Chapter One Marketing Is All Around Us!

Section 1.1 Objectives Define marketing Explain the four foundations of marketing List the seven functions of marketing Understand the marketing concept Marketing and the Marketing Concept

Section 1.1 Key Terms Marketing Goods Services Marketing concept Marketing and the Marketing Concept

The Scope of Marketing Marketing is a broad term that includes many activities and requires many skills Marketing is the process of planning, pricing, promoting, selling, and distributing ideas goods or services to create exchanges that satisfy customers

Ideas, Goods and Services Marketing promotes ideas, goods, and services Goods are tangible items that have monetary value and satisfy your needs and wants Services are intangible items that have monetary value and satisfy your needs and wants

Ideas, Goods and Services Intangible means you cannot physically touch them The marketplace is the commercial environment where trades happen

Foundations of Marketing The practice of marketing depends on four key areas of knowledge Business, management, entrepreneurship Communication and interpersonal skills Economics Professional development

Business Management Entrepreneurship Understanding the basics of business, management, and entrepreneurial concepts that affect business decision making

Communication and Interpersonal Skills Understanding concepts, strategies, and systems needed to interact effectively with others

Economics Understanding the economic principles and concepts that are basic to marketing

Professional Development Understanding concepts and strategies needed for career exploration, development, and growth

Seven Functions of Marketing Distribution Financing Marketing Information Management Pricing Product/Service Management Promotion Selling

Distribution The process of deciding how to get goods in customers’ hands Physically moving and storing goods is part of distribution Main forms are truck, rail, ship, or air

Financing Getting the money necessary to pay for setting up and running a business Owners often obtain loans and sell shares of their business

Marketing Information Management Gathering information, storing it, and analyzing it are all part of marketing information management. Companies conduct research so they can be successful at marketing and selling their products.

Pricing Pricing decisions are based on costs and on what competitors charge for the same product or service. To determine a price, marketers must also determine how much customers are willing to pay.

Product/Service Management Obtaining, developing, maintaining, and improving a product or a product mix is product/service management.

Promotion The effort to inform, persuade, or remind potential customers about a business’s products or services, such as radio commercials. Also, it could be used to improve a company’s public image.

Selling Selling provides customers with the goods and services they want. The selling process influences purchasing decisions and enhances future business opportunities.

The Marketing Concept Marketing Concept is the idea that a business should strive to satisfy customers’ needs and wants while generating a profit for the firm. The message is that the customer satisfaction is most important.

Customer Relationship Management (CRM) In today’s marketplace, customer relationship is most important. Customer relationship management (CRM) is an aspect of marketing that combines customer information with customer service and marketing communications. Marketers who uses CRM tries to create more meaningful one-on-one communications with the customer.

Section 1.2 Objectives Analyze the benefits of marketing Apply the concept of utility The Importance of Marketing Key Term Utility

The Main Idea Marketing is a key part of our economy because it supports competition and offers benefits to consumers.

Economic Benefits of Marketing Through the study of marketing, you will realize just how important marketing is and how much it affects your life and the lives of other consumers. Also consider how it affects our economy and standard of living.

Economic Benefits of Marketing (cont) Marketing provides the means for competition to take place In a competitive marketplace, businesses try to create new or improved products at lower prices than their competitors.

Economic Benefits of Marketing (cont) Businesses are forced to be efficient and responsive to consumers Businesses look for ways to add value to a consumer’s shopping experience.

New and Improved Products Businesses are always looking for ways to satisfy customers’ wants and needs and to keep customers interested.  Example: Personal computers have gotten smaller, lighter, more powerful and less expensive.

New & Improved Products Example Give an example of how consumer demand can influence what changes are made to existing products.

Lower Prices Marketing activities increase demand, and this helps to lower prices. When demand is high, manufacturers can produce products in larger quantities and this reduces the unit cost of each product.  This is because the fixed costs (such as rent on a building) remain the same whether the company produces 10 units or 10,000 units.

Added Value & Utility The functions of marketing add value to a product. This added value in economic terms is called utility. Utilities are the attributes of a product or service that make it capable of satisfying customers’ wants and needs.

Economic Utilities There are five economic unities involved with all products:  Form  Place  Time  Possession  Information Note: Form utility is not directly related to marketing, however what goes into creating new products, such as marketing research and product design is an integral part of the marketing process.

