Chapter 20 – Nature and Scope of Marketing 1

Importance of Marketing For the economy to work well, producers and consumers need information to help them make their decisions, so that producers will provide the types and amounts of products and services that consumers are willing and able to buy. Marketing (general definition) a set of activities that gets products from producers to consumers 2

Importance of Marketing (cont’d) “Modern” marketing – the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives; includes packaging, developing brand names, determining prices, financing and storing products until purchased Over one-third of all people employed in the U.S. work in a marketing job or a marketing business. 3

Marketing Activities Buying – obtaining product to be resold; involves finding suppliers that can provide the right products in the right quality and quantity at a fair price Selling – providing personalized and persuasive information to customers to help them buy the products and services they need Transporting – moving products from where they were made to where consumers can buy them 4

Marketing Activities (cont’d) Storing – holding products until customers need them, such as on shelves, in storage rooms, or in a warehouse Financing – providing money needed to pay for the various marketing activities, such as by obtaining credit when buying and extending credit when selling Researching – studying buyer interests and needs, testing products, and gathering facts needed to make good marketing decisions 5

Marketing Activities (cont’d) Risk Taking – assuming the risk of losses that may occur from fire, theft, damage, or other circumstances Grading and Valuing – grouping goods according to size, quality, or other characteristics, and determining an appropriate price for products and services 6

Role of Marketing In the early 1900s, there were not many producers. Businesses were more product-oriented meaning they were only concentrated on what and how to produce. They were not so much worried about marketing. Later, with more producers, businesses became more sales-oriented emphasizing widespread distribution and promotion to sell products. Advertising and selling became important marketing tools as businesses convince customers that their products are the best. 7

Role of Marketing (cont’d) Today, more businesses are focusing on customer needs and have become customer-oriented where they direct their activities toward satisfying the customers because with competition, businesses pay more attention to marketing concepts as they strive to meet needs and products customers now demand. 8

Market Determination Market – types of buyers a business wishes to attract and where those buyers are located Market research – the study of a company’s current and prospective customers Target markets – groups of customers with very similar needs to whom the company plans to sell its product 9

The Marketing Mix 4 Elements of the Marketing Mix (The 4 Ps): Product – Will you make the product in one size and color, or in several? Price – Will you price the product high, medium, or low? Place (distribution) – Will you sell the product in retail stores or over the Internet? Promotion – Will you use newspaper, radio, television, or Internet advertising? 10

Marketing mix – the blend of all decisions related to the four elements of marketing 11

Product Defined as all attributes, both tangible and intangible, that customers receive in exchange for the purchase price. Market information allows businesses to make decisions such as how many to produce, what the physical features of a product will be, the quality demanded, number of different models, packaging features, and guarantees and services. 12

Price Defined as the amount of money given to acquire a product or service. Must be high enough to cover the costs of producing and marketing the product. 13

Place (distribution) Defined as the set activities required to transport and store products, and make them available to customers. Place utility – product must be in a place where customers need or want it 14

Promotion Defined as providing information to consumer that will assist them in making a decision and persuade them to purchase a product or service. Major methods are advertising and personal selling 15

Marketing Plan A detailed written description of all marketing activities that a business must accomplish in order to sell its products. A marketing plan is usually written for one year 16

Marketing Plan Includes: The goals the business wants to accomplish The target markets it wants to serve The marketing mixes it will use for each product (product, price, distribution, and promotion) 17

Four Stages of the Product Life Cycle Introduction stage Growth stage Maturity stage Decline stage 18

Product Categories Industrial goods – products designed for use by another business Consumer goods – products designed for personal or home use 19

Consumer Products Convenience Goods – inexpensive items that comsumers purchase regularly without much thought (candy, milk, soft drinks, pencils, soap, etc.) Shopping Goods – products that consumers purchase less frequently than convenience goods, usually have a higher price, and require some buying thought (cars, furniture, large appliances, houses, etc.) Specialty Goods – products that customers insist on have and are willing to search for until they find them (designer clothing, expensive jewelry, certain brands of cameras, computers, automobiles, etc.) Unsought Goods – customers do not shop for some products because they do not have a strong need for them 20