© 2009 South-Western, Cengage LearningMARKETING 1 Chapter 4 THE BASICS OF MARKETING 4-1Changes in...

© 2009 South-Western, Cengage LearningMARKETING

1

Chapter 4

THE BASICSOF MARKETING

4-1 Changes in Today’s Marketing

4-2 Planning a Marketing Strategy

4-3 Deciphering Consumers and Competitors

4-4 The Varied Role of Marketing

CHAPTER

4

© 2009 South-Western, Cengage LearningMARKETINGChapter 4

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Focus Questions:What do you think is meant

by the ad’s headline?What role does Visa play in

helping businesses market products and services to customers?

How do credit and financial services such as the ones described in this ad make it easier for businesses to participate in international commerce?

©V

ISA


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CHANGES INTODAY’S MARKETING

GOALSExplain how marketing today differs

from marketing in the past.Show why understanding customers is

crucial to applying the marketing concept.

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Marketing Has ChangedUnderstanding The Differences

From few activities to many activitiesWas:

Few activities Used to move products from producers to consumers

Now: Large variety of activities Used for promotions & sales to persuade consumers Now includes research and consumer credit

Must understand how to use all the marketing tools.


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Marketing Has ChangedUnderstanding The Differences

From independence to integrationWas:

independent part of business Only understood if you had marketing background Marketers often worked alone / separate from business

Now: integrated with other business functions Integrated: considered an essential part of the business. Involved in all important business decisions


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Marketing Has Changed Understanding The Differences

From problems to opportunitiesWas:

a problem-solving tool looked to marketers if they faced a problem (inventory high)

Now: used as an opportunity-creation tool Can not afford to wait for a problem to arise Continuously looking for Marketing Opportunities: include

new markets and ways to improve a company’s offerings in current markets.


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Marketing Has Changed Understanding The Differences

From expense to investmentWas:

Very expensive; big expense When facing financial issues, cut costs in marketing dept

Now: Effective marketing is a critical investment Matching company’s offerings with market needs Spend money on marketing to increase profits


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What Does Marketing Marketing Mean to a Business?

Reliable Auto Service (Page 93) Dee’s Designs (Page 94)

Unsuccessful because: 1. Concerned only about the product/service

2. Believed they knew what the customer wanted

3. Did not study the market

4. Failed to use a variety of marketing tools.


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PLANNING A MARKETING STRATEGY

GOALSUnderstand how the marketing concept

transforms business planning.Explain the importance of market seg-

ments and market opportunity analysis.Discuss how businesses develop the

right marketing mix.

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Putting Marketing Up Front

Marketing Concept: using the needs of customers as the primary focus during the planning, production, pricing, distribution, and promotion of a product/service.

Strategy: Planning that identifies how a company expects to achieve its goals.Provides clearest indication of whether that business

understands the marketing concept.


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How Does the Marketing Concept Affect Planning?

Without the marketing concept1. Develop a product.

2. Decide on marketing activities.

3. Identify potential customers.

With the marketing concept1. Conduct research to identify potential customers and

their needs.

2. Develop a marketing mix (product, distribution, price, promotion) that meets specific customer needs.


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Understanding the Customer

Identifying customer needs is difficult:

Many customers are not sure of their needs or may have conflicting needs.

Consumers have many needs but typically have limited amounts of money available to satisfy those needs.

The needs of individuals and groups of consumers can be quite different.


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Two Views of Consumers

Businesses view consumers in two ways:

1. Customers are all alike and can be influenced to buy what a business offers.

2. Customers are quite different and we should select products and services to meet their unique needs.


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Understanding the CustomerSatisfying Customer Needs

1. Study markets to identify groups of consumers with unsatisfied needs on which they can focus their efforts.

Market research allows businesses to gather and analyze consumer information.

2. Categorize customers according to similar characteristics, needs, and purchasing behavior.

Market Segment: Smaller groups of similar consumers within the larger market.


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3. Identify and Analyze Market Segments Determine which can be served most effectively Has the strongest needs Has the most resources Has the least competition

Market Opportunity Analysis: studying and prioritizing market segment to locate the best potential based on demand and competition


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4. Choose which market segment provides the most opportunities for success and focuses its efforts on that particular target market.

Target Market: a clearly defined segment of the market to which a business wants to appeal.


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Planning the Offering

Marketing Mix – blend of the 4 marketing elements (Product, Place, Price, Promotion)

Creating the right mixDeveloping productsMaking distribution decisionsPricing products and servicesPlanning promotion


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Combining Parts ofthe Marketing Mix

Product that offers choicesDistribution that provides

conveniencePrice that gives valuePromotion that aids

decision-makingSatisfied customers


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Creating the Right Mix

Developing ProductsImprove Customer Satisfaction

unique design, construction, size, color & operationaccessories = products easier to operate & efficient

Product improved by providing services related to purchase, delivery, installation, use,

or maintenance of the productProduct Packaging

Protects the product and provides information


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Making Distribution DecisionsMake the products available where and when

the consumers want them.

