UNIT 3 – MARKETING
Unit 3.01
Marketing
Basics
KEY TERMS
Marketing
Final Consumers
Marketing Strategy
Business Consumers
Target Market
Consumer DecisionMaking Process
Marketing Mix
Marketing
Orientation
Buying Motives
MARKETING
The activity, set of institutions, and process for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large
American Marketing Association
 Marketing is used to
 Identify the customer
 Satisfy the customer
 Keep the customer
MARKETING FUNCTIONS
MARKETING FUNCTIONS
 Product & Service Management
 Designing, developing, maintaining, improving, and acquiring
products and services that meet consumer needs
 i.e. creating new products
 Distribution
 Determining the best ways for customers to locate, obtain, and
use the products and services of an organization
 i.e. shipping, handling, and storing of products
MARKETING FUNCTIONS
 Selling
 Communicating directly with potential customers to determine
and satisfy their needs
 i.e. face to face or telemarketing
 Marketing-Information Management
 Obtaining, managing, and using market information to improve
business decision-making and the performance of marketing
activities
 i.e. market research, database management
 Pricing
 Setting and communicating the value of products and services
 i.e. low enough that customers willing to pay, high enough for a
business to make a profit
MARKETING FUNCTIONS
 Financial Analysis
 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
 i.e. credit card
payment systems
 Visa
MARKETING FUNCTION
 Promotion
 Communicating information about products and services to potential
customers
 i.e. advertising
 Most visible form of marketing
 Worldwide, over $545.4 Billion
spent on advertising
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Television (commercials)
Print (magazine ads)
Radio
Digital Media
MARKETING FUNCTION
 Promotion
 In 2014, US spent $180 Billion
on advertising
 Equates to $565 per person
 Biggest US spenders in 2014:

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Proctor & Gamble
AT&T
General Motors
Comcast
Verizon
$4.6
$3.3
$3.1
$3.0
$2.5
Billion
Billion
Billion
Billion
Billion
SLID
E 10
MARKETING FUNCTION
 Promotion
 Procter & Gamble
 Tide detergent, Crest toothpaste, Cover Girl make up, etc.
 Why advertise so much?
 Consumer products
 Highly competitive
 Largest expenses?
1.
2.
TV advertising
Magazine advertising
 Expensive celebrity endorsements
 Easily reach target market
MARKETING FUNCTION
 Promotion
 Amount spent on advertising varies
MARKETING FUNCTION
 A Dealer for the People
 $18,000 monthly advertising budget
MARKETING FUNCTION
 Promotion
 The most expensive commercials of all time

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CARLTON DRAUGHT: $1.5 million (2005)
FERRARI/SHELL: $4.5 million (2007)
HONDA: $6.2 million (2003)
PEPSI: $8.1 million (2002)
CHRYSLER: $12 million (2011)
AVIVA: $13.4 million (2008)
GUINNESS: $16 million (2007)
CHANEL: $33 million (2004)
MARKETING STRATEGY
A company’s plan that identifies how it will use marketing to
achieve its goals
 Need to come up with a good one ~ Marketing activities often
cost 50% or more of the selling price of a product or service
 Advertising-to-Sales Ratio (A/S Ratio)
 Measurement of the effectiveness of an advertising campaign
 Calculated by dividing total advertising expenses by sales revenue
 High A/S Ratio – high advertising expenses resulted in low sales revenue
 Low A/S Ratio – the advertising campaign generated sales
TARGET MARKET
A specific group of consumers who have similar wants and
needs
 Four ways to identify target markets
1.
2.
3.
4.
Geographics: The location, size of the area, density, and climate
zone of your customers.
Demographics: The age, gender, income, family composition and
size, occupation, and education of your customers.
Psychographics: The general personality, behavior, life -style, rate of
use, repetition of need, benefits sought, and loyalty characteristics
of your customers.
Behaviors: The needs they seek to fulfill, the level of knowledge,
information sources, attitude, use or response to a product of your
customers.
