SECTION 1.1
What Is Marketing
What Is Marketing
Marketing is the process of developing, promoting, and distributing products to satisfy customers' wants and needs.

SECTION 1.1
What Is Marketing
Products = Goods and Services
Goods : Hammers, automobiles, soda pop, clothing, and computers
Services : Dry cleaners, amusement parks, attorneys, and movie theaters
Exchange : Buying or selling a good or service

SECTION 1.1
What Is Marketing
Foundations of Marketing 15% of Test
Building on these four foundations helps you to acquire marketing skills that are relevant to your own career development.
 Business, Management, and
Entrepreneurship
 Communication and Interpersonal Skills
 Economics
 Professional Development
Slide 1 of 3

SECTION 1.1
What Is Marketing
Functions of Marketing 35% of Test
These functions define marketing as it is applied in business operations.
 Distribution
 Financing
 Marketing-Information Management
 Pricing
 Product/Service Management
 Promotion
 Selling
Slide 1 of 4

SECTION 1.2
Economic Utilities
Economic Utilities
Economic utilities reflect the value that producers and marketers add to raw materials when they make them into products and offer them for sale to the public.
 Form utility
 Place utility
 Time utility
 Possession utility
 Information utility
Form Utility is NOT
A marketing utility.

SECTION 1.2
Economic Utilities
Form Utility
Changing raw materials or putting parts together to make them more useful.
 Example : The parts of a lounge chair
— the wood frame, the fabric, the glue and nails, and the reclining mechanism
— are less useful by themselves. Putting them together adds form utility.

SECTION 1.2
Place Utility
Economic Utilities
Having a product where customers can buy it.
 Example : Selling directly to the customer through catalogs.

SECTION 1.2
Economic Utilities
Time Utility
Having a product available at a time convenient for customers.
 Example : Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year.

SECTION 1.2
Economic Utilities
Possession Utility
Exchange of a product for some monetary value.
 Example : Taking credit cards and checks rather than just cash enables customers to buy products.

SECTION 1.2
Economic Utilities
Information Utility
Providing information so the customer is comfortable buying.
 Example : Salespeople explain features of products.
 Example : Packaging explains qualities and uses.
 Example : Advertising informs consumers about products.

SECTION 2.1
The Marketing Concept
What is a Market?
A market is all potential customers who share common needs and wants and who have the ability and willingness to buy the product.

SECTION 2.1
The Marketing Concept
The Marketing Mix
The marketing mix comprises four basic marketing strategies known as the four Ps:
 Product
 Place
 Price
 Promotion
Slide 1 of 3

SECTION 2.1
The Marketing Concept
The Marketing Mix
Product strategies include what product to make, how to package it, what brand name to use, and what image to project.
Place strategies deal with how and where a product will be distributed.
Slide 2 of 3

SECTION 2.1
The Marketing Concept
The Marketing Mix
Price strategies should reflect what customers are willing and able to pay.
Promotion strategies deal with how potential customers will be told about the new product, what the message will be, when and where it will be delivered, and with what inducements to buy.
Slide 3 of 3

SECTION 2.1
The Marketing Concept
Target Marketing
Target marketing is focusing all marketing mix decisions on the specific group of people you want to reach.

SECTION 2.2
Market Segmentation
Market Segmentation
Dividing the total market into smaller groups of people who share specific needs and characteristics is the essence of market segmentation.

SECTION 2.2
Market Segmentation
Analyzing Markets
Businesses may segment a market by:
 demographics
 psychographics
 geographics
 product benefits

SECTION 2.2
Market Segmentation
Demographics
Demographics refers to statistics that describe a population in terms of personal characteristics. These include:
 age
 gender
 income
 ethnic background

SECTION 2.2
Market Segmentation
Psychographics
Psychographics involves studies of consumers based on social and psychological characteristics.
In addition to segmenting people by their leisure time interests, marketers observe trends and changes in households, the economy, politics, and the workplace.

