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Chapter 1 Marketing.

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1 Chapter 1 Marketing

2 Scope of Marketing Everything around you Marketing
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?

3 Ideas, Goods, and Services
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


5 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

6 7 Functions of Marketing
Product/Service Management Obtaining, developing, maintaining, and improving a product or a product mix in response to market opportunities Marketing research = determining needs/wants 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 7 Functions of Marketing Continued…
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? Distribution The process of deciding how to get goods in customers’ hand Transportation, storing, tracking

8 7 Functions of Marketing Continued…
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?

9 7 Functions of Marketing Continued…
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. Selling Providing customers with goods and services they want Directly to the customer or business Techniques and activities

10 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

11 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

12 The Importance of Marketing

13 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?

14 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?

15 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

16 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

17 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)

18 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

19 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

20 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

21 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?

22 Fundamentals of Marketing

23 Market Can you make your product appeal to everyone? Market
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

24 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

25 Market Share The percentage of total sales volume generated by all companies that compete in a given market Continuously changes Why?

26 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

27 Marketing Mix Four basic marketing strategies 4 P’s
Product Price Promotion Place/Distribution Marketers use these to influence potential customers

28 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

29 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

30 Strategies List price or MSRP Discounts Allowances Credit Terms
Pricing Strategies Promotional Strategies List price or MSRP Discounts Allowances Credit Terms Payment Period Promotional Pricing Period of time How potential customers will be told about a company’s products The message Media selected Special offers Timing of promotional campaigns

31 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

32 Review Name the four P’s of the marketing mix and explain the importance of a target market for each of them 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. Write a customer profile for a magazine of your choice. Provide examples of articles and advertisements that support that profile

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