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Marketing CH. 4 Notes
The Basics of Marketing
Marketing today is different from marketing only a few years ago It has expanded from a few activities to a variety The earliest use of marketing was to move products from the producer to the consumer Then promotion and sales were added to help persuade customers to buy Today, businesses are able to complete a vast # of marketing activities ranging from research to customer credit
From Independence to Integrated
Has changed from an activity that was an independent part of business to one that is well integrated with other business functions In the past, marketing was not well understood so they would often work by themselves Now, it is integrated- meaning it is an essential part of the business It is involved in all important business decisions, and strategies are developed as a part of the business plan
From Problems to Opportunities
Marketing used to be handled as a problem-solving tool, now it is a creation tool Also, it is often called on when companies face problems Today’s businesses can’t afford to wait until problems occur, so they are continuously looking for market opportunities Ways to improve a companies offerings in current markets It is responsible for identifying and planning opportunities
Putting Marketing Up Front
Successful businesses use carefully prepared plans to guide their operations The business will use a strategy for how it expects to achieve its goals To develop this strategy businesses should use the marketing concept By incorporating the marketing concept companies attempt to develop products and services that respond to customers’ needs rather than what the company thinks should be offered. Marketing will be directed at meeting the identified needs of the customers rather than developing ways to persuade people to buy something they may not need.
How Does the Marketing Concept Affect Planning?
Without the Marketing Concept With the Marketing Concept Develop a Product Conduct research to identify potential customers and their needs Decide on marketing activities 2. Develop a marketing mix (4Ps) that meets specific customer needs. Identify potential customers
Understanding the customer Customers have many choices of products
They often spend time comparing products and services before making decisions Bringing a new product to the market is expensive, it take time and money to develop, produce, distribute, and promote When it enters the market it must compete with other companies This competition among products is very intense
Identifying customer needs
Successful companies are usually those that meet customer needs But, meeting customer needs is not easy Many customers are not sure of their needs, or have conflicting needs Customers have many needs, they typically have limited amounts of money available Needs of individuals and groups can be different Businesses tend to deal with customers in two ways Some businesses don’t view the specific needs of customers as important. They believe if they can effectively produce and market products customer will buy Understanding customers is an important part of business activities
Satisfying Customer Needs
Businesses study markets to identify groups of consumers with unsatisfied needs Through extensive marketing research, the business gather and analyzes consumer information It categorizes customers according to similar characteristics, needs, and purchasing behavior Groups of similar markets are known as market segments After distinct market segments have been identified, a business will analyze each of them It tries to determine which market segments can be served most effectively and which have the strongest need, the most resources, and the least competition Once segments have been identified and prioritized, the business selects those segments on which it will focus its efforts
Consumers Decision Making
Consumers make decision every day Decision is a choice among alternatives Made to satisfy a need or to solve a problem Consumers want to choose the alternatives that provide us the most satisfaction or the greatest value If marketers want to satisfy customer needs, they must understand how consumers choose what they will buy Different theories are made, but there is a general agreement that people follow a series of decision making when purchasing These decisions become routine and simple when repeated
Stages of a Decision Step 1. Recognize- Begins when a consumer recognizes that a need exists If the need is urgent the process is quick If not, then the consumer may take time before buying Step 2. Identify- When the consumer becomes interested in finding a solution Identifying products or services that relate to the need Step 3. Evaluate- When the consumer gathers information and uses it to evaluate choices An evaluation is done to see if any choice is better, more available, or more affordable Step 4. Decide- When the consumer is comfortable with the evaluation, a decision is made Decision will be to select one of the available choices, to gather more information, or to do nothing Step 5. Assess- When the consumer determines whether or not the choice was correct Evaluated to see if it satisfied the need If it did the decision will likely be repeated the next time
Relying on Information
Marketers are creative. Creativity is needed to plan the marketing mix, develop new product features and uses, and prepare promotional materials and activities Conducting research is an important marketing activity Need to be skilled in organizing research and using results Most important part of research is the study of potential and current customers Additionally, the research about competitors will identify the type of competition and strengths and weaknesses of competing companies
Responding to Competition
1. Intense Competition Most difficulty type of competition businesses face is market in which businesses compete with others offering very similar products Ex- Pure competition…many business offering the same product (Agricultural) Limited Competition Some businesses have the advantage of having little or no direct competition Ex- Known as a monopoly Monopolistic Competition Most business face competition somewhere between intense and monopoly They have many competitors, but customers see differences among choices The customers determine which product fits there wants and needs
Open Ended Question Recognize Recognizes that a need exists
Cell phone battery will not charge Identify Interested in finding a solution Going to buy a new cell phone, instead of getting the old one fixed Evaluate Gathers information to evaluate choices Go to Verizon and look at available phones Decision Decision will be: select one of the available choices, to gather more information, or to do nothing Buy the phone Gather info do nothing I chose to buy phone Assess Consumer determines whether or not the choice was correct Do not buy the Verizon Droid, it is cheaply made, and breaks easily
Producers and Manufacturers
They develop the products and services needed by other businesses and consumers Because of that role, the product part element of the marketing mix receives the most attention’ Distribution is also important to insure the product gets to the customers Unless manufacturers and producers distribute products directly to the users, they must rely on other businesses to make good decisions about product distribution, prices, and promotion Even if producers and manufacturers do not sell directly to final consumers, they still must understand and respond to customers needs
Channel Members A channel of distribution is made up of all the businesses involved in completing marketing activities as products move from the producer to the consumer Channel Members- are the businesses used to provide many of the marketing functions during the distribution process. If the product does not meet the customers needs, the customers are likely to hold the channel member as responsible as the producer After decisions are made about what products to offer, channel members then focus their attention on the other mix elements Retailers are responsible for most final pricing decisions They use promotion activities to encourage consumers to purchase their products
Service Businesses Most service businesses work directly with customers rather than through a channel of distribution Therefore they are responsible for the entire marketing mix Product mix element is very important- they must develop procedures to insure quality service every time Distribution is also important- because the service must be available where and when the customer wants it Service businesses have more control over pricing It is more difficult for customer to determine the appropriate price Marketing by Non-Business organizations It is not unusual today to see marketing used by museums, libraries, symphonies, athletic teams, churches, and clubs Nonprofit organizations Do not operate off of profit motive, however still need resources to provide the services They often rely on fundraising Must convince people of the value of their service, and the need to support the organization
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