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Chapter 1. Marketing. Scope of Marketing. Everything around you Think of purchases you have (or have not) made How does a business influence your purchases? Southwest Airlines Marketing

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scope of marketing
Scope of Marketing
  • Everything around you
    • Think of purchases you have (or have not) made
    • How does a business influence your purchases?
      • Southwest Airlines
  • Marketing
    • The process of planning, pricing promoting, selling and distributing ideas, goods, or services to create exchanges that satisfy customers
      • An ongoing process – why?
ideas goods and services
Ideas, Goods, and Services
  • Ideas
    • generally ideals, thoughts
      • Politicians, environmentalists
      • Got Chocolate Milk?
  • Goods
    • Tangible items that have monetary value and satisfy your needs and wants
      • Examples?
  • Services
    • Intangible items that have monetary value and satisfy your needs and wants
      • Examples?
foundations of marketing
Foundations of Marketing
  • Practice of marketing depends on 4 key areas of knowledge: 4 foundations of marketing
    • Business, management, entrepreneurship
      • Understanding these areas affect decision making
    • Communication and interpersonal skills
      • Interact effectively with others
    • Economics
      • Economic principles
    • Professional Development
      • Career exploration, development and growth
7 functions of marketing
7 Functions of Marketing
  • Product/Service Management
    • Obtaining, developing, maintaining, and improving a product or a product mix in response to market opportunities
      • Marketing research = determining needs/wants
  • Pricing
    • How much to charge for goods and services in order to make a profit
      • Costs
      • Competition price
      • Customers willingness and ability to pay
7 functions of marketing continued
7 Functions of Marketing Continued…
  • Promotion
    • Effort to inform, persuade, or remind potential customers about a business’s product or services
      • Examples of promotion?
      • Other than product and services promotion, what else can a company promote?
  • Distribution
    • The process of deciding how to get goods in customers’ hand
      • Transportation, storing, tracking
7 functions of marketing continued1
7 Functions of Marketing Continued…
  • Marketing Information Management
    • Gathering information, storing it, and analyzing the information
      • Why?
        • Apple example
      • How would you gather information?
        • Nielsen – Consumer and Consumer behavior (watch and buy)
        • J D Power & Associates – primarily customer surveys
      • How often?
7 functions of marketing continued2
7 Functions of Marketing Continued…
  • Financing
    • Getting the money necessary to pay for setting up and running a businesses
      • Loans, selling shares of stock, issuing bonds
    • Helping others obtain your product/service
      • Extending credit to customers
      • Payment options
        • Term payments, credit cards, etc.
  • Selling
    • Providing customers with goods and services they want
    • Directly to the customer or business
      • Techniques and activities
marketing concept
Marketing Concept
  • Marketing Concept
    • The idea that a business should strive to satisfy customers’ needs and wants while generating a profit for the firm
    • Where is the focus?
    • Success comes when all 7 functions support the marketing concept idea
  • Customer Relationship Management (CRM)
    • An aspect of marketing that combines customer information with customer service and marketing communications
      • Meaningful one-on-one communications via customer intelligence
review and critical thinking
Review and critical thinking…
  • On a piece of paper, answer the following (page 7, 1-3 and 5):
    • Name 2 ideas that can be marketed
    • Where do exchanges take place?
    • What is the main difference between consumers and industrial users
    • List at least 3 ways the Internet has changed marketing functions
economic benefits of marketing
Economic Benefits of Marketing
  • Marketing has an important role in the economy
    • Provides the means for competition to take place
      • Businesses try to create new or improved products at lower prices than their competitors
        • How does this affect the consumers?
        • How does this affect businesses to have such competition?
    • New and improved products
      • Continuing to look at ways to satisfy customers
        • How has competition shaped the personal computer industry?
economic benefits of marketing continued
Economic Benefits of Marketing Continued…
  • Lower prices
    • What happens in the marketplace when prices drop?
    • What happens to production when demand increases?
      • Overall unit costs go down
        • Fixed costs
          • Rent, insurance, etc. stay the same regardless of production
        • Variable costs
          • Costs that change given the amount of production
            • Labor, materials, etc.
        • Example: $20,000 in fixed costs, Quantity produced is 10,000 units. How much per unit does it cost the company?
        • How much per unit would it cost the company if they produced 200,000 units?
added value and utility
Added Value and Utility
  • The functions of marketing add value to a product
    • Utility
      • An attribute of a product or service that makes it capable of satisfying consumers’ wants and needs
        • 5 economic utilities
          • Place
          • Time
          • Possession
          • Information
          • Form (not directly related to marketing; however, the research and product design makes it a crucial part of the marketing process
utility
Utility
  • Form Utility
    • Involves changing raw materials or putting parts together to make them more useful
      • Deals with making or producing things
        • Taking things of little value and putting them together to create more value
      • Special features or ingredients in a product add value and increases its form utility
        • Example: Automobiles
utility continued
Utility Continued…
  • Place Utility
    • Involves having a product where customers can buy it.
      • Businesses study consumers shopping habits to determine the most convenient and efficient locations to sell products
      • Direct approach
        • Catalogs
        • Internet
        • Retail stores (considered an intermediary)
utility continued1
Utility Continued…
  • Time Utility
    • Having a product available at a certain time of year or a convenient time of day
    • Increases the value of the products by having them available when consumers want them
    • Examples?
      • 24 hour super stores
      • Coffee shops
      • Extended hours during holiday shopping seasons
utility continued2
Utility Continued…
  • Possession Utility
    • When legal ownership of a product changes hands
  • How do you come into possession of the items you want? What exchanges are made?
    • How does this add value?
  • Possession utility also includes providing payment options
utility continued3
Utility Continued…
  • Information Utility
    • Involves communication with the consumer
    • Examples:
      • Labeling
      • Advertising
      • Web Assist and Manuals
        • How do these add value?
          • Provide information to customers by explaining the features and benefits of the products
review
Review
  • The added value to a product that marketing provides is called ___________________
  • How does marketing help to lower prices?
  • In what way is marketing related to form utility?
  • Which utility is added by drive-through windows at fast-food restaurants?
  • In a business-to-business transaction, the seller offers the buyer a 2% discount for paying a bill early. Assuming the buyer took advantage of this offer, how much would be discounted on a $10,000 invoice?
market
Market
  • Can you make your product appeal to everyone?
    • What considerations do we need to make?
  • Market
    • All people who share similar needs and wants and who have the ability to purchase your products
consumer vs industrial markets
Consumer vs. Industrial Markets
  • Consumer Market
    • Consists of consumers who purchase goods and services for personal use
      • What does a consumer take into consideration?
        • Lifestyles
          • Price, convenience/easier, improved appearance, status, or some other motivation that provides satisfaction
  • Industrial Market (AKA Business to Business Market)
    • Businesses that buy products for use in their operations
      • What does the business take into consideration?
        • Profits
          • Efficiency
market share
Market Share

