Part 1: A Passion for the Business Advertising’s Role in Marketing Part 1: A Passion for the Business Chapter 2

Questions We’ll Answer CHAPTER KEY POINTS Questions We’ll Answer What is marketing and what are its key concepts? What are the different types of markets, and how do they relate to the marketing process? Who are the key players in marketing? How are agencies organized, and how do they work with their clients?

WHAT IS MARKETING? Defining Marketing Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted. “An organizational function and a 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.”—American Marketing Association

Key Concepts in Marketing WHAT IS MARKETING? Key Concepts in Marketing The Marketing Concept Exchange Differentiation & Competitive Advantage Added Value Branding Marketing should focus first on identifying the needs and wants of the consumer, rather than building products the consumer may not want. Two steps of the marketing concept: Determine customer needs and wants through research. Develop, manufacture, market, and service goods that fill those needs and wants—solve customers’ problems.

Key Concepts in Marketing WHAT IS MARKETING? Key Concepts in Marketing The Marketing Concept Exchange Differentiation & Competitive Advantage Added Value Branding Exchange is the act of trading a product or service for something of value (money) Two types of exchange: economic and communication

Key Concepts in Marketing WHAT IS MARKETING? Key Concepts in Marketing The Marketing Concept Exchange Differentiation & Competitive Advantage Added Value Branding A brand’s competitive advantage is where it’s different from its competitors and superior in some way. In marketing, this concept is called differentiation. Price Design Performance distribution Brand image Reliability

Key Concepts in Marketing WHAT IS MARKETING? Key Concepts in Marketing The Marketing Concept Exchange Differentiation & Competitive Advantage Added Value Branding Added value is a marketing or advertising activity that makes the product more valuable, useful or appealing to consumers. Other ways to add value: More convenient to buy Lower price More useful features Higher quality Status symbol More knowledgeable employees

Key Concepts in Marketing WHAT IS MARKETING? Key Concepts in Marketing The Marketing Concept Exchange Differentiation & Competitive Advantage Added Value Branding Branding is the way marketers create a special meaning for a product. Brand image is based on communication and on the consumer’s personal experiences with the product. Brand equity refers to the financial value based on the reputation and meaning the brand name has acquired over time.

Types of Markets Consumer Markets Business-to-Business Markets WHAT IS MARKETING? Types of Markets Consumer Markets Those who buy products or services for personal use. Business-to-Business Markets Companies that buy products or services to use in their own business or to make products. Institutional Markets Nonprofits such as hospitals, governments, schools that provide goods and services for the benefit of society. Channel Markets Resellers and intermediaries who buy finished or semi-finished products and resell them for a profit.

The Marketing Plan WHAT IS MARKETING? Steps in the Marketing Process Research the consumer marketplace and competitive marketplace and develop a situation analysis or SWOT analysis. Set objectives for the marketing effort. Assess consumer needs and wants, segment the market into groups, target specific markets. Differentiate and position the product relative to the competition. Develop the marketing mix strategy. Evaluate the effectiveness of the strategy.

Marketing Research Marketing Research WHAT IS MARKETING? Marketing Research Marketing Research Research markets, product categories, consumers, and the competitive situation. Planners need to know as much as they can about the marketplace so they can make informed, insightful strategic decisions. SWOT (Strengths, Weaknesses, Opportunities, Threats) helps managers turn data into insights.

Marketing Research WHAT IS MARKETING? Key Strategic Decisions Objectives—increase sales, share of market, or broader distribution Segmenting and targeting Target market Segmenting Target audience Differentiating and positioning. The point of differentiation positions the product within the competitive environment, relative to consumer needs. Positioning is how consumers view the brand relative to others in the category.

The Marketing Mix Product Distribution Pricing Marketing Communication WHAT IS MARKETING? The Marketing Mix Product Distribution Pricing Marketing Communication Includes product design and development, product operation and performance, branding, and physical packaging. Product design, performance, and quality are key to a product’s success.

The Marketing Mix Product Distribution Pricing Marketing Communication WHAT IS MARKETING? The Marketing Mix Product Distribution Pricing Marketing Communication The channels used to move a product from manufacturer to buyer. Types of distribution: Direct marketing to consumer Channel marketing through resellers and retailers Strategic distribution decisions: Market coverage strategy Push strategies Pull strategies

The Marketing Mix Product Distribution Pricing Marketing Communication WHAT IS MARKETING? The Marketing Mix Product Distribution Pricing Marketing Communication Price is based on: Cost of making and marketing the product and seller’s expected profit level. Also, based on what the market will bear, competition, economic well-being of customer, value of product, and the consumer’s ability to gauge the value. Pricing strategies: Customary pricing—movies Psychological pricing for affluent customers

The Marketing Mix Product Distribution Pricing Marketing Communication WHAT IS MARKETING? The Marketing Mix Product Distribution Pricing Marketing Communication Includes personal selling, advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, packaging. Personal sales uses face-to-face contact with customers to create immediate sales. Marketing communication is about “Big Ideas.”

