment, parents and siblings, gets involved through their interactions with the young contest participants. The exchange of value occurs when the children listen to the sponsor's presentation and wear their helmets while bicycling, which means they have adopted, or become â€Å"purchasers,† of the safety idea that the group marketed. In Chapters 8,9, and 10 of this book, you will learn much more about the decisions, theories, applications, and strategies of product and services marketing. Price: Transacting Value Everything has a price, though it doesn't always have to be monetary.Price, therefore, is everything the buyer gives up—money, time, energy—in ex change for the product. Marketers must determine the price of a product carefully on the basis of the potential buyer's belief about its value. For example, Air Canada can take you from Toronto to Vancouver or New York. The price you pay depends on how far in advance you book the ticket, the time of year, whether you want to fly economy or business class, and more recently whether or not you have luggage to check in. Passengers are charged a fee if they have more than one piece of check -in luggage.If you value the convenience of buying your ticket at the last minute for a ski trip between Christmas and New Year's Day and you want to fly business class, you can expect to pay four or five times as much as you would for the cheapest available ticket. That is, you have traded off a lower price for convenience. For marketers, the key to determining prices is figuring out how much customers are willing to pay so that they are satisfied with the purchase and the seller achieves a reasonab le profit. In Chapter 11, you will learn much more about pricing concepts, decisions, and strategies.The Country Grocer was Canada's first independently owned grocery store to sell groceries online. Place: Delivering Value The third P, place, describes all the activities necessary to get the product from the manufacturer or producer to the right customer when that customer wants it. Place decisions are concerned with developing an efficient system for merchandise to be distributed in the right quantities, to the right locations, and at the right time in the most efficient way in order to minimize systemwide costs 10 while satisfying the service levels required by their customers.Many marketing students initially overlook the importance of distribution management because a lot of distributio n activities occur behind the scenes. But without a strong and efficient distribution system, merchandise isn't available when or where customers want it. They are disappointed, and sales and pro fits suffer. Place or distribution activities and decisions are discussed in detail in Chapter 12. To illustrate how distribution delivers value, consider the experience of The Country Grocer, a small Ottawa-based independent grocery store.The Country Grocer was the first independently owned grocery store in Canada to offer online groceries. You might think that because the store is independent, customers would live within a couple of kilometres of it. On the contrary, The Country Grocer (www. thecountrygrocer. com) gets more than 30 percent of its online sales from the eastern Arctic (Iqaluit) and about 5 percent of its business from customers in the United States. Customers place their orders 11 through the website, and The Country Grocer ensures that their purc hases are delivered on time.Promotion: Communicating Value Even the best products and services will go unsold if marketers cannot communicate their value to customers. Countless Internet companies failed in the late 1990s, at least partly because they did not communicate successfully with their customers. Some such firms had great products at very fair prices, but when customers could not find them on the Internet, the companies failed. Promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response.Promotion generally can enhance a product or service's value, as happened for Parasuco jeans. The company's provocative advertising has helped create an image that says more than â€Å"Use this product and you will look good. † Rather, the promotion sells youth, style, and sex appeal. The four Ps work together. Although marketers deliver value through each of the four Ps individually, they can deliver greater value to consumers by configuring the four Ps as a whole rather than by treating them as separate components.That is, the product or service offered must satisfy the target customers' spe cific needs and wants, be priced appropriately, be available at loc ations where customers want it, and be promoted in a manner and through media that are consistent with the target consumers. For instance, luxury or high-fashion items from retailers such as Coach, Louis Vuitton, and Swarovski are well -made, priced at a premium, available at exclusive locations, and promoted only in certain media where the advertisements emphasize style, fashion, sex appeal, and so on.Parasuco is known for its provocative advertising, which appears on billboards and uses celebrities to market its denim lines. Page 11 Marketing Is Shaped by Forces and Players Within the Firm A company's marketing activities are shaped by factors that are both internal to the firm and external to the firm, as shown in Exhibit 1. 4. The consumer is the centre of all marketing activities, and offering the best value possible will attract customers to products and keep them loyal.For marketers to deliver the best value to their customers, they must leverage the full potential of their internal capabilities; w ork effectively with their partners (i. e. , suppliers, distributors, and other intermediaries, such as financial institutions, advertising agencies, and research firms); and constantly evaluate and respond to the competitive environment. EXHIBIT 1. 