Nature of Marketing

3. Nature of Marketing • To create value by allowing people and organizations to obtain what they need and want

4. The Exchange Relationship • Exchange: • The act of giving up something (money, credit, labor, goods) in return for something else (goods, services, or ideas)

5. The Exchange Process: Giving Up One Thing in Return for Another

6. Marketing Creates Utility • Utility--a product’s ability to satisfy human needs and wants • Place • Time • Ownership • Form

7. Buying Selling Transporting Storing Grading Financing Marketing research Risk taking Functions of Marketing

8. The Marketing Concept • The idea that an organization should try to satisfy customer’s needs through coordinated activities that allow it to achieve its own goals (profit) Did You Know? Trying to determine a customer’s true needs is difficult because no one fully understands what motivates people to buy.

9. Evolution of the Marketing Concept • The production orientation • During the second half of the 19th century • The sales orientation • By the early part of the 20th century • The marketing orientation • By the 1950s

10. Marketing Orientation • Requires organizations to: • Gather information about customer needs • Share that information throughout the entire firm • Use that information to help build long-term relationships with customers

11. Developing Marketing Strategy • Marketing strategy: • A plan of action for developing pricing, distributing and promoting products that meet the needs of specific customers • Two major components: • Selecting a target market • Developing the appropriate marketing mix

12. Selecting a Target Market • Market • A group of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas • Target market • A more specific group of consumers on whose needs and wants a company focuses its marketing effort

13. Total-Market Approach • The marketer tries to appeal to everyone and assumes that all buyers have the same needs

14. Target Market Strategies Total-Market Approach

15. Market Segmentation • Market Segmentation: • A strategy to divide the total market into groups of people who have relatively similar product needs

16. Market Segment • A collection of individuals, groups, or organizations who share one or more characteristics and have similar product needs and desires

17. Minority Buying Power by Race,1990 versus 2003 & 2005

18. Niche Market • Narrow market segment focus when efforts are on one small, well-defined segment that has a unique, specific set of needs

19. Bases for Segmenting Markets • Demographic • Geographic • Psychographic • Behavioristic Did You Know? During its first year of operation, sales of Coca-Cola averaged just nine drinks per day for total first-year sales of $50. Today, Coca-Cola products are consumed at the rate of one billion drinks per day.

20. The Keys to Successful Market Segmentation • Consumers’ product needs must be heterogeneous • Segments must be identifiable and divisible • The market must be divided so segment sales, cost, and profit can be compared • One segment must have enough profit potential to justify a special marketing strategy • The chosen segment must be reached by the firm with a particular marketing strategy

21. Developing the Marketing Mix

22. Product • A good, service, or idea that has tangible and intangible attributes that provide satisfaction and benefit to consumers • Products should be sold at a profit

23. Price • A value placed on a product or service that is exchanged between a buyer and seller

24. Distribution • Making products available to consumers in the quantities and locations desired

25. Promotion • A persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals and organizations to accept goods, services, and ideas

26. Marketing Research & Information Systems • Marketing research • A systematic, objective process of getting customer information to guide marketing decisions • Marketing information system • A framework for assessing information about customers from internal and external sources

27. Collecting Data • Primary data • Marketing information that is observed, recorded, or collected directly from respondents • Secondary data • Information that is compiled inside or outside an organization for some purpose other than changing the current situation

28. Buying Behavior • The decision processes and actions of people who purchase and use products

29. Psychological Variables of Buying Behavior • Perception • Motivation • Learning • Attitude • Personality

30. Social Variables of Buying Behavior • Social roles • Reference groups • Social classes • Culture

31. How America Spends If you had an extra $1,000 to spend, what would you do with the money? Source: “If you had an extra $1,000 to spend, what would you do with the money?,” USA Today, January 11, 2006, p.B1.

32. U.S. Chocolate Consumption • Chocolate consumed by Americans • 11.7 lbs./person • Increase in sales (2003 vs. 1998) • 11% • Favorite forms of chocolate • Reese’s Peanut Butter Cups • Kit Kat • Popable Pieces (such as M&Ms) Source: Sandra Yin (2004) “Chock Full of Gold,” American Demographics, February 1, http:/demographics.com (accessed August 3, 2004).

33. Consumers Showing a Preference for Additional Ingredients in their Chocolate Source: Sandra Yin (2004) “Chock Full of Gold,” American Demographics, February 1, http:/demographics.com (accessed August 3, 2004).

34. The Marketing Environment • External forces that directly or indirectly influence the development of marketing strategies • Political • Legal • Regulatory • Social • Competitive • Economic, and technological

35. The Marketing Mix and the Marketing Environment

36. Obesity Share by Nation

37. Solve the Dilemma • What do you think were the main concerns with the Olympus 2-door sports coupe? • Is there a market for a 2-seat, $32,000 sports car when the Miata sells for significantly less? • Evaluate the role of the marketing mix in the Olympus introduction. • What are some of the marketing strategies auto manufacturers use to stimulate sale of certain makes of automobiles?

38. Explore Your Career Options • How will a career in marketing be enhanced by knowledge about customer buying behavior and customer service?

39. Additional Discussion Questions and Exercises • Utility is the ability of a product to satisfy human needs and wants. • What are the four kinds of utility? • Why are intermediaries helpful in distribution? • What are some different forms of promotion? • What is the difference between primary data and secondary data? • What are some sources for obtaining secondary data?

40. Chapter 12 Quiz • When a business segments markets on the basis of personality characteristics, motives, and lifestyles, that segmentation is based on • demographics • geographic factors • psychographics • behavioristic characteristics • The act of giving up one thing in return for something else is • marketing • utility • an exchange • promotion

41. Chapter 12 Quiz • The psychological factor described as “changes in a person’s behavior based on information and experience” is termed: • Perception • Motivation • Personality • Learning • In developing a marketing mix, what should be the central focus of all marketing activities? • Price • Buyer or target market • Product • Promotion

42. Multiple Choice Questions about the Video • The person responsible for helping the Pike Place Fish Market achieve such success is: • Emeril Lagassi • John Yokoyama • Frederick Taylor • Abraham Maslow • The only advertising done by Pike Place Fish Market is on: • QVC • Food TV • CNN • Its Web site