Chapter 1

Everything around you
 Think of purchases you have (or have not) made
 How does a business influence your purchases?
▪ Southwest Airlines

Marketing
 The process of planning, pricing promoting,
selling and distributing ideas, goods, or services to
create exchanges that satisfy customers
▪ An ongoing process – why?

Ideas
 generally ideals, thoughts
▪ Politicians, environmentalists
▪ Got Chocolate Milk?

Goods
 Tangible items that have monetary value and satisfy
your needs and wants
▪ Examples?

Services
 Intangible items that have monetary value and satisfy
your needs and wants
▪ Examples?
Practice of marketing depends on 4 key areas of
knowledge: 4 foundations of marketing


Business, management, entrepreneurship
▪

Understanding these areas affect decision making
Communication and interpersonal skills
▪

Interact effectively with others
Economics
▪

Economic principles
Professional Development
▪
Career exploration, development and growth
Product/Service Management
1.

Obtaining, developing, maintaining, and improving
a product or a product mix in response to market
opportunities
▪
Marketing research = determining needs/wants
Pricing
2.

How much to charge for goods and services in order
to make a profit
▪
▪
▪
Costs
Competition price
Customers willingness and ability to pay
Promotion
3.

Effort to inform, persuade, or remind potential
customers about a business’s product or services
▪
▪
Examples of promotion?
Other than product and services promotion, what else
can a company promote?
Distribution
4.

The process of deciding how to get goods in
customers’ hand
▪
Transportation, storing, tracking
Marketing Information Management
5.

Gathering information, storing it, and analyzing
the information
▪
Why?
▪
▪
How would you gather information?
▪
▪
▪
Apple example
Nielsen – Consumer and Consumer behavior (watch and buy)
J D Power & Associates – primarily customer surveys
How often?
Financing
6.

Getting the money necessary to pay for setting up and
running a businesses
▪

Loans, selling shares of stock, issuing bonds
Helping others obtain your product/service
▪
▪
Extending credit to customers
Payment options
▪
Term payments, credit cards, etc.
Selling
7.


Providing customers with goods and services they want
Directly to the customer or business
▪
Techniques and activities

Marketing Concept
 The idea that a business should strive to satisfy
customers’ needs and wants while generating a profit
for the firm
 Where is the focus?
 Success comes when all 7 functions support the
marketing concept idea

Customer Relationship Management (CRM)
 An aspect of marketing that combines customer
information with customer service and marketing
communications
▪ Meaningful one-on-one communications via customer
intelligence

On a piece of paper, answer the following
(page 7, 1-3 and 5):
 Name 2 ideas that can be marketed
 Where do exchanges take place?
 What is the main difference between consumers
and industrial users
 List at least 3 ways the Internet has changed
marketing functions

Marketing has an important role in the
economy
 Provides the means for competition to take place
▪ Businesses try to create new or improved products at
lower prices than their competitors
▪ How does this affect the consumers?
▪ How does this affect businesses to have such competition?
 New and improved products
▪ Continuing to look at ways to satisfy customers
▪ How has competition shaped the personal computer industry?

Lower prices
 What happens in the marketplace when prices drop?
 What happens to production when demand increases?
▪ Overall unit costs go down
▪ Fixed costs
 Rent, insurance, etc. stay the same regardless of production
▪ Variable costs
 Costs that change given the amount of production
 Labor, materials, etc.
▪ Example: $20,000 in fixed costs, Quantity produced is 10,000 units. How
much per unit does it cost the company?
▪ How much per unit would it cost the company if they produced 200,000
units?