4 Understanding the Marketing Environment Page 12 As described in the chapter vignette, RIM's success rests in the unique email capability of the BlackBerry, coupled with excellent customer service.RIM harnesses its internal capabilities by creating a custome rdriven organization, where all internal departments and functions share information and work collaboratively toward a common goal, balance costs with benefits, and build strong relationships with customers. In addition, RIM relies on corporate partners, such as Rogers, TELUS, and Bell, to sell its BlackBerry devices, so it is hardly surprising to hear RIM co-CEO Jim Balsillie making the poin t that carriers are aware of how profitable the BlackBerry is for their businesses.RIM's competitors have improved the value they offer to customers; thus, it is imperative for RIM to enhance its value to customers, or else it could be overtaken by the competition. Suppliers or even natural disasters can exert substantial influence on a company's marketing activities, sometimes with devastating consequences. In March 2011, a tsunami and earthquake in Japan destroyed several nuclear reactors, disrupting power and industrial production in Japan. This natural disaster also affected North American companies that relied on Japanese suppliers or inputs.For example, both Honda and Toyota severely cut back on the production of their 2011-model vehicles because of a shortage of electronic components and other parts that were usually imported from Japan. This reduction created a huge shortage of vehicles among Japanese dealerships in Canada and the United States during the spring season, one of the best 12 seasons for new-car sales. Marketing Is Shaped by Forces and Players External to the Firm External forces such as cultural, dem ographic, social, technological, economic, and political and legal changes shape a company's marketing activities, as shown in Exhibit 1. . For instance, two current social trends that are reshaping the marketing activities of most firms are concerns about the environment and obesity. In response to these concerns, marketers are beginning to use more environmentally friendly packaging for their products; some companies are even using alternative materials in the products themselves. In response to the obesity trend, marketers try to distinguish their products by using labels such as non-fat, low-fat, fat-free, sugar-free, and cholesterol-free. Similarly, food retailers are responding to demographic changes in Canada's population composition.Because the prop ortion of Chinese and South Asian people in Canada is on the rise and is forecasted to increase in the next decade, many food retailers have developed products and services that cater specifically to the needs of these groups. Sobeys's FreshCo store format demonstrates a prime example of a retailer trying to reach out and serve these Canadians. The store's layout, merchandise, level of service, and prices cater specifically to the needs of this segment of the Canadian demographic. The influence of all of these forces is discussed in greater detail inChapter 3. Sustainable Marketing 1. shows how marketers are trying to become more socially responsible in their business practices. Marketing Can Be Performed by Both Individuals and Organizations Imagine how complicated the world would be if you had to buy everything you consumed directly from producers or manufacturers. You would have to go from farm to farm buying your food and then from manufacturer to manufacturer to purchase the table, plates, and utensils you need to eat that food. Fortunately, marketing intermedia ries, such as retailers, accumulate merchandise from producers in large amounts and then sell it to you in smaller amounts.The process in which businesses sell to consumers is known as B2C (business-to-consumer) marketing, whereas the process of selling merchandise or services from one business to another is called B2B (business-to-business) marketing. Some companies, such as GE (General Electric), are engaged in both B2B and B2C marke ting at the same time. However, with the advent of various auction sites, such as eBay and Kijiji, and payment sites, such as PayPal, consumers have started marketing their products and services to other consumers, which requires a third category in which consumers sell to other consumers, or C2C (consumer-to-consumer)marketing.These marketing transactions are illustrated in Exhibit 1. 5. Individuals can also undertake activities to market themselves. When you apply for a job, for instance, the research you do about the firm, the resume and cover lett er you submit with your application, and the way you dress for an interview and conduct yourself during it are all forms of marketing activities. Accountants, lawyers, financial planners, physicians, and other professional service providers also market their services. EXHIBIT 1. 5 Marketing Can Be Performed byBoth Individuals and Organizations Page 13 Sustainable Marketing 1. 