NATURE AND SCOPE OF MARKETING

1. NATURE AND SCOPE OF MARKETING When you have completed this chapter, you will be able to: • Discuss the importance of marketing and its role in the economy. • List the activities that are part of marketing. • Define basic marketing concepts and the four elements of the marketing mix. • Explain the four stages of the product life cycle. • Identify the consumer goods classifications.

2. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing • What is marketing? • According to the American Marketing Association, marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. • Simply put, marketing is a key tool in matching supply and demand.

3. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing • What is the supply and demand concept? • Supply is how much of something is available. • Demand is how much of something people want. • The price of something will go up if the demand goes up. Why? Because the seller thinks he or she can get more money for whatever he or she is selling. • In the same way, the price will go down when the demand goes down.

4. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing • Business people make decisions about what to produce. • Consumers make decisions about what they want to purchase. • Marketing activities help to match production and consumption. • How does the supply and demand concept relate to marketing? Marketing helps to increase demand!

5. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing • It is estimated that the average consumer sees about 1 million marketing messages a year—about 3,000 a day. • One trip to the supermarket alone can expose you to more than 10,000 marketing messages. Facts and Figures

6. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing What are some examples of consumers’ daily contact with different forms of marketing? • Print ads • Decals on vehicles • Banners • Sales • Customer service phoneannouncements • Flyers • Brochures • Word of mouth • Press releases • Television & radio commercials • Internet pop ups/webadvertising • Sales people (e.g. Sam’s Club food stations) • Billboards • Product packaging • Mass transit ads

7. CHAPTER 21: NATURE AND SCOPE OF MARKETING Importance of Marketing Millions of businesses worldwide engage in marketing as their primary business activities. • Retailers (businesses that sell directly to final consumers) • Wholesalers (businesses that buy products from businesses and sell them to other businesses) • Businesses that sell services are included. (e.g., advertising agencies) • Some manufacturers have marketing departments with employees who do marketing tasks.

8. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing When many people think of marketing, they think only of advertising and selling. • Many marketing activities MUST occur before a product can be advertised and sold. • Marketing activities include: • Buying • Transporting • Storing • Risk taking • Grading and Valuing

9. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing Marketing Activities: • Buying - Obtaining product to be resold. • Transporting – Moving products from where they were made to where customers can buy. • Storing – Holding products until customers need them. • Risk taking – Assuming the risk of losses that may occur from fire, theft, damage, or other circumstances. • Grading and valuing– Grouping goods according to size, quality, or other characteristics, and determining an appropriate price for products and services.

10. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing COST OF MARKETING • Performing marketing activities needs many people and special equipment. • Half or more of the price you pay for a product may result from marketing expenses.

11. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing • ROLE OF MARKETING • Marketing in the early 1900’s was very different because customers were limited to a few products, and they had a limited amount of money to spend. • Demand for most products was greater than supply. • Consequently, most producers concentrated on making more kinds of products in greater quantities; they were production oriented. • Business success also required that businesses be sales oriented; emphasis was placed on widespread distribution and promotion in order to sell products.

12. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing • ROLE OF MARKETING • Today, more businesses are customer oriented—they direct the activities of the company toward satisfying customers. • Keeping the focus on the customer during the design, production, and distribution of a product is called the marketing concept. When a company is customer oriented, the marketing manager is part of top management.

13. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Whom to Serve) • A company needs to identify potential customers for its product or service. • The term, market, refers to the types of buyers a business wishes to attract, and where those buyers are located. • Because of cost considerations, a business does not try to reach ALL potential customers. • Instead, a business identifies several groups of potential customers and then decides which groups will be the best markets for its product.

14. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Whom to Serve) • Marketers use population characteristics called demographics to group customers. • Demographics can include such characteristics as: • Age • Gender • Family Status • Education • Income • Occupation • For example, a clothing manufacturer could handle women’s or men’s clothing, clothing for children or adults, casual clothing or the latest fashions.

15. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Whom to Serve) • What are some examples of types of customers that a cell phone producer could target? Keep in mind that you cannot reach ALL potential customers in a market. • Families • People concerned about safety • Business people • Students

16. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Whom to Serve) • Businesses decide to serve one or more markets based on the opportunities for success that the market presents. • Few existing competitors • A large number of customers with a need for the product • Customers with sufficient money to spend on the product • The ability of the company to produce a product that will satisfy the needs of the market

17. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Where to Serve) • Producers often limit the scope of their business operations to certain geographic areas. Options include: • The coast • The mountains • Areas with certain climates • Urban areas • Rural areas

18. CHAPTER 21: NATURE AND SCOPE OF MARKETING Nature of Marketing MARKET DETERMINATION (Identifying Target Markets) • Companies can produce goods and services that meet consumers’ needs better if they know who their customers are, where they are located, and what they want and need. • Market research is the study of a company’s current and prospective customers. • Companies use market research to identify their target markets, which are groups of customers with very similar needs to whom the company pans to sell its products.

19. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING Management decisions center on the 7 Functions of Marketing. The blend of all these decisions make up the marketing mix. The 7 Functions of Marketing are: 1.    Product 2.   Price 3.   Distribution 4.   Promotion Selling Marketing Information Management Financing

20. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing)

21. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Product • Product is defined as services and physical goods that customers receive in exchange for the purchase price. • It involves designing, developing, maintaining ,improving, and acquiring products and services that meet consumer needs.

22. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Product • Product planning decisions include: • Number of items to produce • Physical features of product • Quality preferred by target market • Number of different models needed • Packaging features • Brand name • Guarantees and services desired by customers • The image to be communicated to customers

23. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Price • Price is the amount of money given to acquire a product or service. • Price involves setting and communicating the value of products and services, and setting the price at the right level. • How do you determine if you are willing to pay the price for a particular product? • What is the price of similar products? • How important is the purchase? • How much money you have?

24. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Distribution • Distribution is the set of activities required to transport and store products, and make them available to customers. • Some businesses are wholesalers who sell their products to retailers. The retailers in turn sell the products directly to the customer. • Distribution problems include lost orders, merchandise sent to the wrong address, and damaged and missing pieces.

25. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Promotion • Promotion means providing information to consumers that will assist them in making a decision and persuade them to purchase a product or service. • The major methods of promotion are advertising, personal selling, publicity, and public relations.

26. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Selling • Selling involves direct selling and is more personalized and engaging than other types of marketing. • Salespeople personally interact with customers face-to-face.

27. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Marketing Information Management • Marketing Information Management involves obtaining, managing, and using information about what customers want to improve business decision making, performance of marketing activities, and determining what will sell. • Methods include testing products and studying buyer interests and needs.

28. CHAPTER 21: NATURE AND SCOPE OF MARKETING 7 Functions of Marketing (Elements of Marketing) FUNCTIONS OF MARKETING • Financing • Financing involves budgeting for marketing activities, obtaining the necessary funds needed for operations, and providing financial assistance to customers (credit) so they can purchase the business products and services.

29. CHAPTER 21: NATURE AND SCOPE OF MARKETING The Marketing Plan • The marketing plan is a detailed written description for all marketing activities that a business must accomplish in order to sell its products. • It describes: • Goals • Target markets • Marketing mixes to be used for each product • Assesses if marketing activities were successful and if goals were accomplished • Written for a specific time period (often one year) • Developed by the top marketing executive

30. CHAPTER 21: NATURE AND SCOPE OF MARKETING The Product Life Cycle • The product life cycle is the four stages of sales and profit performance through which all brands of a product progress.

31. CHAPTER 21: NATURE AND SCOPE OF MARKETING The Product Life Cycle • The product life cycle is the four stages of sales and profit performance through which all brands of a product progress. • The four stages are: • Introduction-a brand new product enters the market • Growth-customers begin buying the product regularly • Maturity-competition becomes intense • Decline-customers switch to a newer better product • Why are profits lower than sales in the Maturity stage? • Competition is fierce and resources are spent promoting the company’s brand name.

32. CHAPTER 21: NATURE AND SCOPE OF MARKETING The Product Life Cycle

33. CHAPTER 21: NATURE AND SCOPE OF MARKETING Types of Consumer Products • Products can be categorized as either industrial or consumer goods. • Industrial goods are products designed for use by another business. • Consumer goods are products designed for personal or home use. • Some products are both—laptop computers and gasoline (businesses can buy these in large quantities).

34. CHAPTER 21: NATURE AND SCOPE OF MARKETING Types of Consumer Products CONSUMER GOODS • Marketers group consumer goods into four categories: • Convenience goods are inexpensive items that consumers purchase regularly without a lot of thought (milk, candy, soft drinks) • Shopping goods are products bought less frequently, have a higher price, and require some thought (furniture, large appliances, houses). • Specialty goods are products that customers insist upon having and are willing to search for; only one brand or product will do (designer clothing). • Unsought goods are products that consumers do not shop for and don’t have a need for (life insurance, funeral services)

35. CHAPTER 21: NATURE AND SCOPE OF MARKETING Successful Marketing Strategies CONSUMER GOODS • Marketing mistakes can be costly so managers cannot afford to guess. • Product life cycle and consumer goods categories are used to plan effective marketing mixes. • Marketers study markets and competition and use their knowledge of marketing to make decisions that will satisfy customer needs and result in profit for the company.

36. CHAPTER 21: NATURE AND SCOPE OF MARKETING THE END!!!