The percentage of total sales volume generated by all companies that compete in a given market

Continuously changes

Why?

calculating market share
Calculating Market Share
  • Unit sales is best
    • The manager of Geneganslet Golf Course discovers that all the courses in the market area together host 50,000 rounds of golf a year. Of those rounds, Open Fairways hosts 7,000, and therefore has _________ market share.
    • Market Share research and exercise
marketing mix
Marketing Mix
  • Four basic marketing strategies
    • 4 P’s
      • Product
      • Price
      • Promotion
      • Place/Distribution
    • Marketers use these to influence potential customers
target market
Target Market
  • A group of people identified as those most likely to become customers
    • All marketing strategies are directed to the target market
    • When there is a lack of a target market, the marketing plan has no focus
marketing mix1
Marketing Mix

~Product: choosing what products to make and sell. Design, features, brand name, packaging, service, and warranty

~Place: Getting the product into the consumer’s hands

Where and how a product will be distributed, transportation, and stock levels

~Price: reflection of what customers are willing to pay and compared to competitors

~Promotion: decisions about advertising, personal selling, sales promotion, publicity

strategies
Strategies

Pricing Strategies

Promotional Strategies

How potential customers will be told about a company’s products

The message

Media selected

Special offers

Timing of promotional campaigns

  • List price or MSRP
  • Discounts
  • Allowances
  • Credit Terms
  • Payment Period
  • Promotional Pricing
    • Period of time
consumers vs customers
Consumers vs. Customers
  • Consumers – Those who “consume” the product/service
  • Customers – Those who buy the product/service
    • Example: Cereal
      • Two target markets:
        • Children = consumers
        • Parents = customers
  • Customer Profile
    • A listing of information about the target market:
      • Age, income level, ethnic background, occupation, attitudes, lifestyle, geographic residence
review1
Review
  • Name the four P’s of the marketing mix and explain the importance of a target market for each of them
  • If total sales in the ice cream category were $4.4 billion and Breyers’s sales were $650,000,000 what would be its market share? Round to the tenth decimal place.
  • Write a customer profile for a magazine of your choice. Provide examples of articles and advertisements that support that profile
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