1 Green Your Marketing Practices The idea of sustainable development, or sustainability, is popular these days among groups representing various segments of society such as the media, environmentalists, nonprofit organizations, politicians, business executives, and even consumers. But what exactly does sustainability mean, how widespread is the adoption of sustainable development practices and policies among businesses, and what are the benefits of sustainability?You might be surprised to learn that sustainability seems to mean different things to different people. Fo r instance, a recent global survey of 1749 business executives by McKinsey & Company reported that 55 percent say that sustainability is about managing environmental issues such as greenhouse gas emissions, energy efficiency, waste management, green-product development, and water conservation. Further, 48 percent say it is about governance issues such as complying with regulations, maintaining ethical practices, and meeting accepted industry standards, and 41 percent say it includes the 13 anagement of social issues such as working conditions and labour standards. In a nutshell, it seems that organizations that practise sustainability must strive to conduct their business in such a way as to minimize harm to the environment, follow good governance practices, and comply with social standards. Indeed, a truly comprehensive and proactive approach to sustainability requires that businesses develop practices and policies around all three perspectives: environmental, governance, and social.This means that sustainability practices and policies must be embedded in all facets of the organization, from human resource management to manufacturing, marketing, production, planning, investments, and corporate strategy. Also, sustainability must involve all employees, from t he CEO to the employee on the shop floor. Implementing a comprehensive sustainability program is quite expensive and so many businesses tend to do the bare minimum or implement low-cost programs.In fact, according to the McKinsey Global Survey, 36 percent of executives believe that the main benefit of sustainability is that it improves corporate and brand reputation, while less than 20 percent believe that it improves operational efficiency, lowers costs, presents growth opportunities (new markets and products), or strengthens competitive position. Clearly, we are in the early stages in the adoption of sustainability policies and practices, and it is not unusual for there to be experimentation and feelings of euphoria, uncertainty, and confusion.O rganizations and executives tend to get better as their learning improves over time. We expect to see a greater number of organizations being more proactive in implementing sustainability policies and practices. Throughout this book, we will present various examples of sustainable marketing efforts undertaken by Canadian companies. Page 14 Social Media Marketing 1. 1 What Is Social Media? W hen you hear the term social media, chances are you immediately think of Facebook, YouTube, MySpace, Twitter. Initially, many of these sites were viewed as places where people connected just for fun.Things have changed dramatically over the last couple of years. Today, marketers are euphoric about the marketing potential of these sites. Not surprisingly, a major preocc upation of marketers these days concerns developing an integrated social media marketing strategy. So, what exactly is social media? It's not an understatement to say that there are as many definitions of social media as there are flavours at a Baskin-Robbins ice cream store. In fact, a quick Google search revealed more than 25 definitions, an indication of the diversity of these media.Considering the various definitions of and the use of social media leads us to the following simple definition: Social media is the use of Internet tools and software by individuals to easily and quickly create and share content, such as information, knowledge, and insights, with people who have similar interests to foster dialogue, social relationships, and personal identities. Participants act as both publishers and consumers by creating, sharing, or re-mixing content, such as videos, images, and texts.Social media conversations and relationships may move freely between the online and physical context. That is, they may originate online and continue offline, or vice versa. Openness, authenticity, and transparency are key 14 elements of effective social media. Social media is important to marketers for several reasons. First, more than 90 percent of Canadian Internet users are actively engaged with social media, with each visitor interacting with it for an average of 15 6. 5 hours per month and downloading an average of 120 videos per month.Social media is an excellent way to reach these consumers. Second, consumers are already carrying on conversations about companies, their brands and services; therefore, to be part of the conversation or to initiate conversations, companies must participate in social media. Third, social media enables marketers to accomplish many marketing goals, such as promoting corporate social responsibility, building customer relationships, enhancing customer service, building or defending their brands, engaging customers in research and new product development, and recruiting talent.Although social media is currently very popular among retail businesses and the consumer packaged goods industry, interest from firms of all sizes, all industries, and all types (B2B, B2C, and C2C) a re increasing daily. To illustrate how marketers are embracing this ever -changing world of social media, we have developed Social Media Marketing boxes for each chapter of this book. For a visual look at the impact of social media on the world around us, you may want to view a video called Social Media Revolution, which is available on YouTube. Sources: â€Å"What is Social Media? A not so critical review of concepts and definitions,†http://blog. etaroll. com/2008/11/14/what-is-social-media-a-not-so-critical-review-of-concepts-anddefinitions/(accessed December 2, 2009); Joseph Thornley, â€Å"Social networking isn't just about Facebook,†http://www. itworldcanada. com/blogs/ahead/2009/04/08/social -networking-isnt-just-aboutfacebook/48460/(accessed December 2, 2009); Joseph Thornley, â€Å"What is ‘social media’? † http://propr. ca/2008/what-issocial-media/ (accessed December 2, 2009); ComScore, www. comscore. com, 2009. Regardless of whether organi zations or individuals are engaged in B2B, B2C, or C2C marketing, one thing seems to be clear: social media is quickly ecoming an integral part of their marketing and communications strategies. Social media was widely used in the 2011 federal election in Canada, as politicians tried to win the hearts and minds of Canadians. Even more dramatically, social media played a major role in the crises observed in several Mideast countries. Social media was used to organize protesters and to report news of events in these countries to the res t of the world as they unfolded in real time. Social Media Marketing 1. 