SECTION 2.2
Geographics
Market Segmentation
Geographics refers to segmentation of the market based on where people live. Marketers study geographics in relation to:
 ethnic concentrations
 age
 ethnic background
 income

SECTION 3.1
Capitalism
Basic Principles
In the United States, we have the freedom to make decisions about where we work and how we spend our money.
A free enterprise system encourages individuals to start and operate their own businesses.

SECTION 3.1
Competition
Capitalism
Competition is the struggle between companies for customers. Competition is an essential part of a free enterprise system. It forces businesses to produce better quality goods and services at reasonable prices.

SECTION 3.1
Capitalism
Risk
Risk is the potential for loss or failure in relation to the potential for improved earnings.
As the potential for earnings gets greater, so does the risk.

SECTION 3.1
Capitalism
Profit
Profit is the money earned from conducting business after all costs and expenses have been paid.
Profit is the engine that drives a free enterprise system.

SECTION 3.2
Government and Consumer
Functions
Determining Prices
Demand refers to consumer willingness and ability to buy products. According to the law of demand, if the price is low enough, demand for a product usually increases.
Slide 2 of 4

SECTION 3.2
Government and Consumer
Functions
Determining Prices
Supply is the amount of goods producers are willing to make and sell.
 higher prices = more products for sale
 lower prices = less products for sale
Slide 3 of 4

SECTION 3.2
Government and Consumer
Functions
Determining Prices
Equilibrium exists when the amount of product supplied is equal to the amount of product demanded.
Slide 4 of 4

SECTION 3.2
Government and Consumer
Functions
Surpluses
Surpluses of goods occur when supply exceeds demand. When this happens, businesses respond by lowering their prices in order to encourage people to buy more of the product.
 Example: When grocery stores have lots of produce, they price the produce low to encourage people to buy.

SECTION 3.2
Government and Consumer
Functions
Shortages
When demand exceeds supply, shortages of products occur. When shortages occur, businesses can raise prices and still sell their merchandise.
 Example: An oil shortage increases the price of gasoline, so consumers who want to drive their vehicles pay the higher price.

SECTION 4.1
What Is an Economy?
What Is an Economy?
An economy , or economic system, is the way a nation makes economic choices about how the nation will use its resources to produce and distribute goods and services.

SECTION 4.1
What Is an Economy?
Resources
Resources, also called factors of production, are all the things used in producing goods and services. They fall into four categories:
 land
 labor
 capital
 entrepreneurship
Slide 1 of 3

SECTION 4.1
What Is an Economy?
Scarcity
Scarcity is the difference between wants and needs and available resources.
 Example: Most underdeveloped nations have natural resources, but do not have capital or skilled labor to develop them.

SECTION 4.2
Understanding the Economy
The Business Cycle
Sometimes an economy grows, and at other times it slows down. These recurring changes are called the business cycle.
The business cycle has four phases:
 prosperity
 recession
 depression
 recovery

SECTION 5.2
Ethics and Social Responsibility
Business Ethics
Ethics are guidelines for good behavior. Ethical behavior is based on knowing the difference between right and wrong —and doing what is right.
Laws are made to address ethical concerns involving products or marketing. The following unethical practices are prohibited:
 bait-and-switch advertising
 price fixing
 selling unsafe products

SECTION 5.2
Ethics and Social Responsibility
Business Ethics
To make the right ethical choices, marketers must answer these three basic questions:
1.
Is the practice right, fair, and honest?
2.
What would happen if the product were marketed differently?
3.
What practice will result in the greatest good for the greatest number of people?

SECTION 6.1
The Global Marketplace
Defining International Trade
International trade involves the exchange of goods and services between nations. Imports are goods and services purchased from other countries. Conversely, exports are goods and services sold to other countries. These exchanges occur between businesses but are controlled by the governments of the countries involved.

