Name ____________________________
Chapter 1 – Marketing Introduction
1.1 – Marketing and the Marketing Concept
Marketing – The process of planning, pricing, promoting, selling, and distributing ideas,
goods, or services to create exchanges that satisfy customers
As a marketer, you need to keep up with trends and consumer attitudes.
Goods –tangible items that have monetary value and satisfy your needs and wants such as
cars, toys, furniture, televisions, clothing, and candy
Examples: cars, toys, furniture, TV, clothing, candy, food
Services – intangible items that have monetary value and satisfy your needs and wants.
Intangible means you cannot physically touch them.
Examples: dry cleaner, car wash (automatic or hand wash), customer service worker
Seven Marketing Core Functions
1.
Channel Management – (Distribution) – the process of deciding
how to get goods into customer’s hands. Examples are truck, rail, ship, or air.
Tracking products is very important and some retail stores (Wal-Mart) have computer
systems to make this process more efficient.
2.
Market Planning – involves understanding the concepts and
strategies used to develop and target specific marketing strategies to a select
audience. This function is critical for a successful business. Determine information
needs, designing data-collection processes, conducting the collection of data,
analyzing data, presenting data, and using that data for creating a marketing plan.
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3.
Marketing Information Management – Good
business and marketing decisions rely on good information about customers, trends,
and competing products. Gathering this information, storing, it, and analyzing it are
all parts of marketing information management. Must be done on a continual basis
as customers’ wants can change. Companies conduct research so they can be
successful at marketing and selling their products.
4.
Pricing – To determine a price, marketers must also determine how
much customers are willing and able to pay and still allow the company to make a
profit. Pricing decisions are based on costs and on what competitors charge for the
same product or service.
5.
6.
7.
Product/Service Management – obtaining, developing,
maintaining, and improving a product or a product mix in response to market
opportunities. Marketing research guides product/service management toward what
the consumer needs and wants.
Promotion – the effort to inform, persuade, or
remind potential customers about a business’s products or services. Two forms of
promotions are advertising and public relations.
Selling – provides customer with the goods and
services they want. Retail selling – you might be the customer. Business-to-business
(B2B) selling might be Coke selling to DECA so we can sell to your fellow students.
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Marketing Concept – the idea that a business should strive to satisfy customers’ needs
and wants while generating a profit for the firm. The focus is on the customer. Customer
satisfaction is most important. Everyone in an organization needs to recognize that repeat
customers keep a company in business.
Customer relationship management (CRM) – Very Important!!! Combines customer
information (through database and computer technology) with customer service and
marketing communications.
1.2 The Importance of Marketing
Marketing plays an important role in an economy because it provides the means for
competition to take place. In a competitive marketplace, businesses try to create new or
improved products at lower prices than their competitors. Those efforts force them to be
efficient and responsive to consumers. And, businesses look for ways to add value to a
consumer’s shopping experience.
Three Benefits of Marketing
1. New and Improved Products – With competition comes the efforts to create new
products and/or improve existing products.
Examples: computer, cell phones, cars, “green” products, such as hybrid vehicles,
recycled products to create shoes and handbags
2. Lower Prices
a. Fixed Costs – remain the same no matter how many products are produced
or customers served, such as rent, truck payment
b. Variable Costs – costs that vary based on the number of units produced, such
as flour for a bakery that makes bread
c. Marketing activities add value to products and increase demand. When
demand is ___high_, manufacturers can make products in larger quantities,
which reduces the unit cost of each product. What kind of cost stays the
same? ___fixed costs__ When a company produces a larger quantity of a
product, it spends less per unit on fixed costs. The company can charge a
lower price per unit, sell more units, and make more money.
3. Added Value and Utility
a. Utility – the attributes of a product or service that make it capable of
satisfying consumers’ wants and needs, such as a luxury car that has heated
seats, DVD player, MP3 connection, leather seats
Five economic utilities. Define each and provide an example not in the book.
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1.
2.
3.
4.
Form Utility – changing raw materials or putting parts
together to make them more useful, such as wood, metal, and screws to make a table
Place Utility – having a product where
customers can buy it, such as a shopping center that groups like kinds of stores
together to make shopping easier
Time Utility – having a product available at a certain
time of year or a convenient time of day, such as a store that is open 24 hours a day
or having a coffee shop that is open early in the morning
Possession Utility – legal
ownership of a product changes hands and each business should increase the
payment options for their customers to stay up with their competition, such as
providing car loans at a car dealership or a store consumer credit card with Macy’s or
layaway at K Mart.
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5.
Information Utility – involves
communication with the consumer, such as product information provided by the sales
staff at Best Buy, prior purchase history for each customer that bought peanuts from
Costco when the product was recalled for health safety concerns, product labels with
nutrition information, and owner’s manuals for products.
1.3 – Fundamentals of Marketing
Market – all people who share similar needs and wants and who have the ability to
purchase a given product
Two types of Markets
1. Consumer Market – consumers who purchase goods and services for personal use.
Wants products and services that: For the most part, consumers are interested in
products that will save them money, make their lives easier, improve their appearance,
create status in the community, or provide satisfaction
2. Industrial Market – business-to-business (B2B) market includes all businesses that
buy products for use in their operations
Wants products and services that: improving profits, improve productivity, increase
sales, decrease expenses, or make their work more efficient. Businesses that buy products
to sell to consumers are known as resellers and they must consider both types of markets in
their decision-making.
Market Share - its percentage of the total sales volume generated by all companies that
compete in a given market. This figure can change and helps marketers analyze their
competition and their status in a given market.
Target Market – the group that is identified for a specific marketing program
wants
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Market Segmentation – the process of classifying customers by needs and
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Consumer – individuals that use the product
Customer – buy the product, but might not use it
Customer Profile – lists information about the target market such as the characteristics
listed below. Some might be relevant to the product, and some might not be relevant, such
as income level and occupation are not important for gum manufacturers.
1. Age
2. Income Level
3. Ethnic Background
4. Occupation
5. Attitude
6. Lifestyle
7. Geographic Residence
Marketing Mix includes four basic marketing strategies (4 P’s)
1. Product – product decisions, such as product features, brand name, packaging,
service, and warranty
2. Place – getting the product into the consumer’s hands, such as transportation
method, stock levels, which retailers to use
3. Price – reflects what customers are willing and able to pay and still provides a profit,
such as discounts, credit terms, special promotional pricing to help introduce a new
product.
4. Promotion – activities related to advertising, personal selling, sales promotion, and
publicity, such as promotional strategies for new products or newly enhanced
products to share the message.
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