1 shows how marketers are using social media to reach out to their customers. Marketing Occurs in Many SettingsMost people think of marketing as a way for firms to make profits, but ma rketing works equally well in the nonprofit sector. Think about what influenced your selection of your college or university, other than family, friends, and convenience. It's likely that your college has a sophisticated marketing program to attract and retain students. Hospitals, theatres, charities, museums, religious institutions, politicians, and even governments rely on marketing to communicate their message to their constituents. A Piece of Africa buys art from African artists and, through its website (www. izinsa. com/apieceofafrica), makes that art available to customers all over the world, thereby creating a market that otherwise would not exist. Page 15 In addition, marketing isn't useful only in countries with well-developed economies. It can also jump-start the economies of less developed countries by actually putting buyers and sellers together to create new markets. A Piece of Africa, for example, buys art from African artis ts and, through its website, makes that art available to customers all over the world, thereby creating a market that otherwise would not exist.Customers become exposed to an array of products from various countries that previously would have b een available only through expensive galleries, and the tribal artists can spend their earnings locally, which stimulates the local economy. Furthermore, A Piece of Africa donates 3 percent of the online sales to goodwill projects in Africa, which solidifies its soci ally responsible appeal. Marketing is often designed to benefit an entire industry, which can help many firms simultaneously. The dairy industry has used a very successful, award-winning campaign with its slogan â€Å"Got Milk? aimed at different target segments. This campaign has not only created high levels of awareness about the 16 benefits of drinking milk, but also increased milk consumption in various target segments, possibly through the use of celebrities such as Hilary Duff and athletes such as soccer s uperstar David Beckham. Overall, this campaign benefits the entire dairy industry, not just one dairy farmer. The dairy industry's â€Å"Got Milk? † ad campaign has created high levels of awareness about the benefits of drinking milk and has increased milk consumption by using celebrities such as David Beckham in its ads.Now that we've examined what marketing is and how it creates value, let's consider how it fits into the world of commerce, as well as into society in general. Page 16 1. LO3 Marketing Helps Create Value Marketing didn't get to its current prominence among individuals, corporations, and society at large overnight. Over the last 100 years, marketing has evolved from an activity designed simply to produce and sell products to an integral business function aimed at creating value for consumers and the company's shareholders.As we have examined marketing practices over the years, we have observed four different marketing orientations or philosophies: product orientation, sales orientation, market orientation, and value-based orientation. Product Orientation Product-oriented companies focus on developing and distributing innovative products with little concern about whet her the products best satisfy customers’ needs. This philosophy is best illustrated by a famous quote made around the turn of the twentieth century by HenryFord, the founder of Ford Motor Company, who remarked, â€Å"Customers can have any colour they want so long as it's black. † Manufacturers believed that a good product would sell itself, and retail stores typically were considered places to hold the merchandise until a consumer wanted it. Companies with a product orientation generally start out by thinking about the product they want to build; they try selling the product after it is developed rather than starting with an understanding of the customers’ needs and then developing a product to satisfy those needs.Sales Orientation Companies that have a sales orientation basically view marketing as a selling function where companies try to sell as many of their products as possible rather than focus on making products consumers really want. These firms typicall y depend on heavy doses of personal selling and advertising to attract new customers. Companies with a selling orientation tend to fo cus on making a sale or on each transaction rather than building long-term customer relationships. They generally believe that if consumers try their products, they will like them.Market Orientation Market-oriented companies start out by focusing on what consumers want and need before they design, make, or attempt to sell their products and services. They believe that customers have choice and make purchase decisions based on several factors, including quality, convenience, and price. Basically, the â€Å"customer is king,† and the market is a buyer's market since consumers wield tremendous power. In this orientation, marketers’ role is to understand and respond to the needs of consumers and to do everything possible to satisfy them.Value-Based Orientation Most successful firms today are market oriented. 