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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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Chapter 1

Chapter 1


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


  • 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


  • 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?


  • 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


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


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


  • 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