1. The Functions of Marketing 2. Understand the Marketing Concept 3. Marketing Utilities 4. Define a Target Market 5. Understand how Markets are Segmented Students will learn: • The meaning of marketing • The functions of marketing • Marketing's importance in a global economy • The Marketing Concept What Is Marketing? 1. Defined: The process of developing, promoting, and distributing products to satisfy customers’ needs and wants. Development + Promotion + Distribution = Happy Customer 1. Products – goods and services that have monetary value 2. Goods – things you can touch or hold 3. Services – you can’t physically touch – tasks performed for a customer Functions of Marketing 1. Activities that work together to get goods and services from producers to consumers 1) Distribution 2) Financing 3) Marketing Information Management 4) Pricing 5) Product Service Management 6) Promotion 7) Selling 2. Each is essential Distribution 1. Deciding where and to whom products need to be sold to reach the final users. Financing 1. Getting the money necessary to operate a business Marketing Information Management 1. Getting information to make sound business decisions. Usually obtained through marketing research For example, after a stay at a luxury hotel, you fill out a form rating the service and accommodations. Pricing 1. How much to charge to maximize profits Product Service Management Obtaining, developing, maintaining, and improving a product or a product mix in response to market opportunities. Promotion 1. Communicating with potential customers to inform, persuade, or remind them about a business’s products Selling 1. Planned, personalized communication that influences purchasing decisions The Global Economy 1. Marketers are found at every level of business. 2. Nearly all business decisions have a Marketing element. 3. Marketing changes the: A. Number, (increased variety) B. Quality, (better quality because of competition) C. and Price (lower price because of competition) of products that you can buy. The Marketing Concept 1. Businesses must satisfy customers’ needs and wants in order to make a profit. When Henry Ford first created the Model T, he was the only one mass producing cars. He didn’t have to think about “The Marketing Concept.” But, as more and more producers started making cars, they had to think about what customers need and want in order to stay in business. Click on the Model T Ford to see Henry Ford’s thoughts about car color in the early 1900’s. Imagine if, in today’s world, you could only buy black. Many customers would not be very happy! Today’s buyer wants a choice! The Marketing Concept 1. If automobile manufactures do not give their consumers a choice (what they want), they will not stay in business. 2. That concept is true for all businesses. 3. Companies sell what Customers want. Students will understand: • The Economic Benefits of Marketing. • The meaning of economic utility. • The five economic utilities and how to distinguish the four that are related to marketing. Economic Benefits of Marketing 1. Marketing bridges the gap between you and the maker or seller of an item Economic Benefits of Marketing New and Improved Products --businesses look for opportunities to please the customer Economic Benefits of Marketing Lower Prices – marketing activities add value and increase demand. When demand is high, manufacturers can produce at a lower price. They can sell at a lower price but increase the quantity sold. Thus, profits are higher even though prices are low. Economic Benefits of Marketing 1. It adds VALUE Added Value = Utility There are five types of Utility: 1) Form 2) Place 3) Time 4) Possession 5) Information Attributes of a product or service that make it capable of satisfying consumers’ wants and needs. Form Utility Changing raw materials into goods– making and producing things. • Sand into glass • Wood into paper • Silk into fabric Place Utility 1. Having a product where customers can buy it. 2.It Includes: A. Location – may be through a catalog or at a retailer (actual store) – or, Internet. B. Transporting the product to the location. Time Utility 1. Having a product available at a certain time of year or a convenient time of day. • Planning and ordering • Time of day and week • Time of year: holidays and seasons Possession Utility • The exchange of a product for some monetary value. Payment may be made by: 1. Cash 2. Personal checks 3. Credit cards 4. Installments (layaway) Information Utility Involves communication with the consumer. • Ads • Packaging • Signs • Displays • Owner’s Manuals Which types of utility are related to marketing? Form utility is a function of production, NOT marketing These utilities ARE directly related to marketing: 1. Place 2. Time 3. Possession 4.Information Students will be able to: • Define a market • Describe target marketing • Differentiate between customers and consumers • Use the four P’s of the marketing mix Market 1. Market – all potential customers who have the ability and willingness to buy Target Marketing 1. Focusing all Marketing efforts on a very specific group of people who you want to reach. 1. Customers – people who buy the product 1. Consumers – people who actually use the product Is mom the customer or the consumer? What about the kids? Marketing Mix • Basic marketing strategies – the four P’s 1. Product 2. Place 3. Price 4. Promotion Product Strategies 1. What product to make 2. How to package it 3. What brand name to use 4.What image to project Place Strategies 1. How and where a product will be distributed. Price Strategies 1. Reflect what customers are willing and able to pay. Promotion Strategies 1. How potential customers will be told about the new product 2. What the message will be 3. When and where it will be delivered 4.What inducements are there to purchase it The Marketing Mix 1. The elements are interconnected Product Place Price Promotion The Marketing Mix – The 4 P’s 1. Contains countless alternatives. 2. Management must select a combination of marketing mix decisions that will satisfy target markets and achieve organizational goals. Product & Place & Price & Promotion = Goals Students will: • Understand the concept of market segmentation. • Define the term market segmentation. • Understand the four methods used to segment a market. • Understand current demographic, psychographic, and geographic trends Analyzing Markets 1.Market segmentation is a way of analyzing a market by specific characteristics as in order to define the target market. Types of Segmentation: Demographics 2. Psychographics 3. Geographics 4. Behavioral 1. Demographics 1. Demographics – statistics that describe a population in terms of personal characteristics. Demographics include: 2. Age A. Baby Boom Generation B. Generation X C. Generation Y 3. Gender 4. Marital Status 5. Ethnic Background U.S. Trend – The percentage of the Caucasian population is declining, while other ethnic populations increase. Psychographics 1. Involves grouping people with similar lifestyles, as well as shared attitudes, values, and opinions. A. Activities B. Attitudes C. Personality & Values Music teachers, dancers, and other music lovers would be one category of people who share psychographic characteristics. VALS™ is a marketing and consulting tool that helps businesses worldwide develop and execute more effective strategies. The system identifies current and future opportunities by segmenting the consumer marketplace on the basis of the personality traits that drive consumer behavior. VALS applies in all phases of the marketing process, from new-product development and entry-stage targeting to communications strategy and advertising. Click on VALS to learn more and to take a survey to determine your VALS type Geographics 1. Geographics – Segmentation based on where people live A. Political Boundary B. Climate C. Natural Boundary Behavioral Segmentation 1. Looking at the benefits desired by consumers, shopping patterns, and usage rate. Market benefits, not just the physical characteristics of a product Behavioral Segmentation 1. Many businesses find that the 80/20 rule applies. 2. 80 % of a company’s sales are generated by 20 % of its loyal customers. Mass Marketing Vs Segmentation 1. Mass marketing not as popular as it once was. 2. Niche marketing (the current trend) – markets are narrowed down and defined with extreme precision.