1. CHAPTER 10
MARKETING

2. 10-1 MARKETING BASICS
UNDERSTANDING MARKETING Marketing – the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

3. UNDERSTANDING MARKETING
10-1 MARKETING BASICS
UNDERSTANDING MARKETING
Marketing Activities
Hear & see advertisements
See name brands on food packages & clothes
Read product descriptions on websites
Interact with salespeople at retail stores
Storing products in warehouses and distribution centers
Gather data on customer needs
Market products and services to other businesses

4. UNDERSTANDING MARKETING
10-1 MARKETING BASICS
UNDERSTANDING MARKETING
Marketing Businesses
Advertising Agencies
Marketing Research Firms
Transportation Companies (trucking, rail, air)
Delivery & Shipping Companies (UPS, FedEx)
Financial Service Companies (Issue & Manage Credit)
Wholesalers & Retailers (distribution, storage, & sale of products to connect manufacturers and their customers)

5. UNDERSTANDING MARKETING Marketing Functions
10-1 MARKETING BASICS
UNDERSTANDING MARKETING Marketing Functions

6. UNDERSTANDING MARKETING
10-1 MARKETING BASICS
UNDERSTANDING MARKETING
Marketing Functions
PRODUCT & SERVICE MANAGEMENT
Designing, developing, maintaining, improving, and acquiring products and services that meet customers needs.
DISTRIBUTION
Determining the best ways for customers to locate, obtain and use the products of services of an organization.
SELLING
Communication directly with potential customers to determine and satisfy their needs.

7. UNDERSTANDING MARKETING
10-1 MARKETING BASICS
UNDERSTANDING MARKETING
Marketing Functions
MARKETING-INFORMATION MANAGEMENT
Obtaining, managing, & using market information to improve business decision-making & the performance of marketing activities.
FINANCIAL ANALYSIS
Budgeting for marketing activities, obtaining the necessary funds needed for operations, and providing financial assistance to customers they can purchase the business’ products and services.
PRICING
Setting & communicating the value of products and services.
PROMOTION
Communicating information about products and services to potential customers (advertising and other promotional methods)

8. 10-1 MARKETING BASICS MARKETING STRATEGY
Marketing activities often cost 50% or more of the selling price of a product or service.
Marketing Planning
Marketing Strategy - A company’s plan that identifies how it will use marketing to achieve its goals
Target Market - A specific group of consumers who have similar wants and needs
Marketing Mix - The blending of four marketing elements – product, distribution, price, and promotion.

9. Develop a Successful Marketing Strategy
10-1 MARKETING BASICS
MARKETING STRATEGY
Develop a Successful Marketing Strategy
Marketing Orientation – considers the needs of customers when developing a marketing mix.
Develop a product/service = $$$ advertising & promotion and possible price reduction (loss of revenue and profit)
Marketing orientations uses research to study customers and make decisions

10. UNDERSTANDING CUSTOMERS
10-1 MARKETING BASICS
UNDERSTANDING CUSTOMERS
Final consumers – persons who buy products and services mostly for their own use.
Business consumers – persons, companies, and organizations that buy products for the organizations that buy products for operations of a business, for incorporation into other products and services, or for resale to their customers.

11. UNDERSTANDING CUSTOMERS Consumer Decision-Making
10-1 MARKETING BASICS
UNDERSTANDING CUSTOMERS
Consumer Decision-Making
Consumer decision-making process – the specific sequence of steps consumers follow to make a purchase.
Recognize a need
Gather information
Select and evaluate alternatives
Make a purchase decision
Determine the effectiveness of the decision

12. UNDERSTANDING CUSTOMERS
10-1 MARKETING BASICS
UNDERSTANDING CUSTOMERS
Buying Motives
Emotional Buying – reasons to purchase based on feelings, beliefs and attitudes.
Rational Buying – guided by fact and logic.

13. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
CREATE AND IMPROVE PRODUCTS Marketing Research – Finding solutions to problems through carefully designed studies involving consumers.

14. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
CREATE AND IMPROVE PRODUCTS
Plan Market Research
STEPS IN MARKETING RESEARCH
Define the marketing problem
Study the situation
Develop a data collection procedure
Gather and analyze information
Propose a solution

15. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
CREATE AND IMPROVE PRODUCTS Plan Market Research Secondary Research – Analyzing existing information gathered for anther purpose but used to solve a current problem. Primary Research – Studies carried out to gather new information specifically directed at a current problem.

16. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
CREATE AND IMPROVE PRODUCTS Types of Research Studies Surveys – Gather information from people using a carefully planned set of questions. Focus groups – A small number of consumers take part in a group discussion. Observations – Collect information by recording the actions of consumers rather than asking them questions. Experiment – Presents two carefully controlled alternatives to subjects in order to determine which is preferred or has better results.

17. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
PRODUCT PLANNING
Parts of a Product
Product – everything a business offers to satisfy a customer’s needs.
Basic product – the simplest form of a product
Product features – additions & improvements to the basic product
Options – choices of features
Brand name – provides a unique identification for a company’s product
Packaging – provides a protection and security
Guarantee or warranty – a way to build customer confidence ( repair, replace, or provide a refund)

18. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
PRODUCT PLANNING
Product Planning
Idea Development – generating new product ideas is the creative process. Most ideas are for improvements to products.
Idea Screening – determine demand & competition, determine if the product can be produced at a reasonable cost, and if the product is legal and safe.
Strategy Development – develop a full marketing strategy. Study the target market, alternative marketing mixes are developed and tested, costs of the alternatives are compared to determine the greatest value.

19. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
PRODUCT PLANNING Product Planning 4. Production & Financial Planning – develop a production procedure & identify the facilities, equipment & people needed. The cost of production & marketing are determined to ensure a profit will be made. 5. Limited Production & Test Marketing – a company may produce a limited quantity & test in a small market. 6. Full-Scale Production – If steps 1-5 are completed successfully, the new product will be moved to full-scale production. Competition must be watched for competitive products.

20. McDonalds Test Market
McDonald‘s is selling Monster Beverage energy drinks in about 20 U.S. restaurants
Locations in Michigan, Ohio, Georgia, Florida and Illinois are testing the drinks
Getting the energy drinks into quick-service restaurants like McDonald's, which has 14,350 U.S. locations, could add as much as $1.5 billion in revenue for Monster in the U.S. alone
 Monster's beverages are typically sold as part of a value meal, with customers paying about $1.50 more to get the Monster drink

21. 10-2 DEVELOP EFFECTIVE PRODUCTS & SERVICES
SERVICES Services – activities that are consumed at the same time they are produced. Intangible – no physical form. Inseparable – consumed at the same time they are produced. Perishable – the availability of a service must match the demand for that service at a specific time. Heterogeneous – there will be differences in the type and quality of services provided.

22. 10-3 PRICE & DISTRIBUTE PRODUCTS
VALUE AND PRICE
Pricing Factors
Supply & Demand – Ready supply = lower price, limited supply = higher price, high demand = high price, low demand = low price
Uniqueness – few close competitors = higher price
Age – newly introduced products = high price, as products age = price gradually decreases
Season – prices are highest just before & during the beginning of the season. Prices are low out of season
Complexity – technical products with many features & options will command higher prices
Convenience – product is easily available = higher price, large warehouse stores = lower prices

23. 10-3 PRICE & DISTRIBUTE PRODUCTS
VALUE AND PRICE
Price a Product
Price – the money a customer must pay for a product or service
Selling price – price paid by the customer for the product
Product cost – costs to the manufacturer of producing the product or the price paid by other businesses to buy the product
Operating expenses – Salaries, storage, display equipment, facilities, utilities, taxes, etc.
Profit – the amount of money available after all costs & expenses have been paid.
Gross margin – the difference between the selling price and the production costs.

24. 10-3 PRICE & DISTRIBUTE PRODUCTS
VALUE AND PRICE Price a Product Markup – the amount added to the cost of a product to set the selling price. Markup is equal to expected gross margin. Markdown – a reduction from the original selling price.

