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Marketing: all the activities needed to move goods and services from the producer to the consumer
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The sole purpose of marketing is to convince consumers that a certain product or service will add to their utility.

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Some economists estimate that about 50% of the price people pay for an item today is the cost of marketing.
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The development of marketing can be traced by analyzing what it has focused on: production, sales, advertising and consumer sovereignty.
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Consumer Sovereignty: the role of the consumer as ruler of the market when determining the types of goods and services produced

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Meeting Consumer Utility
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Utility: the amount of satisfaction one gets from a good or service
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Utility can be divided into four major types:
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Form Utility
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Place Utility
Time Utility
Ownership Utility

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Form utility is converting raw materials into desired/needed products.
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Created by production.
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Examples:
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Transforming cotton cloth into draperies
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Refining crude oil into gasoline

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Place utility is providing the good/service where the customer wants it to be.
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Examples:
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Locating a gas station on a busy corner.
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Internet shopping

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Time utility is providing the good/service at precisely the time the customer wants it.
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Examples:
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A 24-hour grocery store or restaurant
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Internet shopping

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Ownership utility is providing goods/services that people are pleased to own.
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Examples:
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Fine art
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Luxury cars
Expensive jewelry

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Market Research: gathering, recording, and analyzing data about the types of goods and services people want
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Should be done before the product is made or service is offered.
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In this sense, the market means the potential buyers of the good or service.

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When should market research be done?
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At the very beginning when the first ideas about a new product are being developed.
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Test sample products and alternative packaging designs.
Immediately after a product is released for sale
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Early market research helps producers determine whether there is a market for the good and can indicate changes in quality.

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Market Surveys
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Market Survey: information gathered by researchers about possible users of a product based on such characteristics as age, gender, income, education, and location
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A market survey usually involves a series of carefully worded questions.
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Surveys could also use focus groups.

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Testing New Products
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Offer the item for sale in a small market before selling it to a larger area.
Test Marketing: offering a product for sale in a small area for a limited period of time to see how well it sells before offering it nationally
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Of all the new products introduced every year in the US, most are not profitable and do not survive in the marketplace.

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Simply producing a good and offering it for sale is not enough in today’s competitive world
Marketing is necessary for companies to be successful.
A marketing strategy, or plan, combines the 4
P’s of marketing:
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Product
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Price
Place
Promotion

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When it comes to product, a company must answer certain questions.
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What good or service should be produced?
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What services should be offered with the product?
 Consider adding warranties
How should product be packaged?
 Consider size, design, color, catch phrases and coupons or rebates.
How should product be identified?
 Consider logos, songs, celebrity endorsements, and packaging.

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Determined by law of supply and demand.
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Companies must consider the cost of producing, advertising, selling, and distributing the product.
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Price leadership occurs when competing companies sell their products for similar prices.
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Price Leadership: practice of setting prices close to those charged by other companies selling similar products
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Selling a new product for a low price to entice people to buy it is called penetration pricing.

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Where should the product be sold?
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Past experience with similar products will help the marketing department make this decision.
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A cereal company would most likely market a new cereal in grocery stores.
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Companies with goods that appeal to a limited market would advertise in specialty shops or on the internet.

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Promotion: informing customers about product or service
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Type of promotion depends upon the product, the target customer, and amount of money the company wants to spend.
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Examples of promotions: direct-mail advertising, free samples, cents-off coupons, and rebates.

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Product Life Cycle: series of stages from first introduction to complete withdrawal from the market
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Four stages:
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Introduction
Growth
Maturity
Decline

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Marketing programs are different for each stage.
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Pricing can be different for each stage.
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Marketers try to extend the life of product by changing its looks, uses, and the advertising focus.

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Channels of Distribution: routes by which goods are moved from producers to consumers
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Decisions about distribution is another function of marketing.
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Distribution: moving goods from where they are produced to the people who will buy them

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Wholesalers: businesses that purchase large quantities of goods from producers for resale to other businesses
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Retailers: business that sell consumer goods directly to the public

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Full service wholesalers warehouse goods and deliver them after retailers pay for them.
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Drop shippers are wholesalers that buy the goods under the condition that the producer will store and ship the goods after the wholesaler has sold them.

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A cash-and-carry wholesaler sells merchandise, but buyer must pay shipping.
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A truck wholesaler sells and delivers at the same time.

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Storage: storing goods for future sales.
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Transportation: Moving goods from producers and/or sellers to buyers.
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The type, size, weight of the good and how fast it is needed factor into storage and transportation.

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Warehouse club shopping lets people buy a limited number of models and brands in huge quantities so the warehouse will get favorable prices from manufacturers.
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Direct marketing is done through catalogs, the
Internet, and “space ads.”