17 That means they have gone beyo nd a production or sales orientation and attempt to discover and satisfy their customers’ needs and wants. Better marketing firms recognized that there was more to good marketing than simply discovering and providing what consumers wanted and needed; to compete successfully, they would have to give their customers greater value than their competitors. 18 Value reflects the relationship of benefits to costs, or what you get for what you give.In a marketing context, customers seek a fair return in goods and/or services for their hard -earned money and scarce time. They want products or services that meet their specific needs or wants and that are offered at competitive prices. The challenge for firms is to find out what consumers are looking for and to attempt to provide those goods and services but still make a profit. Every value-based marketing firm must implement its strategy according to what its customers value.Depending on the specific product or service for sale, these valuable benefits could include speed, convenience, size, accuracy, price, cost-savings, or user-friendliness. Sometimes providing greater value means providing a lot of merchandise for relatively little mone y, such as Subway's foot-long subs for $5 or a diamond for 40 percent off the suggested retail price at Costco. But value is in the eye of the beholder and doesn't always come inexpensively. Satisfied Louis Vuitton customers probably believe the Vuitton clothing, bags, or shoes they buy are good value because they have received many benefits for a reasonable price.Similarly, teenagers may be willing to pay a premium for Apple's iPhone because of its extraordinary design and packaging, even though cheaper s ubstitutes are available. This is the power of marketing in general and branding in particular. Value-based marketing is examined in greater detail in the following section; however, the story of Carmen Creek described in Entrepreneurial Marketing 1. 1 illustrates aspects of value beyond monetary cost and price. Page 17 Entrepreneurial Marketing 1. 1 Carmen Creek: Meeting Customer Needs19In 2002, Kelly Long, Pieter Spinder, and Dean Andres joined forces to create Carme n Creek Gourmet Meats. The award-winning, Calgary-based company specializes in the marketing and distribution of grade A Canadian bison, which the Heart and Stroke Foundation's Health Check approves as a healthy substitute for red meat. Carmen Creek saw its revenues increase 15 times during its first year of operation and 18 times during its second year. The company was a finalist for the 2008 Ernst and Young Entrepreneur of the Year Award and won the 2008 Calgary Chamber of Commerce RBC Small Business of the Year Award.Carmen Creek attributes its success to its distinctive marketing strategy: it positions itself as a bison-specific producer with a commitment to quality and consistency to reach targeted markets. Carmen Creek brings value to its three target markets, consumers, retailers ( e. g. , Safeway Canada), and foodservice businesses (e. g. , Moxie's Classic Grill restaurant), in a variety of ways. Consumers can choose from an assortment of fresh and frozen bison meat, including bison burgers, bison steak, and prime rib.Retailers are provided with support in the form of recipe cards, a 1-800 help line, shelf danglers, shelf talkers, and in-store sampling booths. Foodservices customers are offered support through menu inserts, table toppers, and server incentives. In addition, Carmen Creek promises all of its customers exquisite gourmet bison meat that is grown, processed, and delivered using appropriate animal health practices, exceptional attention to detail, and superior safety. It provides all of this whi le guaranteeing the best prices that it can offer.Carmen Creek's quality products and competitive pricing is allowing it to successfully satisfy the demands of North American and European customers. Its commitment to building a value chain that embraces pro ducers, processors, and customers is allowing Carmen Creek to break into new markets. On February 27, 2007, Carmen Creek acquired all the shares of Grande Prairie Bison Company, along with its strong European customer base and distribution network. This acquisition opened the door for Carmen Creek to expand its European presence.The company is actively pursuing new European markets in Belgium, Luxembourg, and the Netherlands to add to its list of international customers, which currently includes Australia and Germany. Carmen Creek Gourmet Meats brings value to its customers beyond monetary cost and price. Carmen Creek carefully focuses the distribution of its investments in Canada, the United States, and Europe. Couple this with its diversified product offerings under a consistent and supported brand, and you get a recipe for success.The company's approach to market development and its unique strategy has launched Carmen Creek Gourmet Meats to the top of both Profit 50’s list of Canada's emerging growth companies and Profit 100’s list of Canada's fastest growing companies. What Is Value-Based Marketing? Consumers make explicit and/or implicit trade-offs between the perceived benefits of a product or service and their costs. Customers naturally seek options that provide the greatest benefits at the lowest costs. Marketing firms attempt to find the most desirable balance between providing benefits to customers and keeping their costs down, as illustrated in Exhibit 1. . EXHIBIT 1. 