Marketing

Introduction to Business© Thomson South-Western

ChapterChapterChapterChapter

Marketing

10-110-1Marketing Basics

10-210-2Develop Effective Products and Services

10-310-3Price and Distribute Products

10-410-4Plan Promotion

1010

Chapter 10

Slide 2Introduction to Business

© Thomson South-Western

Marketing BasicsMarketing - is the process of planning and

executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create

exchanges that satisfy individual and organizational objectives.

Marketing activities – Marketing is all around you!

Marketing businesses – All businesses must complete some marketing activities even if that is not their focus.

Chapter 10



MARKETING FUNCTIONS

Chapter 10



Marketing Functions Product/Service management – is

designing, developing, maintaining, improving, and acquiring products and services that meet consumer needs.

Distribution – involves determining the best ways for customers to locate, obtain, and use the products and services of an organization. Shipping Storage

Chapter 10



Selling – is communicating directly with potential customers to determine and satisfy their needs. Selling can be face to face, such as when a customer visits a business or when a salesperson goes to the home or business of a potential customer.

Marketing-information management – obtaining, managing, and using market information to improve business decision-making and the performance of marketing activities.

Chapter 10



Financing – is budgeting for marketing activities, obtaining the necessary funds needed for operations, and providing financial assistance to customers so they can purchase the business’ products and services.

Pricing – is setting and communicating the value of products and services. Fair value for money spending.

Chapter 10



Promotion – is communicating information about products and services to potential customers. Advertising and other promotional methods are used to encourage consumers to buy. Examples – television, newspapers,

magazines, radio, direct mail, and the Internet.

Chapter 10



MARKETING STRATEGY

Marketing planning – need to develop strategies

To develop a successful marketing strategy Identify a target market – is a specific group of

consumers that have similar wants and needs. Create a marketing mix - the blending of four

marketing elements – product, place, price, promotion.

Marketing activities often cost 50 percent or more of the selling price of a product or service.

Chapter 10



UNDERSTAND CUSTOMERSEffective marketing begins with

customers. Businesses can develop products for two

types of consumers. Final consumers – persons who buy products

and services mostly for their own use. Business consumers – persons, companies,

and organizations that buy products for the operation of a business, for incorporation into other products and services, or for resale to their customers.

Chapter 10



Consumer decision-making – a specific sequence of steps consumers follow to make a purchase Begins with a need

Chapter 10



STEPS IN THE CONSUMER DECISION-MAKING PROCESS

1.1. Recognize a need.

2.2. Gather information.

3.3. Select and evaluate alternatives.

4.4. Make a purchase decision.

5.5. Determine the effectiveness of the decision.

Chapter 10



Understanding Customers

Buying motives – the reasons consumers decide what products and services to purchase. Emotional buying motives – reasons to

purchase based on feelings, beliefs, and attitudes Examples – protecting family/security system

Gifts & cards/Valentines Day – feelings of love and affection.

Chapter 10



Understanding Customers

Rational Buying Motives – guided by facts and logic Cost effective car/fuel use and repair College/costs and reputation

Chapter 10



Develop Effective Products and Services

Finding solutions to problems through carefully designed studies involving consumers is known as marketing research.

Chapter 10



PLAN MARKETING RESEARCH

Steps in marketing research1.1. Define the marketing problem.

2.2. Study the situation.

3.3. Develop a data collection procedure.

4.4. Gather and analyze information.

5.5. Propose a solution.

Chapter 10



TYPES OF RESEARCH STUDIES Surveys – gather info from people using a

carefully planned set of questions. Mail/Internet/Phone

Focus groups – small number of consumers take part in a group discussion. Discuss experience/react to new ideas/make

suggestions

Observations – collect information How customers choose products/problems with

products

Experiments – pepsi/coke

Chapter 10



PRODUCT PLANNING

Parts of a product Basic Product – the simplest form of a product –

not unique and is usually available from several companies.

Product features – models of cell phones options

Brand Name – unique identification for a companies products.

Packaging – security, storage Guarantee or warranty

Each part of the marketing mix is important when you decide to buy a product – this even includes packaging.

Chapter 10



PRODUCT PLANNING Product planning procedures

Idea development – generating new product ideas is a creative process

Idea screening Strategy development Production and financial planning Limited production and test marketing Full-scale production

Chapter 10



SERVICES – are activities that are consumed at the same time they are produced. Intangible – no physical form Inseparable – consumed at the same

time they are produced Perishable – the availability of a service

must match the demand for that service at a specific time.

Heterogeneous – differences in the type and quality of service provided.

Chapter 10



Price and Distribute Products

Buyers usually want to pay the lowest price possible.

Sellers want to charge the highest price possible.

Chapter 10



PRICING FACTORS Supply and demand Uniqueness Age – product new on market $ Season Complexity – highly complex and technical

products have higher prices than simple products. Products with many features and options will also command higher prices.

Convenience

Chapter 10



PRICE A PRODUCT

Selling price Product costs Operating expenses Profit

Gross margin

Sellingprice

=Product

costs+

Operating expenses

+ Profit

GrossMargin

=Sellingprice

+Product

costs

Chapter 10



PRICE A PRODUCT

Markup – the amount added to the cost of a product to set the selling price. The markup is equal to the expected gross margin.

Markdown – reduction in selling price.

Chapter 10



CHANNELS OF DISTRIBUTION

Need for distribution channels Differences in quantity Differences in assortment – businesses

usually specialize in producing a specific type of product, while consumers want to purchase a variety of products.

Differences in location Differences in timing

Chapter 10



CHANNELS OF DISTRIBUTION Channels and channel members

Direct channel of distribution – products move from the producer straight to the consumer with no other organizations participating.

Indirect channel of distribution – includes one or more other businesses between the producer and consumer. These other businesses provide one or more of the marketing functions.

Chapter 10



COMMUNICATION

The communication process Communicating through promotion

Promotion is any form of communication used to inform, persuade, or remind. Businesses, organizations, groups, or individuals use promotion.

Chapter 10



COMPONENTS OF EFFECTIVE COMMUNICATION

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PROMOTION Personalized promotion –

communicated directly with each customer using information tailored to that person.

Mass promotion – communicated with many people at the same time with a common message.

Mass personalization

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Promotion The most well known type of

personalized promotion is personal selling. Personal selling – is direct, individualized

communication with prospective customers to assess their needs and assist them in satisfying those needs with appropriate products and services.

Chapter 10



Promotion Personal Selling

Gather information for sale Product information Meet with Customer Ask Questions Provides Information Demonstrate Product for Customer Helps the Customer make decision to purchase Arrange payment or financing After sale – follow-up

Chapter 10



Promotion Advertising – is any paid form of

communication through mass media directed at identified consumers to provide information and influence their actions. Television, Radio, Newspapers Magazines, Mass Mailings, Outside

Displays Internet Specialty Advertising

Chapter 10



Promotion Publicity – is non-paid promotional

communication presented by the media rather than by the business or organization that is being promoted.

Public relations – ongoing program of non-paid and paid communications – favorably influence public opinion about an organization, marketing effort, idea, or issue

Chapter 10



Promotion Sales promotion – includes activities

and materials designed to reinforce a company’s brand or image. Contests Games

Mass Personalization – Using the Internet sees advertisement – encouraged to complete on-line survey.

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