25. 10-3 PRICE & DISTRIBUTE PRODUCTS
CHANNELS OF DISTRIBUTION Distribution – the locations and methods used to make a product or service available to the target market Channel of distribution – the route a product follows and the business involved in moving a product from the producer to the final consumer

26. 10-3 PRICE & DISTRIBUTE PRODUCTS
CHANNELS OF DISTRIBUTION Need for distribution Channels Difference in Quantity – businesses produce or sell large amounts of each product to many customers. How many products does a consumer need at one time? Differences in Assortment – businesses specialize in producing a specific type of product. What do consumers want? Differences in Location – thousands of miles separate producers & consumers. Businesses need to distribute their products to customers in many places. Differences in Timing – businesses gain efficiency by producing large amounts of products at one time.

27. 10-3 PRICE & DISTRIBUTE PRODUCTS
CHANNELS OF DISTRIBUTION
Channel Members
Channel members – the businesses that take part in a channel of distribution
Direct channel of distribution – moves from the producer straight to the consumer with no other organization participating .
Indirect channel of distribution – includes one or more other businesses between the producer and consumer.
Wholesaler – intermediaries between manufactures and retailers (Indirect distribution channel)

28. 10-3 PRICE & DISTRIBUTE PRODUCTS
CHANNELS OF DISTRIBUTION Channel Members Retailers – the final business organization in an indirect channel of distribution for consumer products.

29. COMMUNICATION AND PROMOTION
10-4 Plan Promotion
COMMUNICATION AND PROMOTION
Promotion – any form of communication used to inform, persuade, or remind.
Used to influence knowledge, beliefs, and actions about products, services or ideas.

30. 10-4 Plan Promotion
COMMUNICATION AND PROMOTION The Communication Process Effective Communication - the exchange of information so there is common understanding by all participants.

31. 10-4 Plan Promotion
COMMUNICATION AND PROMOTION The Communication Process
ENCODE MESSAGE
DECODE MESSAGE
COMMUNICATION CHANNEL
INFORMATION
SENDER
RECEIVER
FEEDBACK

32. COMMUNICATION AND PROMOTION
10-4 Plan Promotion
COMMUNICATION AND PROMOTION
Communication Through Promotion
A business needs to provide information to consumers in order to persuade them to make a purchase.
Common promotional channel tools include advertising media, salespeople, the internet

33. Personalized Promotion
10-4 Plan Promotion
TYPES OF PROMOTION
Personalized Promotion
Personal selling – direct, individualized communication with prospective customers to assess their needs and assist them in satisfying those needs with appropriate products and services.
Used for complex and expensive products

34. 10-4 Plan Promotion TYPES OF PROMOTION Mass Promotion
Directed to many people at the same time
Cannot be individualized and specific
Less expensive
Most common form: Advertising

35. 10-4 Plan Promotion TYPES OF PROMOTION Mass Promotion
Advertising – any paid form of communication through mas media directed at identified consumers to provide information and influence their actions.
Television, Internet, radio, newspapers, magazines, mass mailings, outdoor displays

36. 10-4 Plan Promotion TYPES OF PROMOTION Mass Promotion
Publicity – non-paid promotional communication presented by the media rather than the business or organization that is being promoted.
Public relations – ongoing program of paid and non-paid communications, it is planned to favorably influence public opinion about an organization, marketing effort, idea or issue.
Sales promotions – activities and materials designed to reinforce a company’s brand and image. May include contests, games, or giveaways that highlight a brand name or product.

37. 10-4 Plan Promotion TYPES OF PROMOTION Merchandising
Merchandising – a set of promotional activities designed to generate sales in the retail setting.
Visual merchandising – uses visual signals to communicate in a retail setting (shelf labels, signs, displays)
Display – to exhibit a product at the point of sale.

38. 10-4 Plan Promotion
TYPES OF PROMOTION Merchandising Retailers should develop merchandising plans that identify strategies for price markdowns or markups, visual displays, and special events such as seasonal sales.

39. 10-4 Plan Promotion TYPES OF PROMOTION Mass Personalization
Promotion through mass media such as newspapers, mass mailings, or the Internet.