6 Value Page 18 To better understand value and to develop a value-based marketing orientation, a business must also understand what customers view as the key benefits of a given product or service and how to improve on them. For example, some benefits of staying at a Four Points by Sheraton hotel might include the high level of service quality provided by the personnel , the convenience of booking the room via Sheraton's website, and the overall quality of the room and me als offered. In broader terms, some critical benefits may be service quality, convenience, and merchandise quality.The other side of the value equation entails the firm's ability to provide either a better product/service mix at the same cost or the same level of quality and convenience for a lower cost. The customer's potential cost elements, in terms of value-based marketing strategies, for the Sheraton hotel in our example would include the price of the room and meals, the time it takes to book a room or check in at the hotel, and the risk of arriving at the hotel and finding it overbooked. How Firms Compete on the Basis of Value W ith such a simple formula, marketers should be able to deliver value consistently, right? Well, not exactly.In today's quickly changing world, consistent ly creating and delivering value is quite difficult. Consumer perceptions change quickly, competitors constantly enter markets, and global pressures continually reshape opportunities. Thus, marketers must keep a vigilant eye on the marketplace so they can adjust their offerings to meet customer needs and keep ahead of their competition. Value-based marketing, however, isn't just about creating strong products and services; it should be at the core of every firm's functions. For example, W almart does not serve those customers who are looking to impress their friends with conspicuous consumption.Rather, this store is for people who want convenient one-stop shopping and low prices—and on those values, it consistently delivers. But good value is not limited to just low prices. Although Walmart carries low-priced pots, pans, and coffee pots, cooking enthusiasts may prefer the product selection, quality, and expert sales assistance at a Paderno outlet. The prices there aren't as low as at Walmart, but Paderno customers believe they are receiving good value when they shop there because of the selection, quality, and service they receive.Even nonprofit organizations need to focu s on creating value to ensure the services they provide to stakeholders are of high quality while also minimizing the total fundraising required. How Firms Become Value-Driven Firms become value-driven by focusing on three activities (see Exhibit 1. 7). First, they share information about their customers and competitors across their own organization and with other firms that might be involved in getting the product or service to the marketplace, such as manufacturers and transportation companies.Second, they strive to balance their customers’ benefits and costs. Third, they concentrate on building relationships with customers. EXHIBIT 1. 7 Value-Oriented Firms Page 19 Sharing Information In a value-based, market-oriented firm, marketers share information about customers and competitors that has been collected through customer relationship management, and integrate it across the firm's various departments.The fashion designers for Zara, the Spain -based fashion retailer, for i nstance, collect purchase information and research customer trends to determine what their customers will want to wear in the next few weeks; simultaneously, the logisticians —those persons in charge of getting the merchandise to the stores —use the same purchase history to forecast sales and allocate appropriate merchandise to individual stores. Sharing and coordinating such information represents a critical success factor for any firm.Imagine what might happen if Zara's advertising department were to plan a special promotion but not share its sales projections with those people in charge of creating the merchandise or getting it to stores. Fashion designers for Zara, the Spain-based fashion retailer, collect purchase information and research customer trends to determine what their customers will want to wear in the next few weeks. They share this information with other departments to forecast sales and coordinate deliveries.Balancing Benefits with Costs Value-oriente d marketers constantly measure the benefits that customers perceive against the cost of their offering. In this task, they use a vailable customer data to find opportunities in which they can better satisfy their customers’ needs and in turn develop long -term loyalties. Such a value-based orientation has helped Canadian Tire and Walmart outperform other department stores, and WestJet Airlines and Southwest Airlines outperform mainstream carriers.Also, as noted in the chapter vignette, RIM offers its customers not only the innovative, feature -packed portfolio of BlackBerry products, but also high-quality customer service at a competitive price. By establishing contracts with wireless carriers such as AT&T and BellSouth, it gained a solid footing before competitors such as Nokia entered the market. RIM's marketing savvy in making customer value the centrepiece of its strategy is one of the reasons why it has been able to beat the competition. To provide a great value, U. K. b ased easyJet offers no food service and generally flies to and from out-ofthe-way airports. Until recently, it sometimes cost more to fly within Europe than to fl y from the United States to Europe. 