MarketingChapter 1

Scope of Marketing

Everything around you Think of purchases you have (or have not)

made How does a business influence your purchases?▪ Southwest Airlines

Marketing The process of planning, pricing promoting,

selling and distributing ideas, goods, or services to create exchanges that satisfy customers▪ An ongoing process – why?

Ideas, Goods, and Services

Ideas generally ideals, thoughts▪ Politicians, environmentalists▪ Got Chocolate Milk?

Goods Tangible items that have monetary value and

satisfy your needs and wants▪ Examples?

Services Intangible items that have monetary value and

satisfy your needs and wants▪ Examples?

Foundations of Marketing

Practice of marketing depends on 4 key areas of knowledge: 4 foundations of marketing

Business, management, entrepreneurship▪ Understanding these areas affect decision making

Communication and interpersonal skills▪ Interact effectively with others

Economics▪ Economic principles

Professional Development▪ Career exploration, development and growth

7 Functions of Marketing

1. Product/Service Management Obtaining, developing, maintaining, and

improving a product or a product mix in response to market opportunities

▪ Marketing research = determining needs/wants

2. Pricing How much to charge for goods and services

in order to make a profit▪ Costs▪ Competition price▪ Customers willingness and ability to pay

7 Functions of Marketing Continued…

3. Promotion Effort to inform, persuade, or remind

potential customers about a business’s product or services

▪ Examples of promotion?▪ Other than product and services promotion,

what else can a company promote?

4. Distribution The process of deciding how to get goods

in customers’ hand▪ Transportation, storing, tracking

7 Functions of Marketing Continued…

5. Marketing Information Management Gathering information, storing it, and

analyzing the information▪ Why?▪ Apple example

▪ How would you gather information?▪ Nielsen – Consumer and Consumer behavior (watch

and buy)▪ J D Power & Associates – primarily customer

surveys

▪ How often?

7 Functions of Marketing Continued…

6. Financing Getting the money necessary to pay for setting up

and running a businesses ▪ Loans, selling shares of stock, issuing bonds

Helping others obtain your product/service▪ Extending credit to customers▪ Payment options▪ Term payments, credit cards, etc.

7. Selling Providing customers with goods and services they

want Directly to the customer or business▪ Techniques and activities

Marketing Concept

Marketing Concept The idea that a business should strive to satisfy

customers’ needs and wants while generating a profit for the firm

Where is the focus? Success comes when all 7 functions support the

marketing concept idea

Customer Relationship Management (CRM) An aspect of marketing that combines customer

information with customer service and marketing communications▪ Meaningful one-on-one communications via customer

intelligence

Review and critical thinking…

On a piece of paper, answer the following (page 7, 1-3 and 5): Name 2 ideas that can be marketed Where do exchanges take place? What is the main difference between

consumers and industrial users List at least 3 ways the Internet has

changed marketing functions

The Importance of Marketing

Economic Benefits of Marketing

Marketing has an important role in the economy Provides the means for competition to

take place▪ Businesses try to create new or improved

products at lower prices than their competitors▪ How does this affect the consumers?▪ How does this affect businesses to have such

competition?

New and improved products▪ Continuing to look at ways to satisfy

customers▪ How has competition shaped the personal computer

industry?

Economic Benefits of Marketing Continued…

Lower prices What happens in the marketplace when prices

drop? What happens to production when demand

increases?▪ Overall unit costs go down▪ Fixed costs

Rent, insurance, etc. stay the same regardless of production▪ Variable costs

Costs that change given the amount of production Labor, materials, etc.

▪ Example: $20,000 in fixed costs, Quantity produced is 10,000 units. How much per unit does it cost the company?

▪ How much per unit would it cost the company if they produced 200,000 units?

