Marketing Chapter 10

Lessons Marketing Basics Develop Effective Products and Services Price and Distribute Products Plan Promotion Essential Question: How is marketing planned and executed to satisfy customer needs at a profit?

Understand Marketing Most visible set of business activities to consumers Marketing: an organizational function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders 10-1: Marketing Basics

Marketing Businesses Advertising agencies Marketing research firms Transportation companies Shipping and delivering companies Financial services companies Wholesalers and retailers Important part of U.S. economy! 10-1: Marketing Basics

Seven Functions of Marketing 1. Distribution shipping, handling, storing; best way for customers to locate, obtain, and use products 2. Financial Analysis company marketing budget, obtaining marketing funds, and customer payment options 3. Marketing Information Management market research to improve the business 4. Pricing setting and communicating value; making a profit 10-1: Marketing Basics

Seven Functions of Marketing 5. Product/Service Management obtaining information, developing and maintaining products to compete in the market 6. Promotion communication to attract customers 7. Selling communicating directly with customers to determine and satisfy needs relationship marketing: building customer loyalty through good customer relations 10-1: Marketing Basics

Marketing Strategy Marketing strategy: a company’s plan that identifies how it will use marketing to achieve its goals (satisfy customer needs to make a profit) It all comes down to knowing your market Promote to a specific, smaller, audience Don’t assume you know what customers want Do research to understand what people want to buy and why they want to buy it Marketing orientation: an approach that considers the needs of customers 10-1: Marketing Basics

Steps to Developing a Marketing Strategy 1.Identify a Target Market a specific group of consumers who have similar wants and needs 2.Create a Marketing Mix The blending of four marketing elements: product, distribution, price, and promotion 10-1: Marketing Basics

Cruise Ship Company Example 1.Research potential customers 2.Select target market 3.Use research gathered to develop marketing mix ProductCreate an exciting / relaxing experience, onboard activities, excursions at scheduled stops DistributionTravel documentation, arranging passenger travel from port to port, handling baggage PricingAffordable for target market, payment options PromotionOffer information to interest customers, travel agent sales, advertising, special offers 10-1: Marketing Basics

Types of Customers 1.Final consumers: people who buy products and services mostly for their own use 2.Business consumers: people, companies, and organizations that buy products for a business, for incorporation into other products or services, or for resale to customers 10-1: Marketing Basics

Customer Decision-Making & Buying Motives Customer decision-making process: specific sequence of steps consumers follow to make a purchase 1.Recognize a need 2.Gather information 3.Select and evaluate alternatives 4.Make a purchase decision 5.Determine effectiveness of decision Buying motives: the reasons consumers decide what products and services to purchase Emotional: based on feelings, beliefs, and attitudes Rational: guided by facts and logic 10-1: Marketing Basics

Marketing Research Secondary research: analyzing existing information gathered for another purpose Primary research: studies carried out to gather new information directed at a current problem Steps in Marketing Research 1. Define the marketing problem 2. Study the situation 3. Develop a data collection system 4. Gather and analyze information 5. Propose a solution Finding solutions to problems through carefully designed studies involving consumers 10-2: Develop Effective Products and Services

Types of Research Studies Surveys: gather information using a carefully planned set of questions Focus groups: small group of people take part in a group discussion sharing ideas, experiences, and opinions Observations: record actions of consumers Experiments: presents two carefully controlled alternatives to determine which is preferred or has better results 10-2: Develop Effective Products and Services

Product Planning The most important part of the marketing mix (if the product is not what you want, the effectiveness of the other elements does not matter) Product: everything a business offers to satisfy customer needs Basic product: simplest form of a product Product features: additions and improvements to the basic Options: choices of features Brand name: provides unique identification Packaging: provides protection and security for the product before it is used, or makes storage and use easier Guarantee or warranty: builds customer confidence 10-2: Develop Effective Products and Services

Steps to New Product Planning 1. Idea Development brainstorm and collaborate for creative ideas 2. Idea Screening evaluate and screen for consumer demand 3. Strategy Development develop a full marketing strategy along with alternatives to compare and determine which provides the greatest value 10-2: Develop Effective Products and Services

Steps to New Product Planning 4. Production and Financial Planning develop productions procedures, identify resources needed, along with costs to make a profit 5. Limited Production and Test Marketing produce limited quantity and test in small market 6. Full-Scale Production full production and marketing, gather info on production, sales, and competition 10-2: Develop Effective Products and Services

Value and Price Pricing Factors: Supply and demand Uniqueness Age Season Complexity Convenience Price a Product: Price: the money a customer must pay for a product or service Gross margin: difference between the selling price and production costs (represents $ on hand to pay for operating expenses and provide a profit) Product costs Operating expenses profit Selling price 10-3: Price and Distribute Products

Channels of Distribution Distribution: locations and methods used to make a product or service available to a target market Channel of Distribution: the route a product follows and the businesses involved in moving a product from the producer to the final consumer The biggest impact distribution has on marketing is how it affects the price of products Each time a product goes through another channel, the cost of marketing it increases 10-3: Price and Distribute Products

Channels Direct distribution: selling goods or services directly from producers to consumers without using intermediaries Indirect distribution: moving goods from producers to consumers using one or more intermediary 10-3: Price and Distribute Products

Channel Members Intermediaries: Distributors Represents a single manufacturer in a geographic area Ex. Cosmetics, cars, furniture, and shoes are sold through distributors Wholesalers Receives large shipments of products from many different producers and breaks them into smaller batches for resale 10-3: Price and Distribute Products

Channel Members Retailers Sells goods directly to the customer Internet Encourages producers to distribute their products themselves (a virtual business allows customers to order online) 10-3: Price and Distribute Products

Promotion Any form of communication used to inform, persuade, or remind Used to influence knowledge, beliefs, and actions about products or services Types: Personalized promotion Mass promotion 10-4: Plan Promotion

Personalized Promotion Communicates directly with each customer using information tailored to that person Most effective but most expensive Personal selling: direct, individualized communication with prospective customers to assess their needs and assist them in satisfying those needs with appropriate products and services Done face-to-face, over the phone, or on the Internet a good salesperson gathers customer information, studies product info, communicates with customer, demonstrates product, helps make decision, arranges payment, follows-up with customer to ensure satisfaction 10-4: Plan Promotion

Mass Promotion Communicates with many people at the same time with a common message Use mass media; Cost per customer is low Advertising: any paid form of communication through mass media directed at identified consumers to provide information and influence their actions Designed to attract attention and focus the consumer on a small amount of specific information Television, radio, newspapers, magazines, mass mailings, outdoor displays, and Internet advertising attempt to influence consumer actions (visit a store, gather info, or test a product) 10-4: Plan Promotion

Mass Promotion Continued Publicity: non-paid promotional communication presented by the media rather than by the business that is being promoted Ex. company or product featured on the news Public relations: an ongoing program of non-paid and paid communications planned to favorably influence public opinion about an organization, marketing effort, idea, or issue Ex. company supporting community initiatives Sales promotion: includes activities and materials designed to reinforce a company’s brand and image; also a direct incentive to take action likely to immediately increase sales Ex. contests, games, giveaways, incentives, frequent buyer plans 10-4: Plan Promotion

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