Poor distribution leads to dissatisfied consumers.

Manufacturers rely for wholesalers and retailers to get products to the consumers.

Retailers must locate sources of the products its customers want and obtain them.


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Pricing Products and Services

Prices - competitive and allow them to make profit

Calculating price must be accepted by customers, but cover all costs and allow for reasonable profit.

Retailers use price tag or sticker to display price.

Businesses commonly use discounts: mark-downs, allowances, trade-ins, and coupons.

Credit used to allow customers to purchase a product without paying the full price at the time of purchase.


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Planning Promotion

Communicates the value and benefits of the product/service to help consumers make decisions.

Common Methods: advertising, personal selling, sales promotion, visual displays and publicity.


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UNDERSTANDINGCONSUMERS AND COMPETITORS

GOALSDetail the stages of consumer decision

making.Understand how business can use the

marketing concept in various types of competition.

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Consumer Decision Making

Decision: a choice among alternatives.

Decisions are made to satisfy a need or solve a problem.

Consumers choose alternative which provides most satisfaction/greatest value.

Stages of a Decision: Recognize, Identify, Evaluate, Decide, Assess


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Consumer Decision-Making Stages

Consumers make a series of decisions when deciding on a purchase.Recognize a needIdentify alternativesEvaluate choicesMake a decisionAssess satisfaction


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Recognize a Need

Urgent – process is quickerNot Urgent – takes the time to make

educated decision

Class examples


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Identify Alternatives

Become interested in finding solutionInterest leads to identifying alternatives and

sources of information to help make effective decision


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Evaluate Choices

Gather info on each alternatives identifiedUse Info to evaluate choices

Better quality, More affordable, More availableWhich choice will better satisfy their needsCareful & Objective vs. Quick, Less Rational


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Make a Decision

Comfortable with evaluationDecide:

1. Select one of the available choices

2. Gather more information

3. Do nothing


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Assess Satisfaction

Did selected product – Satisfy the need?Yes – decision can be repeated next time the same

need occurs. No – start the process over again

Understanding the process helps marketers offer the right info at the right time, resulting in a more effective exchange


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Relying On Information

Information is gathered to improve decisions.

Conducting research is an important marketing activity:

Marketers are able to organize research and use the results

Study potential and current customers

Research competitors & their strengths, weaknesses

Develop market information systems - collect and store data

Understand how consumers make their decisions


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Responding to Competition

Intense competition (Most difficult competition)

Pure Competition – many businesses, offering similar products

Oligopoly – few companies, same products

Businesses can adjust their marketing mix to create advantages for their products.


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Limited competitionMonopoly - businesses facing little or no

direct competition.

Consumers often become dissatisfied with their lack of choices.

Avoid competition - protect their location and concentrate on keeping their product unique.


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Monopolistic competition (most common)

Many competitors.

Consumers see the differences among the choices.

Marketing concept most value to these businesses.

Changes and improvements to products, distribution, price and promotion give them the advantage over their competitors.


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THE VARIEDROLE MARKETING

GOALSExplain how the role of marketing

differs in various types of businesses.Identify ways marketing is used by non-

business organizations.

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The Varied Uses of Marketing

Producers and Manufacturers

Develop products/services needed by other businesses and other consumers.

Main marketing-mix focus is Product.

Rely on other businesses to make good decision about distribution, pricing, promotion


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Channel Members: the businesses used to provide many of the marketing

functions during the distribution process. Channels of Distribution: made up of all the

businesses involved in completing marketing activities as products move from producers to the consumer.

Less emphasize on ProductWholesalers emphasize distribution planningRetailers responsible for most final pricing decisions


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Service BusinessesMost work directly with customers

Not through distribution channels

Responsible for entire marketing mix. Product/Service = Must develop procedures to insure quality

service every time. Distribution = convenient location and hours of operation Price = have more control, difficult for consumers to determine Promotion = unfamiliar services require much more promotion


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Non-Business Organizations

Primary focus is on something other than providing products and service for a profit.

Examples: Government agencies Churches Schools Museums Professional organizations

Marketing is important to non-business organizations because they must satisfy their customers’ needs in order to achieve their goals and max. their effectiveness.

© 2009 South-Western, Cengage LearningMARKETING 1 Chapter 4 THE BASICS OF MARKETING 4-1Changes in...

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