Marketing CH. 4 Notes

The Basics of Marketing

Marketing today is different from marketing only a few years ago

It has expanded from a few activities to a varietyThe earliest use of marketing was to move products

from the producer to the consumerThen promotion and sales were added to help

persuade customers to buyToday, businesses are able to complete a vast # of

marketing activities ranging from research to customer credit

From Independence to Integrated

• Has changed from an activity that was an independent part of business to one that is well integrated with other business functions

• In the past, marketing was not well understood so they would often work by themselves

• Now, it is integrated- meaning it is an essential part of the business

• It is involved in all important business decisions, and strategies are developed as a part of the business plan

From Problems to Opportunities

• Marketing used to be handled as a problem-solving tool, now it is a creation tool

• Also, it is often called on when companies face problems• Today’s businesses can’t afford to wait until problems

occur, so they are continuously looking for market opportunities

• Ways to improve a companies offerings in current markets

• It is responsible for identifying and planning opportunities

Putting Marketing Up Front•Successful businesses use carefully prepared plans to guide their operations•The business will use a strategy for how it expects to achieve its goals•To develop this strategy businesses should use the marketing concept• By incorporating the marketing concept companies attempt to develop products and services that respond to customers’ needs rather than what the company thinks should be offered.•Marketing will be directed at meeting the identified needs of the customers rather than developing ways to persuade people to buy something they may not need.

Marketing ConceptHow Does the Marketing Concept Affect Planning?

Without the Marketing Concept With the Marketing Concept

1. Develop a Product 1. Conduct research to identify potential customers and their needs

1. Decide on marketing activities 2. Develop a marketing mix (4Ps) that meets specific customer needs.

1. Identify potential customers

•Understanding the customer Customers have many choices of products They often spend time comparing products and

services before making decisions Bringing a new product to the market is

expensive, it take time and money to develop, produce, distribute, and promote

When it enters the market it must compete with other companieso This competition among products is very intense

•Identifying customer needs Successful companies are usually those that meet customer

needs But, meeting customer needs is not easy1. Many customers are not sure of their needs, or have

conflicting needs2. Customers have many needs, they typically have limited

amounts of money available3. Needs of individuals and groups can be different Businesses tend to deal with customers in two ways1. Some businesses don’t view the specific needs of customers

as important. They believe if they can effectively produce and market products customer will buy

2. Understanding customers is an important part of business activities

• Satisfying Customer Needs Businesses study markets to identify groups of consumers

with unsatisfied needs Through extensive marketing research, the business gather

and analyzes consumer information It categorizes customers according to similar characteristics,

needs, and purchasing behavior Groups of similar markets are known as market segments After distinct market segments have been identified, a

business will analyze each of them It tries to determine which market segments can be served

most effectively and which have the strongest need, the most resources, and the least competition

Once segments have been identified and prioritized, the business selects those segments on which it will focus its efforts

• Consumers Decision MakingConsumers make decision every dayDecision is a choice among alternatives

o Made to satisfy a need or to solve a problemConsumers want to choose the alternatives that

provide us the most satisfaction or the greatest value If marketers want to satisfy customer needs, they must

understand how consumers choose what they will buyDifferent theories are made, but there is a general

agreement that people follow a series of decision making when purchasing

These decisions become routine and simple when repeated

• Stages of a Decision•Step 1. Recognize- Begins when a consumer recognizes that a need exists If the need is urgent the process is quick If not, then the consumer may take time before buying

•  •Step 2. Identify- When the consumer becomes interested in finding a solution Identifying products or services that relate to the need

•  •Step 3. Evaluate- When the consumer gathers information and uses it to evaluate choices An evaluation is done to see if any choice is better, more available, or more

affordable•  

•Step 4. Decide- When the consumer is comfortable with the evaluation, a decision is made Decision will be to select one of the available choices, to gather more information,

or to do nothing

•Step 5. Assess- When the consumer determines whether or not the choice was correct Evaluated to see if it satisfied the need If it did the decision will likely be repeated the next time

• Relying on InformationMarketers are creative. Creativity is needed to plan

the marketing mix, develop new product features and uses, and prepare promotional materials and activities

Conducting research is an important marketing activity

Need to be skilled in organizing research and using results

Most important part of research is the study of potential and current customers

Additionally, the research about competitors will identify the type of competition and strengths and weaknesses of competing companies

• Responding to Competition•1. Intense Competition Most difficulty type of competition businesses face is market in which

businesses compete with others offering very similar products Ex- Pure competition…many business offering the same product

(Agricultural)•  

2. Limited Competition Some businesses have the advantage of having little or no direct

competition Ex- Known as a monopoly•  

2. Monopolistic Competition Most business face competition somewhere between intense and

monopoly They have many competitors, but customers see differences among

choices The customers determine which product fits there wants and needs

Open Ended Question

Recognize Recognizes that a need exists

Cell phone battery will not charge

Identify Interested in finding a solution

Going to buy a new cell phone, instead of getting the old one fixed

Evaluate Gathers information to evaluate choices

Go to Verizon and look at available phones

Decision Decision will be: select one of the available

choices, to gather more information, or to do

nothing

1. Buy the phone2. Gather info3. do nothing

I chose to buy phone

Assess Consumer determines whether or not the choice was correct

 

Do not buy the Verizon Droid, it is cheaply made, and breaks easily

•Producers and Manufacturers They develop the products and services needed by other

businesses and consumersBecause of that role, the product part element of the

marketing mix receives the most attention’Distribution is also important to insure the product gets to

the customersUnless manufacturers and producers distribute products

directly to the users, they must rely on other businesses to make good decisions about product distribution, prices, and promotion

Even if producers and manufacturers do not sell directly to final consumers, they still must understand and respond to customers needs

• Channel Members A channel of distribution is made up of all the businesses

involved in completing marketing activities as products move from the producer to the consumer

Channel Members- are the businesses used to provide many of the marketing functions during the distribution process.

If the product does not meet the customers needs, the customers are likely to hold the channel member as responsible as the producer

After decisions are made about what products to offer, channel members then focus their attention on the other mix elements

Retailers are responsible for most final pricing decisions They use promotion activities to encourage consumers to

purchase their products

•Service Businesses Most service businesses work directly with customers rather than through a channel

of distribution Therefore they are responsible for the entire marketing mix Product mix element is very important- they must develop procedures to insure

quality service every time Distribution is also important- because the service must be available where and when

the customer wants it Service businesses have more control over pricing It is more difficult for customer to determine the appropriate price•  • Marketing by Non-Business organizations It is not unusual today to see marketing used by museums, libraries, symphonies,

athletic teams, churches, and clubs

• Nonprofit organizations • Do not operate off of profit motive, however still need resources to provide the

services• They often rely on fundraising• Must convince people of the value of their service, and the need to support the

organization