Form Utility Form utility involves changing raw materials or putting parts together to make them more useful. In other words, it deals with making or producing things. Form utility involves making products that consumers need and want. Example: Taking lumber from the forest and turning it into a desk

Place Utility Place utility involves having a product where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient locations to sell products. Some businesses uses the catalog, while others rely on retailers.

Time Utility Time Utility is having a product available at a certain time of year or a convenient time of day. Retailers often have extended shopping hours during the busiest shopping season of the year, from Thanksgiving till Christmas. Marketers increase the value of products by having them available when consumers want them.

Possession Utility The exchange of a product for money is possession utility. Retailers may accept alternatives to cash, such as personal checks, debit or credit cards, in exchange for their merchandise. Retailers may offer installment or layaway plans (delayed possession in return for gradual payment).

Information Utility Information utility involves communication with the consumer. Salespeople provide information to customers by explaining the features and benefits of products.  Packaging and labeling information  Clothes labels  Manufacturers owners manual

Section 1.3 Objectives Describe the concept of market Differentiate consumer and industrial markets Describe market share Define target market List the components of the marketing mix Fundamentals of Marketing

Market Consumer market Industrial market Market share Target market Customer profile Marketing Mix Michelle was here. Section 1.3 Key Terms

The Main Idea Market refers to all the people who might buy a product or service. The marketing mix is a set of four tools or strategies the marketer uses to influence buying decisions

Market & Market Identification Marketers know that their product or service cannot appeal to everyone. To do their job, they look for people  who might have an interest in or a need for their product  They also look at people who have the ability to pay for their products.

Market & Market Identification All people who share similar needs and wants and who have the ability to purchase a given product are called a market  If you liked video games and had the resources to buy or rent them, you would be part of the video game market

Consumer vs. Industrial Markets There are different types of markets  Consumer markets consists of consumers who purchase goods and services for personal use  Industrial markets (business to business markets) include all businesses that buy products for use in their operations

Consumer Markets Consumers’ needs and wants generally fall into categories that address their lifestyles Consumers are interested in products that will save them money, make life easier, improve their appearance and provides personal satisfaction

Industrial Market The goals and objectives of business firms are different from consumer markets Main goal is to improve profit Companies want to improve productivity, increase sales, decrease expenses or in some way make their work more efficient

Industrial Markets Companies that produce product for sale in the consumer market consider the reseller of their products to be part of the industrial market

Market Share A market is further described by the total sales in a product category. A company’s market share is its percentage of the total sales volume generated by all companies that compete in a given market

Market Share Knowing ones market share helps marketers analyze their competition and their status in a given market. Market shares change all the time as new competitors enter the market and as the size of the market increases or decreases in volume

Target Market & Market Segmentation Businesses look for ways to offer their product or service to the people who are most likely to be interested This involves segmenting, or breaking down the market into smaller groups that have similar needs. The group that is identified for a specific marketing program is the target market.

Consumers vs. Customers A product may have more than one target market.  Manufacturers of children cereal know that they need to target children and parents differently. Consumers use the product and customers buy the product.

Customer Profile To develop a clear picture of their target market, businesses create a customer profile. A customer profile lists information about the target market, such as age, income level, ethnic background, occupation, attitudes, lifestyle, and geographic residence.

Marketing Mix The marketing mix includes four basic marketing strategies called the four Ps:  Product  Place  Price  Promotion The four elements of the marketing mix are interconnected.

Product Product decisions begin with choosing what products to make and sell. A product’s features, brand name, packaging, service, and warranty are all part of the development. By developing new uses and identifying new target markets, a company can extend the life of a product.

Place The means of getting the product into the consumer’s hands is the place factor of the marketing mix. Place strategies determine how and where a product will be distributed

Pricing Strategies Price strategies therefore include arriving at the list price or manufacturer’s suggested retail price, as well as discounts, allowances, credit terms, and payment period for industrial customers. A company may use special promotional pricing that would adjust the suggested retail price. A manufacturer may decide to use a promotional price for a fixed period of time.

Price Price is what is exchanged for the product. Price strategies should reflect what customers are willing and able to pay. Pricing decisions also take into account prices the competition charges for comparable products.

Promotion Promotion refers to decisions about advertising, personal selling, sales promotion, and publicity. Promotional strategies deal with how potential customers will be told about a company’s product.