THE KEY PLAYERS Marketer The advertiser or client that is the company or organization who produces and sells the brand. The marketing function is usually handled by a marketing department headed by a VP or director of marketing. Some companies have a product or brand manager who handles marketing and makes all strategic decisions about design, manufacture, and the marketing mix.

THE KEY PLAYERS Suppliers and Vendors They provide or produce the materials and ingredients that are sold to manufacturers to make products. In theory, every member of the supply chain adds value. In practice, every member of the supply chain is a partner in creating the product and marketing the brand.

Distributors and Retailers THE KEY PLAYERS Distributors and Retailers The distribution chain or channel of distribution refers to all the companies who help move a product from manufacturer to buyer. The trade refers to upstream players (suppliers and vendors in the supply chain) and downstream players (companies in distribution chain)

THE KEY PLAYERS Marketing Partners Suppliers, distributors, and marketing communication agencies are partners in supporting the brand and maintaining good customer relationships. Affiliate marketing is a partnership in which one company drives customers to another company and may get a commission for doing so.

The Agency-Client Relationship HOW AGENCIES WORK WITH THEIR CLIENTS The Agency-Client Relationship Agencies and agency networks (holding companies) Companies have internal advertising departments who act as a liaison between the marketing department and advertising agency(ies). Advertisers may have one agency of record (AOR) or several agencies. Agencies offer clients: Specialized services Objective advice Experienced staffing Management of all advertising activities and personnel

HOW AGENCIES WORK WITH THEIR CLIENTS Types of Agencies Full-service Agencies Account management, creative services, media planning, account planning, accounting, traffic, production, and human resources Specialized by: Function (copy, art, media) Audience (minority, youth) Industry (healthcare, computers, agriculture) Market (minority groups) Creative Boutiques Small agencies focused on the creative product Media-buying Services Focused on purchasing media for clients

How Agency Jobs Are Organized HOW AGENCIES WORK WITH THEIR CLIENTS How Agency Jobs Are Organized Account Management Serves as a liaison between the client and agency Three levels: management supervisor, account supervisor, account executive Account Planning and Research Acts as the voice of the consumer Creative Development and Production People who create and people who inspire Creative directors, copywriters, art directors, producers Media Planning and Buying Recommend most efficient means of delivering the message Internal Agency Services Traffic, print production, financial services, human resources

HOW AGENCIES WORK WITH THEIR CLIENTS How Agencies Are Paid Commissions A percentage of the media cost Fees Hourly fee or rate plus expenses and travel Retainers Amount billed per month based on projected amount of work and hourly rate charged Performance-based Based on percentage of sales or marketing budget Profit-based Greater risk if campaign doesn’t have desired impact Value Billing Based on value of creative strategy or ideas

CURRENT DEVELOPMENTS IN MARKETING Accountability Senior managers want marketing managers to prove that their marketing is effective based on: Sales increases Percentage share of the market the brand holds Return on Investment (ROI) Agencies are creating departments to help marketers evaluate the efficiency and effectiveness of their marketing communication budgets.

Integrated (Holistic) Marketing CURRENT DEVELOPMENTS IN MARKETING Integrated (Holistic) Marketing Focused on better coordinating all marketing efforts to maximize customer satisfaction. All areas of the marketing mix work together to present the brand in a coherent and consistent way. The goal is to manage all the messages delivered by all aspects of the marketing mix to present a consistent brand strategy.

Emerging Marketing Strategies CURRENT DEVELOPMENTS IN MARKETING Emerging Marketing Strategies Relationship Marketing Permission Marketing Experience Marketing Guerilla Marketing Digital Marketing Viral Marketing Mobile Marketing Social Network Marketing

CURRENT DEVELOPMENTS IN MARKETING Global Marketing Most countries have local, regional, and international brands requiring international advertising to promote the same brand in several countries. Companies may have several international regional offices and/or a world corporate headquarters. Agencies must adapt with new tools including one language, one budget, and one strategic plan. The choice of an agency for international advertising depends on whether the brand message will be standardized or localized.

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