TARGET MARKET
 Why target specific groups?
 Streamline advertising
 Focus on income level
 Understand buying behaviors
 Where would you find these advertisements?
MARKETING MIX
The blending of four marketing elements – product, placement
(distribution), price, and promotion
 Known as the 4Ps
 Marketing Orientation –
considers the needs of customers
when developing a marketing mix
UNDERSTAND CUSTOMERS
 If a product appeals to a group of customers with unsatisfied
needs, it has a real chance to succeed
 If customers do not see a need or believe they have other
choices that are better or less costly, the product will most
likely not succeed
 10 Famous Product Failures
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Sony Betamax (VCR cheaper)
Coca Cola – New Coke (nothing wrong with old Coke)
McDonald’s Arch Deluxe Burger (McD’s = fine dining)
DeLorean DMC 12 (founder arrested for drug trafficking)
UNDERSTANDING CUSTOMERS
 2 Types of Customers
 Final Consumers
 AKA Business-to-Consumers (B2C)
 Persons who buy products and services mostly for their own use
 Can be done in-store or on-line
 E-Commerce
 Commercial transactions conducted electronically on the internet
 Played a large role in the rapid development of the
commercial Internet in the 1990s
 Sold almost $1.5 Trillion in ecommerce worldwide
in 2014
UNDERSTANDING CUSTOMERS
 2 Types of Customers
 Business Consumers
 AKA Business-to-Business (B2B)
 When one business makes a commercial transaction with another
 Sourcing – a business purchases materials from another business that are needed to make
their own product
 Example: a food manufacturer purchasing ingredients (salt, flour, sugar, etc.)
 Services – a business needs the services of another company to conduct their own business
 Example – hiring an accounting firm to audit their finances
 Resale – a business purchases goods or services with the intention of selling them rather
than consuming or using them directly
 Example – a retail store stocking their shelves with products to sell consumers
CONSUMER DECISION MAKING
The specific sequence of steps consumers follow to make a
purchase
1.
Recognize a need
2.
Gather information
3.
Select and evaluate alternatives
4.
Make a purchase decision
5.
Determine the ef fectiveness of the decision
BUYING MOTIVES
Reasons consumers decide what products and ser vices to
purchase
 Emotional Buying Motives
 When a buyer decides to purchase a product without thinking over
the matter logically and carefully
 Without much reasoning
 Rational Buying Motives
 When a buyer decides to buy a certain thing after careful
consideration
 After thinking over the matter consciously and logically
BUYING MOTIVES
 Emotional Buying Motives
 Pride or Prestige
 Most common and strongest emotional buying motive
 Consumers feel that the possession of the product increases their social prestige
or status
 Emulation or Imitation
 The desire to imitate other
 Why celebrity endorsements work so well
 Affection
 Goods are purchased out of love for others
 Want to do something nice for a loved one
 Comfort or desire for comfort
 Not a need, but a want that brings comfort
 Air conditioning, washing machine, cushion beds, etc.
BUYING MOTIVES
 Emotional Buying Motives
 Sex Appeal
 Buyers purchase goods that will make them attractive to others
 Cosmetics, nice clothes, etc.
 Ambition
 Sales decisions based on a goal
 Drive a BMW by the time you’re 30, own a 3000 sq foot house
 Distinctiveness or Individuality
 People motivated to buy things that make them different from everyone
else
 Recreation or Pleasure
 Vacation, boat, new car
 Hunger and Thirst
 Display signs or free samples at store
 Freshly baked cookie smell
BUYING MOTIVES
 Rational Buying Motives
 Safety or Security
 Alarm systems on the home, safes, medicine, etc.
 Economy/Lower Price
 Purchase less expensive items to save money
 Couponing, generic brands, fuel efficient cars
 Suitability/Utility/Versatility
 Multiple use items
 Durability
 Long lasting/high quality items
 Convenience
 Purchase items that are easier, more convenient to use
 Automatic vs. manual car