SECTION 6.1
The Global Marketplace
Interdependence of Nations
Most countries need to get some of their goods and services from other nations. This is called economic interdependence. There are two types of advantages in international trade:
 absolute
 comparative

SECTION 6.1
The Global Marketplace
Absolute Advantage
Absolute advantage occurs when a country has special natural resources or talents that allow it to produce an item at the lowest cost possible.
 Example: China produces close to
80 percent of all the silk in the world, which gives them absolute advantage.

SECTION 6.1
The Global Marketplace
Comparative Advantage
Comparative advantage is the value that a nation gains by selling the goods that it produces most efficiently.
 Example: U.S. businesses have a comparative advantage in producing technology related goods and services.

SECTION 12.1
Selling
Knowing Your Product and Your Customer
The goal of selling is to help customers make satisfying buying decisions.
Salespeople accomplish this by solving customers ’ problems and by understanding their needs and wants.
Slide 2 of 2

SECTION 12.1
Selling
Product Features
Product features are the basic, physical, or extended attributes of the product:
 Basic features are a product ’ s intended use.
 Physical qualities differentiate it from competing brands and models.
 Additional features add value and justify price differences between models.

SECTION 12.1
Selling
Customer Benefits
Customer benefits are the advantages or personal satisfaction a customer will get from a good or service.
To determine customer benefits, salespeople need to answer two questions about each product feature:
1.
How does the feature help the product ’ s performance?
2.
How does the performance information give the customer a personal reason to buy the product?

SECTION 12.1
Selling
Customer Buying Motives
Salespeople must know what motivates customers to buy and what decisions customers make before the final purchase.
Customers' motives fall into the following categories:
 rational
 emotional
Slide 1 of 2

SECTION 12.1
Selling
Customer Buying Motives
A rational motive is a conscious, logical reason for a purchase, such as dependability or time savings.
An emotional motive is a feeling experienced by a customer through association with a product, such as social approval, recognition, power, or prestige.
Slide 2 of 2

SECTION 12.1
Selling
Customer Decision Making
There are three distinct types of decision making:
 extensive
 limited
 routine
Decisions are based on a person ’ s previous buying experience and the importance and perceived risk of the purchase.

SECTION 12.1
Selling
Extensive Decision Making
Extensive decision making is used when there has been little or no previous experience with an item.
 Extensive decision making is used when there is a high degree of perceived risk.
 It is usually used for goods and services that are very expensive or have high value to the customer.

SECTION 12.1
Selling
Limited Decision Making
Limited decision making is used when a person buys goods and services that he or she has purchased before but not regularly.
 In limited decision making, there is a moderate degree of perceived risk.
 When making this type of decision, the customer often needs some information before buying.

SECTION 12.1
Selling
Routine Decision Making
Routine decision making is used when a person needs little information about a product.
 In routine decision making, there is a high degree of prior experience.
 It is usually used for goods and services that have a low perceived risk (because an item is inexpensive, is bought frequently, or satisfaction with the product is high).

12.1
Types of Customer Decision-Making Processes
CUSTOMER
Expensive or Highly
Valued Item
No
Experience with Item
Information
Needed
Some
Experience with Item
High
Product
Satisfaction
Much Prior
Experience with Item
High
Perceived Risk
Moderate
Perceived Risk
Low
Perceived Risk
Extensive
Decision
Making
Limited
Decision
Making
Routine
Decision
Making

SECTION 12.2
Preparing for the Sale
The Preapproach
The preapproach is getting ready for the face-to-face encounter in a selling situation.
Salespeople do the following to prepare for the sale:
 Study their products.
 Keep abreast of industry trends.
 Research potential customers.
 Develop familiarity with their company's policies and procedures.

SECTION 13.1
The Sales Process
Steps of a Sale
Professional salespeople go through seven steps when helping a customer make a purchase.
1.
Approaching the customer
2.
Determining needs
3.
Presenting the product
4.
Overcoming objections
5.
Closing the sale
6
. Suggestion selling
7.
Relationship building

SECTION 13.1
The Sales Process
Steps of a Sale
Sometimes it is easy to remember many steps by creating a mnemonic device, such as
ANPOCS for the steps of a sale. What is the significance of each letter in this mnemonic device? How is
“ Customer Relationship
Building ” part of the sales process?