20 But low-frills, low-cost carriers such as Ryanair and easyJet, modelled on Southwest Airlines and JetBlue Airways, now offer customers what they want: cheap intra -Europe airfares. Like their American counterparts, Ryanair and easyJet offer no food service and generally fly to and from out -of-the-way airports, such as Stansted, which is about 55 kilometres northeast of London.But many customers find value despite such minor inconveniences. Consider, for example, the Lon don to Salzburg, Austria, route for $65 or the London to Sweden flight for $70. Values such as these are also what have given low -cost carriers in the United States approximately 25 percent of the market share. They are so popular that conventional airlines have started their own low-frills/low-cost airlines: Singapo re Airlines provides Tiger Airways and Australia's Qantas offers Jetstar. Page 20 1. LO4Building Relationships with Customers During the past decade or so, marketers have begun to realize that they need to think about their customer orientation in terms of relationships rather than 21 transactions. A transactional orientation regards the buyer–seller relationship as a series of individual transactions, so anything that happened before or after the transaction is of little importance. For example, used-car sales typically are based on a transactional approach; the seller wants to get the highest price for the car, the buyer wants to get he lowest price, and neither expects to do business w ith the other again. A relational orientation, in contrast, is based on the philosophy that buyers and sellers should develop a long-term relationship. According to this idea, the lifetime profitability of the relationship matters, not how much money is made during each transaction. For exam ple, UPS works with its shippers to develop efficient transportation solutions. Over time, UPS becomes part of the fabric of the shippers’ organizations, and their operations become intertwined. In this scenario, UPS an d its shippers have developed a long-term relationship.Firms that practise value-based marketing also use a process known as customer relationship management (CRM), a business philosophy and set of strategies, programs, and systems that focus on 22 identifying and building loyalty among the firm's most valued customers. Firms that employ CRM systematically collect information about their customers’ needs and then use that information to target their best customers with the products, services, and special pr omotions that appear most important to those customers. 1. LO5 Why Is Marketing Important? Marketing was once only an afterthought to production.Early marketing philosophy went something like this: â€Å"We've made it; now how do we get rid of it? à ¢â‚¬  Today, marketing has evolved into a major business function that crosses all areas of a firm or organization, as illustrated in Exhibit 1. 8. Marketing works with other departments, such as research and development (R&D), engineering, and production, to ensure that high-quality, innovative products that meet customers’ needs are available in the right quantity, at the right price, and at the right pla ce, that is, wherever they want to purchase it.It creates mutually valuable relationships between the company and its suppliers, distributors, and other external firms that are involved in the firm's marketing process. It identifies those elements that lo cal customers value and makes it possible for the firm to expand globally. Marketing has had a significant impact on consumers as well. Without marketing, it would be difficult for any of us to learn about new products and services. You may even decide to pursue a career in marketing after you graduate.Even if you pursue a career in another field, marketing knowledge will help you market yourself in ways that could land you your dream job. EXHIBIT 1. 8 Importance of Marketing These brands can be found in many countries. Marketing Expands Firms’ Global Presence A generation ago, Coca-Cola was available in many nations, but Levi's and most other American and Canadian brands were not. But today most jeans, including those by Levi Strauss & Co. a nd Parasuco, are made in places other than Canada and the United States and are available nearly everywhere.Thanks to MTV and other global entertainment venues,cheap foreign travel, and the Internet, you share many of your consumption behaviours with college and university students in countries all over the globe. The best fashions, music, and even food trends disseminate rapidly around the world. Starbucks has adjusted its menu to meet customer wants in the Japanese market more effectively. Page 21 Take a look at your next shopping bag. Whether it cont ains groceries or apparel, you will find goods from many countries: produce from Mexico, jeans from Italy, T -shirts from China.Global manufacturers and retailers continue to make inroads into the Canadian market. Companies such as Honda, Sony, and Heineken sell as well in Canada as they do in their home countries. Sweden's fashion retailer H 23 operates in 38 countries, including Canada. Its upscale competitor Spain's Zara operates in more than 24 80 countries, including Canada. Starbucks even adjusted its menu to meet customer wants in the Japanese market more effectively. How does marketing contribute to a company's successful global expansion? Understanding customers is critical.Without the knowledge that can be gained by analyzing new customers’ needs and wants on a segment-by-segment, region-by-region basis—one of marketing's main tasks—it would be difficult for a firm to expand globally. Power of the Internet 1. 