Marketing CH. 4 Notes The Basics of Marketing Marketing today is different from marketing only a few years ago It has expanded from a few activities to a variety The earliest use of marketing was to move products from the producer to the consumer Then promotion and sales were added to help persuade customers to buy Today, businesses are able to complete a vast # of marketing activities ranging from research to customer credit From Independence to Integrated • Has changed from an activity that was an independent part of business to one that is well integrated with other business functions • In the past, marketing was not well understood so they would often work by themselves • Now, it is integrated- meaning it is an essential part of the business • It is involved in all important business decisions, and strategies are developed as a part of the business plan From Problems to Opportunities • Marketing used to be handled as a problemsolving tool, now it is a creation tool • Also, it is often called on when companies face problems • Today’s businesses can’t afford to wait until problems occur, so they are continuously looking for market opportunities • Ways to improve a companies offerings in current markets • It is responsible for identifying and planning opportunities Putting Marketing Up Front •Successful businesses use carefully prepared plans to guide their operations •The business will use a strategy for how it expects to achieve its goals •To develop this strategy businesses should use the marketing concept • By incorporating the marketing concept companies attempt to develop products and services that respond to customers’ needs rather than what the company thinks should be offered. •Marketing will be directed at meeting the identified needs of the customers rather than developing ways to persuade people to buy something they may not need. Marketing Concept How Does the Marketing Concept Affect Planning? Without the Marketing Concept With the Marketing Concept 1. Develop a Product 1. 1. Decide on marketing activities 1. Identify potential customers Conduct research to identify potential customers and their needs 2. Develop a marketing mix (4Ps) that meets specific customer needs. • Understanding the customer Customers have many choices of products They often spend time comparing products and services before making decisions Bringing a new product to the market is expensive, it take time and money to develop, produce, distribute, and promote When it enters the market it must compete with other companies o This competition among products is very intense • Identifying customer needs Successful companies are usually those that meet customer needs But, meeting customer needs is not easy 1. Many customers are not sure of their needs, or have conflicting needs 2. Customers have many needs, they typically have limited amounts of money available 3. Needs of individuals and groups can be different Businesses tend to deal with customers in two ways 1. Some businesses don’t view the specific needs of customers as important. They believe if they can effectively produce and market products customer will buy 2. Understanding customers is an important part of business activities • Satisfying Customer Needs Businesses study markets to identify groups of consumers with unsatisfied needs Through extensive marketing research, the business gather and analyzes consumer information It categorizes customers according to similar characteristics, needs, and purchasing behavior Groups of similar markets are known as market segments After distinct market segments have been identified, a business will analyze each of them It tries to determine which market segments can be served most effectively and which have the strongest need, the most resources, and the least competition Once segments have been identified and prioritized, the business selects those segments on which it will focus its efforts • Consumers Decision Making Consumers make decision every day Decision is a choice among alternatives o Made to satisfy a need or to solve a problem Consumers want to choose the alternatives that provide us the most satisfaction or the greatest value If marketers want to satisfy customer needs, they must understand how consumers choose what they will buy Different theories are made, but there is a general agreement that people follow a series of decision making when purchasing These decisions become routine and simple when repeated • Stages of a Decision • Step 1. Recognize- Begins when a consumer recognizes that a need exists If the need is urgent the process is quick If not, then the consumer may take time before buying • • Step 2. Identify- When the consumer becomes interested in finding a solution Identifying products or services that relate to the need • • Step 3. Evaluate- When the consumer gathers information and uses it to evaluate choices An evaluation is done to see if any choice is better, more available, or more affordable • • Step 4. Decide- When the consumer is comfortable with the evaluation, a decision is made Decision will be to select one of the available choices, to gather more information, or to do nothing • Step 5. Assess- When the consumer determines whether or not the choice was correct Evaluated to see if it satisfied the need If it did the decision will likely be repeated the next time • Relying on Information Marketers are creative. Creativity is needed to plan the marketing mix, develop new product features and uses, and prepare promotional materials and activities Conducting research is an important marketing activity Need to be skilled in organizing research and using results Most important part of research is the study of potential and current customers Additionally, the research about competitors will identify the type of competition and strengths and weaknesses of competing companies • Responding to Competition • 1. Intense Competition Most difficulty type of competition businesses face is market in which businesses compete with others offering very similar products Ex- Pure competition…many business offering the same product (Agricultural) • 2. Limited Competition Some businesses have the advantage of having little or no direct competition Ex- Known as a monopoly • 2. Monopolistic Competition Most business face competition somewhere between intense and monopoly They have many competitors, but customers see differences among choices The customers determine which product fits there wants and needs Open Ended Question Recognize Identify Evaluate Decision Assess Recognizes that a need exists Interested in finding a solution Cell phone battery will not charge Going to buy a new cell phone, instead of getting the old one fixed Gathers information to Go to Verizon and look at evaluate choices available phones Decision will be: select 1. Buy the phone one of the available 2. Gather info choices, to gather more 3. do nothing information, or to do I chose to buy phone nothing Consumer determines Do not buy the Verizon whether or not the Droid, it is cheaply made, choice was correct and breaks easily • Producers and Manufacturers They develop the products and services needed by other businesses and consumers Because of that role, the product part element of the marketing mix receives the most attention’ Distribution is also important to insure the product gets to the customers Unless manufacturers and producers distribute products directly to the users, they must rely on other businesses to make good decisions about product distribution, prices, and promotion Even if producers and manufacturers do not sell directly to final consumers, they still must understand and respond to customers needs • Channel Members A channel of distribution is made up of all the businesses involved in completing marketing activities as products move from the producer to the consumer Channel Members- are the businesses used to provide many of the marketing functions during the distribution process. If the product does not meet the customers needs, the customers are likely to hold the channel member as responsible as the producer After decisions are made about what products to offer, channel members then focus their attention on the other mix elements Retailers are responsible for most final pricing decisions They use promotion activities to encourage consumers to purchase their products • Service Businesses Most service businesses work directly with customers rather than through a channel of distribution Therefore they are responsible for the entire marketing mix Product mix element is very important- they must develop procedures to insure quality service every time Distribution is also important- because the service must be available where and when the customer wants it Service businesses have more control over pricing It is more difficult for customer to determine the appropriate price • • Marketing by Non-Business organizations It is not unusual today to see marketing used by museums, libraries, symphonies, athletic teams, churches, and clubs • Nonprofit organizations • Do not operate off of profit motive, however still need resources to provide the services • They often rely on fundraising • Must convince people of the value of their service, and the need to support the organization