SECTION 13.1
The Sales Process
The Approach in Retail Selling
There are three methods you can use in the initial approach to retail customers:
 the service approach
 the greeting approach
 the merchandise approach

SECTION 14.2
Handling Customer Objections
Four-Step Process for Handling Objections
Successful salespeople have learned to use a very basic, four-step strategy when answering all objections:
 Listen carefully.
 Acknowledge the customer's objections.
 Restate the objections.
 Answer the objections.
Slide 1 of 4

SECTION 14.2
Handling Customer Objections
Specialized Methods of Handling Objections
There are six specialized methods for handling objections:
 boomerang
 question
 superior point
 denial
 demonstration
 third party

SECTION 15.1
Customer Buying Signals
Closing the Sale
Closing the sale is obtaining positive agreement from the customer to buy. All your efforts up to this step of the sale have involved helping your customer make buying decisions.

SECTION 15.2
Effective Selling
Suggestion Selling
Suggestion selling is selling additional goods or services to the customer, items that will ultimately save time and money or make the original purchase more enjoyable.

SECTION 18.1
Display Features
What is Visual Merchandising?
Visual merchandising refers to the coordination of all physical elements in a place of business and is used to project the right image to its customers.
The "right" image invites interest in the merchandise or services, encourages purchasing, and makes customers feel good about where they are doing business.
Slide 1 of 2

SECTION 19.1
Advertising Media
Advertising and its Purpose
Advertising is any paid form of nonpersonal promotion of ideas, goods, or services by an identified sponsor. Advertising is either promotional or institutional.
Promotional advertising is designed to increase sales. It introduces new products and businesses, encourages an interest in products, and explains products and service features.
Slide 1 of 2

SECTION 19.1
Advertising Media
Advertising and its Purpose
Institutional advertising attempts to create a favorable impression and goodwill for a business or an organization by providing positive information about a business.
Slide 2 of 2

SECTION 21.1
Distribution
Distribution—How It Works
The channel of distribution is the path a product takes from producer or manufacturer to final user. This is a place decision, one of the four Ps of the marketing mix.

SECTION 21.1
Distribution
Direct and Indirect Channels
Channels of distribution are classified as direct or indirect.
Direct distribution occurs when the goods or services are sold from the producer directly to the customer; no intermediaries are involved.
Indirect distribution involves one or more intermediaries.

SECTION 26.1
Pricing Concepts
Basic Pricing Concepts
There are three basic pricing concepts that you will want to consider in determining the price for any given product:
 cost-oriented pricing
 demand-oriented pricing
 competition-oriented pricing

SECTION 26.2
Setting Prices
Steps in Setting Prices
These are the six steps in determining a price for an item:
1.
Determine pricing objectives.
2.
Study costs.
3.
Estimate demand.
4.
Study competition.
5.
Decide on a pricing strategy.
6.
Set price.

SECTION 28.1
Marketing Information Systems
Defining Marketing Research
Marketing research links the consumer, customer, and public to the marketer through information. Marketing information is used to identify marketing opportunities, solve marketing problems, implement marketing plans, and monitor marketing performance.

SECTION 28.1
Marketing Information Systems
Why is Marketing Research Important?
Given the high failure rate of new products on the market, marketing research can make or break a business.
Marketing research helps businesses:
 plan future operations to increase sales and profits
 decide what products to produce
 decide where to sell products
 decide how to promote products
 decide how to price products
 solve marketing problems
 anticipate future marketing potential
 keep track of current markets and competitors

SECTION 28.1
Marketing Information Systems
Who Uses Marketing Research?
Marketing research is valuable for organizations of any size.
Marketing research is useful to:
 businesses
 state and federal governments
 trade associations

SECTION 31.2
Packaging and Labeling
Functions of Packaging
A package is a selling tool. Its functions include:
 promoting and selling the product
 defining product identity
 providing information
 meeting customer needs
 ensuring safe use
 protecting the product