Added Value and Utility

The functions of marketing add value to a product Utility▪ An attribute of a product or service that makes it

capable of satisfying consumers’ wants and needs▪ 5 economic utilities

Place Time Possession Information Form (not directly related to marketing; however, the

research and product design makes it a crucial part of the marketing process

Utility

Form Utility Involves changing raw materials or

putting parts together to make them more useful▪ Deals with making or producing things▪ Taking things of little value and putting them

together to create more value

▪ Special features or ingredients in a product add value and increases its form utility▪ Example: Automobiles

Utility Continued…

Place Utility Involves having a product where

customers can buy it.▪ Businesses study consumers shopping habits

to determine the most convenient and efficient locations to sell products▪ Direct approach▪ Catalogs▪ Internet▪ Retail stores (considered an intermediary)

Utility Continued…

Time Utility Having a product available at a certain

time of year or a convenient time of day Increases the value of the products by

having them available when consumers want them

Examples?▪ 24 hour super stores▪ Coffee shops▪ Extended hours during holiday shopping

seasons

Utility Continued…

Possession Utility When legal ownership of a product

changes hands How do you come into possession of the

items you want? What exchanges are made?▪ How does this add value?

Possession utility also includes providing payment options

Utility Continued…

Information Utility Involves communication with the

consumer Examples: ▪ Labeling▪ Advertising▪ Web Assist and Manuals▪ How do these add value? Provide information to customers by explaining the features and benefits of the products

Review

The added value to a product that marketing provides is called ___________________

How does marketing help to lower prices? In what way is marketing related to form utility? Which utility is added by drive-through windows

at fast-food restaurants? In a business-to-business transaction, the seller

offers the buyer a 2% discount for paying a bill early. Assuming the buyer took advantage of this offer, how much would be discounted on a $10,000 invoice?

Fundamentals of Marketing

Market

Can you make your product appeal to everyone? What considerations do we need to

make? Market

All people who share similar needs and wants and who have the ability to purchase your products

Consumer vs. Industrial Markets Consumer Market

Consists of consumers who purchase goods and services for personal use▪ What does a consumer take into consideration?▪ Lifestyles

Price, convenience/easier, improved appearance, status, or some other motivation that provides satisfaction

Industrial Market (AKA Business to Business Market) Businesses that buy products for use in their

operations▪ What does the business take into consideration?▪ Profits

Efficiency

Market Share

21.1

17.5

17.2

10.7

7.2

26.3

Camera Market

SonyKodakCanonOlympusFuji FilmOthers

The percentage of total sales volume generated by all companies that compete in a given market

Continuously changes Why?

Calculating Market Share

Unit sales is best The manager of Geneganslet Golf

Course discovers that all the courses in the market area together host 50,000 rounds of golf a year. Of those rounds, Open Fairways hosts 7,000, and therefore has _________ market share.

Market Share research and exercise

Marketing Mix

Four basic marketing strategies 4 P’s▪ Product▪ Price▪ Promotion▪ Place/Distribution

Marketers use these to influence potential customers

Target Market

A group of people identified as those most likely to become customers All marketing

strategies are directed to the target market

When there is a lack of a target market, the marketing plan has no focus

Marketing Mix~Product: choosing what products to make and sell. Design, features, brand name, packaging, service, and warranty~Place: Getting the product into the consumer’s hands Where and how a product will be distributed, transportation, and stock levels~Price: reflection of what customers are willing to pay and compared to competitors~Promotion: decisions about advertising, personal selling, sales promotion, publicity

Strategies

PRICING STRATEGIES

List price or MSRP

Discounts

Allowances

Credit Terms

Payment Period

Promotional Pricing

Period of time

PROMOTIONAL STRATEGIES

How potential customers

will be told about a

company’s products

The message

Media selected

Special offers

Timing of promotional

campaigns

Consumers vs. Customers Consumers – Those who “consume” the

product/service Customers – Those who buy the

product/service Example: Cereal▪ Two target markets: ▪ Children = consumers▪ Parents = customers

Customer Profile A listing of information about the target market:▪ Age, income level, ethnic background, occupation,

attitudes, lifestyle, geographic residence

Review

1. Name the four P’s of the marketing mix and explain the importance of a target market for each of them

2. If total sales in the ice cream category were $4.4 billion and Breyers’s sales were $650,000,000 what would be its market share? Round to the tenth decimal place.

3. Write a customer profile for a magazine of your choice. Provide examples of articles and advertisements that support that profile