The functions of marketing add value to a
product
 Utility
▪ An attribute of a product or service that makes it
capable of satisfying consumers’ wants and needs
▪ 5 economic utilities
 Place
 Time
 Possession
 Information
 Form (not directly related to marketing; however, the research
and product design makes it a crucial part of the marketing
process

Form Utility
 Involves changing raw materials or putting parts
together to make them more useful
▪ Deals with making or producing things
▪ Taking things of little value and putting them together to create
more value
▪ Special features or ingredients in a product add value
and increases its form utility
▪ Example: Automobiles

Place Utility
 Involves having a product where customers can
buy it.
▪ Businesses study consumers shopping habits to
determine the most convenient and efficient locations
to sell products
▪ Direct approach
▪ Catalogs
▪ Internet
▪ Retail stores (considered an intermediary)

Time Utility
 Having a product available at a certain time of
year or a convenient time of day
 Increases the value of the products by having
them available when consumers want them
 Examples?
▪ 24 hour super stores
▪ Coffee shops
▪ Extended hours during holiday shopping seasons

Possession Utility
When legal ownership of a product changes hands
 How do you come into possession of the items
you want? What exchanges are made?

▪ How does this add value?
 Possession utility also includes providing payment
options

Information Utility
 Involves communication with the consumer
 Examples:
▪ Labeling
▪ Advertising
▪ Web Assist and Manuals
▪ How do these add value?
 Provide information to customers by explaining the
features and benefits of the products





The added value to a product that marketing
provides is called ___________________
How does marketing help to lower prices?
In what way is marketing related to form utility?
Which utility is added by drive-through windows
at fast-food restaurants?
In a business-to-business transaction, the seller
offers the buyer a 2% discount for paying a bill
early. Assuming the buyer took advantage of this
offer, how much would be discounted on a
$10,000 invoice?

Can you make your product appeal to
everyone?
 What considerations do we need to make?

Market
 All people who share similar needs and wants and
who have the ability to purchase your products

Consumer Market
 Consists of consumers who purchase goods and services
for personal use
▪ What does a consumer take into consideration?
▪ Lifestyles
 Price, convenience/easier, improved appearance, status, or some
other motivation that provides satisfaction

Industrial Market (AKA Business to Business Market)
 Businesses that buy products for use in their operations
▪ What does the business take into consideration?
▪ Profits
 Efficiency
Market Share


The percentage of
total sales volume
generated by all
companies that
compete in a
given market
Continuously
changes
Camera Market
21.1
26.3
Sony
Kodak
Canon
Olympus
17.5
7.2
 Why?
Fuji Film
Others
10.7
17.2

Unit sales is best
 The manager of Geneganslet Golf Course
discovers that all the courses in the market area
together host 50,000 rounds of golf a year. Of
those rounds, Open Fairways hosts 7,000, and
therefore has _________ market share.
 Market Share research and exercise

Four basic marketing strategies
 4 P’s
▪ Product
▪ Price
▪ Promotion
▪ Place/Distribution
 Marketers use these to influence potential
customers

A group of people
identified as those
most likely to become
customers
 All marketing strategies
are directed to the
target market
 When there is a lack of a
target market, the
marketing plan has no
focus
Marketing
Mix
~Product: choosing what
products to make and sell.
Design, features, brand
name, packaging, service,
and warranty
~Place: Getting the product
into the consumer’s hands
Where and how a product
will be distributed,
transportation, and stock
levels
~Price: reflection of what
customers are willing to pay
and compared to
competitors
~Promotion: decisions about
advertising, personal selling,
sales promotion, publicity
PRICING STRATEGIES
PROMOTIONAL STRATEGIES

How potential customers

List price or MSRP

Discounts
will be told about a

Allowances
company’s products

Credit Terms


Payment Period
Promotional Pricing
 Period of time

The message

Media selected

Special offers

Timing of promotional
campaigns


Consumers – Those who “consume” the
product/service
Customers – Those who buy the product/service
 Example: Cereal
▪ Two target markets:
▪ Children = consumers
▪ Parents = customers

Customer Profile
 A listing of information about the target market:
▪ Age, income level, ethnic background, occupation, attitudes,
lifestyle, geographic residence
1.
2.
3.
Name the four P’s of the marketing mix and
explain the importance of a target market for
each of them
If total sales in the ice cream category were $4.4
billion and Breyers’s sales were $650,000,000
what would be its market share?
Round to the tenth decimal place.
Write a customer profile for a magazine of your
choice. Provide examples of articles and
advertisements that support that profile