1 shows how the Internet has expanded the r each of marketers and changed marketing practices. Page 22 Marketing Is Pervasive Across the Organization In value-based marketing firms, the marketing department works seamlessly with other functional areas of the company to design, promote, price, and distribute products.Consider the Scion, a car and brand designed by Toyota for the less affluent youth market, which sometimes has been referred to as 26 Generation Y. Scion's marketing department worked closely with engineers to ensure that the new car exceeded customers’ expectations in terms of design but remained affordable. The co mpany also coordinated the product offering with an innovative communications strategy. Because Generation Y is famous for its resistance to conventional advertising, Scion introduced a virtual road race in which participants received mileage points for sending Scion e-cards.The more â€Å"places† they visited, the more mileage points they received. At the end of the competition, each dri ver's points were totalled and compared with other racers’ scores. The driver with the most points won an onboard navigation system worth more than $2000. In addition, when Scion was a new car, the marketing department worked closely with the distribution department to ensure that advertising and promotions reached all distributors’ territories and that distribution existed where those promotions occurred.Thus, marketing was responsible for coordinating all these aspects of supply and demand. Toyota introduced a virtual road race in which participants received mileage points for sending Scion e cards. At the end of the competition, the driver with the most points won an onboard navigation system worth more than $2000. Page 23 Power of the Internet 1. 1 Internet Marketing: Past, Present, and Future25 The Internet was released for commercial use in 1993. Immediately, the media, entrepreneurs, and others began to hype it as the â€Å"new marketing channel† that wou ld revolutionize business practices.For entrepreneurs and investors, it was a time of euphoria, experimentation, and instantaneous wealth; for established companies, it was a time of uncertainty and fear. Many traditional businesses with established brands thought that the Internet was just another fad; while others did not quite understand how to integrate it with their existing businesses. Fear of making mistakes that could harm their brands led many companies to create â€Å"online† businesses that were separate from their core â€Å"bricks -and-mortar† or â€Å"offline† businesses.For instance, Procter & Gamble's online business was called reflect. com and Kmart's company in the United States was called bluelight. com. The apprehension that established marketers had for jumping on the dot-com bandwagon seemed justified when in 2000 the explosive growth of Internet businesses collap sed within a couple of months. The dot-com bust provided established marketer s with breathing room to reflect on how they could incorporate the Internet into their business and marketing strategies.Around 2004, almost a decade later, marketers came to realize that an effective marketing strategy requires an integration of online and offline businesses to provide customers with a seamless â€Å"multi-channel marketing† experience. W hen marketers initially pursued Internet marketing, they were mostly excited abou t designing the best website by using the latest publishing software and technology available. Although most websites were originally text-based, marketers quickly adopted multimedia technologies since their goal was to create an appealing website that would attract visitors and keep them on the site.Little thought was given as to whether or not customers needed or valued these features. The early focus on the technology and the product is reminiscent of the product-oriented market era of early twentieth century. Two decades later, in 2012, we observe that although websites are much more complex technologically, their focus has shifted to the consumer: that is, how marketers can use the technology to identify and fulfill customer needs and deliver the best customer value while generating profits. This focus seems more in line with the value based orientation described in the book.But, how did we get from a technology focus to a value -based focus? What were some of the steps along the way? From Static Websites to Social Media to Mobile Marketing Rewind to 1993 when the commercial Internet came into being; websites were static, text-based sites, which marketers used to â€Å"push† information to customers about their products and companies. Customer s wishing to make a purchase had to call a telephone number listed on the website. Shortly thereafter, email marketing became widespread, and the main focus was on how to create the perfect email and ensure it reached the target customers.Second-generation websites beca me more dynamic and interactive; that is, they provided information to customers’ requests in real time, made greater use of multimedia technology, and offered modest interactivity. The next development was e-commerce capability, that is, the ability to order and pay for goods and services online. This capability laid the foundations for the explosive growth of online marketing since marketers could now reach customers worldwide through their online stores and customers could order products and services anytime, anywhere.The era of instant gratification and ultimate shopping convenience seemed closer than ever. E-commerce transactions grew exponentially year after year, and they continue to grow unabated. B2C, B2B, and C2C via auction sites b ecame possible and grew exponentially. The next phase in the evolution of Internet marketing was personalization and customization, where customers were given the ability to customize the look and feel of a website, and the products show n, to suit their preferences.Today, thanks to social networking sites such as Myspace, YouTube, Facebook, Flickr, and Twitter, and portable devices such as smartphones, social media and mobile marketing is all the rage. What will be next? The Internet is much more sophisticated and complex now than it was in the 1990s. It has changed and will continue to change. No one can predict the transform