11 chapter Business Essentials, 7 th Edition Ebert/Griffin © 2009 Pearson Education, Inc. The U. S. Business Environment Instructor Lecture PowerPoints PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College

What Is Marketing? Marketing – “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” (AMA) Finding a need and fulfilling it Providing Value and Satisfaction – Consumers buy products that offer the best value when it comes to meeting their needs and wants © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Value and Benefits – Value compares a product’s benefits with its costs. – Benefits include not only the functions of the product but also the emotional satisfaction associated with owning, experiencing, or possessing it. Value and Utility – Form utility – Time utility – Place utility – Ownership utility © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Goods, Services, and Ideas – Consumer goods: Tangible goods that consumers may buy for personal use Consumer marketing – Industrial goods: Physical items used by companies to produce other products Industrial marketing – Services: Products with intangible (nonphysical) features Service marketing Relationship Marketing – Emphasizes building lasting relationships with customers and suppliers © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) The Marketing Environment – Political-legal environment – Sociocultural environment – Technological environment – Economic environment – Competitive environment Substitute products Brand competition International competition © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Strategy: The Marketing Mix – Marketing Plan A detailed strategy for focusing marketing efforts on consumer needs and wants – Marketing Mix Product – Differentiating a product Pricing – Selecting the best price at which to sell a product Place – Distributing a product through the proper channels Promotion – Communicating information about a product © 2009 Pearson Education, Inc.

Target Marketing and Market Segmentation Target Markets – Groups of people with similar wants and needs who can be expected to show interest in the same products Market Segmentation – Dividing a market into categories of customer types or “segments” Geographic Demographic Psychographic © 2009 Pearson Education, Inc.

TABLE 11.1 Demographic Variables © 2009 Pearson Education, Inc.

Understanding Consumer Behavior Influences on Consumer Behavior – Psychological influences – Personal influences – Social influences – Cultural influences Brand Loyalty – Consumers who regularly purchase products because they are satisfied with their performance © 2009 Pearson Education, Inc.

FIGURE 11.1 The Consumer Buying Process Problem\Need Recognition Information Seeking Evaluation of Alternatives © 2009 Pearson Education, Inc.

Organizational Marketing and Buying Behavior Organizational Markets – Industrial Markets Businesses that buy goods to be converted into other products or that are used up during production – Reseller Markets Intermediaries, including wholesalers and retailers, that buy and resell finished goods – Government and Institutional Markets Federal and state governments Nongovernmental organizations © 2009 Pearson Education, Inc.

Organizational Marketing and Buying Behavior (cont’d) Organizational Buying Behavior – Differences in Buyers Organizational buyers are professionals who negotiate the buyer-seller agreement (purchase terms) – Specialists in purchasing a line of items – Experts about the products purchased – Differences in the Buyer-Seller Relationship Frequent purchases Enduring long-term relationships Buyers and sellers may work closely Emphasis is on personal selling © 2009 Pearson Education, Inc.

What Is a Product? Product Defined – A value package that provides a bundle of benefits and features to satisfy the needs and wants of customers Product Features – Tangible and intangible qualities built into a product Benefits – The tangible and intangible outcomes associated with acquisition or use of a product © 2009 Pearson Education, Inc.

TABLE 11.2 Categories of Consumer Products © 2009 Pearson Education, Inc.

The Product Mix Product Mix – The group of products (consumer, industrial, or both) that a company makes available for sale Product Line – A group of products that are closely related because they function in a similar manner or are sold to the same customer group who will use them in similar ways Multiple (or Diversified) Product Lines – Allow a company to grow rapidly and can help to offset the consequences of slow sales in any one product line © 2009 Pearson Education, Inc.

Developing New Products The New Product Development Process – Research and development (R&D) Departments for exploring new product possibilities – Product mortality rates Few product ideas (1 in 50) actually reach the market – Speed to market Responding to customer demand or market changes by introducing new products to the market ahead of competitors © 2009 Pearson Education, Inc.

Identifying Products Branding Products – Branding A process of using symbols to communicate the qualities of a particular product made by a particular producer – Signals uniform quality and stimulates consumer recall – Brand loyalty Consumer preference for a particular product – Brand awareness The brand name that comes first to mind when consumers consider a particular product category © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Gaining Brand Awareness – Product placement A promotional tactic for brand exposure in which characters in television, film, music, magazines, or video games use a real product that is visible to viewers – Buzz marketing A form of word-of-mouth marketing – Viral marketing Relying on word-of-mouth and the Internet to spread information like a “virus” from person-to-person about products and ideas © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Types of Brand Names – National brands Products that are produced by, widely distributed by, and carry the name of the manufacturer – Licensed brands Companies (and even personalities) license (sell the rights to) other companies to put their names on products – Private (or private label) brands Carry the brand name that a wholesaler or retailer develops and has a manufacturer put it on a product © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Packaging Products – Purposes of packaging Reduce the risk of damage, breakage, or spoilage Increase the difficulty of stealing small products Serves as an in-store advertisement that makes the product attractive Displays the brand name Identifies features and benefits Enhances the utility of the product features and benefits © 2009 Pearson Education, Inc.

The International Marketing Mix International Products – Need to adapt product to foreign markets International Pricing – Higher transportation and selling costs abroad International Distribution – Distribution network access in foreign markets International Promotion – Cultural sensitivity requires adjustments to the marketing mix © 2009 Pearson Education, Inc.

Small Business and the Marketing Mix Small-Business Products – Product failures due to lack of market potential for products or marketing to the wrong target market segments Small-Business Pricing – Losses due to pricing errors resulting from underestimating operating expenses Small-Business Distribution – Poor location choice fails to attract customers Small-Business Promotion – Careful promotion can reduce expenses © 2009 Pearson Education, Inc.