Overview of Marketing

Class 23Tuesday 11/15/11

Nature of MarketingNature of Marketing

• To create value by allowing people and organizations to obtain what they need and want

The Exchange Process: Giving Up One The Exchange Process: Giving Up One Thing for AnotherThing for Another

Marketing Creates UtilityMarketing Creates Utility

• Utility—the ability of a a product or service to satisfy human needs and wants– Place– Time– Ownership– Form

Evolution of the Marketing ConceptEvolution 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

Marketing OrientationMarketing 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

Developing Marketing StrategyDeveloping 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

Selecting a Target MarketSelecting 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

Target Market Strategies Total-Market Target Market Strategies Total-Market ApproachApproach

Further RefinementFurther Refinement

• Market Segment– A collection of individuals, groups, or

organizations who share one or more characteristics and have similar product needs and desires

• Niche Market– Narrow market segment focus when efforts are

on one small, well-defined segment that has a unique, specific set of needs

The Keys to Successful Market The Keys to Successful Market SegmentationSegmentation

1. Consumers’ product needs must be heterogeneous2. Segments must be identifiable and divisible3. The market must be divided so segment sales, cost, and

profit can be compared4. One segment must have enough profit potential to justify

a special marketing strategy5. The chosen segment must be reached by the firm with a

particular marketing strategy

Marketing Research & Information Marketing Research & Information SystemsSystems

• 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

Collecting DataCollecting 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

Influences OnInfluences OnBuying BehaviorBuying Behavior

PsychologicalPsychologicalMotivationMotivationPerceptionPerceptionLearningLearningAttitudesAttitudes

PersonalityPersonality

SocialSocialFamilyFamily

ReferenceReferenceGroupsGroups

Economic orEconomic orSocial StatusSocial Status

CultureCulture

The Marketing Mix and the The Marketing Mix and the Marketing EnvironmentMarketing Environment

The 4 PThe 4 P’’ss

• 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

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

• Place (Distribution): Making products available to consumers in the quantities and locations desired

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

Product - Life CycleProduct - Life Cycle

Introduction StageIntroduction Stage& Marketing Mix& Marketing Mix

Product Awareness

Limited Competition

Skim-Pricing Approach

Few Channels

Growth Stage & Marketing MixGrowth Stage & Marketing Mix

Building Sales

Competition = Lowering Prices

Multiple Channels

Profitable

Maturity Stage & Marketing MixMaturity Stage & Marketing Mix

Sales Grow At Decreasing Rate

Differentiate from Competition

Price Wars

Profits Up With Sales

Changing Consumer Preferences

Decline StageDecline Stage& Marketing Mix& Marketing Mix

Demand Down

Intense Price Competition

Profits Low Or Losses

Revitalize Or Pull Product

Pricing - Product PricingPricing - Product Pricing

•New$Skimming$Penetration

•Other$Cost-Based$Demand-Based$Target Costing$Prestige$Odd-Even

Place - DistributionPlace - Distribution

• Intermediary – “…a wholesaler or retailer who helps move products

from their original source to the end user…”

• Each intermediary in the channel of distribution requires a profit margin,

thus increasing the cost of the product.

Distribution ChannelsDistribution Channels

The Supply ChainThe Supply Chain

Value ChainValue Chain

• “…the entire range of activities involved in delivering value to

customers…”

Promotion MixPromotion Mix

• “…the means by which (companies) communicate

with customers…”

Considerations Considerations BeforeBeforeSelecting Promotional StrategySelecting Promotional Strategy

Purpose of Promotion? Target Market? Product Features to Emphasize? Afford? Similar to Competitors?

Promotional ToolsPromotional Tools

Advertising

Advertising

Personal

PersonalSellingSelling

Sales

Sales

Prom

otion

Prom

otion

Publicity & Public

Publicity & Public

Relations

Relations

Promotion - BrandingPromotion - Branding

• “…word, letter, sound, or symbol that… differentiate(s)… products on the

market.”

• Trademark – “…register(ed) name with the U. S. Patent and Trademark

Office.”• U.S. Patent & Trademark Website

RR

Branding StrategiesBranding Strategies

Private Branding

Generic Branding

Manufacturer Branding

Branding Equity & LoyaltyBranding Equity & Loyalty

• Equity – Value of a brand generated by a favorable consumer experience with a product or service

• Loyalty – Consumer preference for a particular product or service that develops over time based on satisfaction with the company’s products or services

Packaging/LabelingPackaging/Labeling

• Packaging - “…container that holds…(the) product.”

• Labeling – “…what… (is said) about the product on… (the) packaging.”