SECTION 1.1

1. SECTION 1.1 What Is Marketing What Is Marketing Marketing is the process of developing, promoting, and distributing products to satisfy customers' wants and needs.

2. SECTION 1.1 What Is Marketing Products = Goods and Services Goods: Hammers, automobiles, soda pop, clothing, and computers Services: Dry cleaners, amusement parks, attorneys, and movie theaters Exchange: Buying or selling a good or service

3. SECTION 1.1 What Is Marketing 15% of Test Foundations of Marketing Building on these four foundations helps you to acquire marketing skills that are relevant to your own career development. • Business, Management, and Entrepreneurship • Communication and Interpersonal Skills • Economics • Professional Development Slide 1 of 3

4. SECTION 1.1 What Is Marketing 35% of Test Functions of Marketing These functions define marketing as it is applied in business operations. • Distribution • Financing • Marketing-Information Management • Pricing • Product/Service Management • Promotion • Selling Slide 1 of 4

5. SECTION 1.2 Economic Utilities Economic Utilities Economic utilities reflect the value that producers and marketers add to raw materials when they make them into products and offer them for sale to the public. • Form utility • Place utility • Time utility • Possession utility • Information utility Form Utility is NOT A marketing utility.

6. SECTION 1.2 Economic Utilities Form Utility Changing raw materials or putting parts together to make them more useful. • Example: The parts of a lounge chair—the wood frame, the fabric, the glue and nails, and the reclining mechanism—are less useful by themselves. Putting them together adds form utility.

7. SECTION 1.2 Economic Utilities Place Utility • Having a product where customers can buy it. • Example: Selling directly to the customer through catalogs.

8. SECTION 1.2 Economic Utilities Time Utility • Having a product available at a timeconvenient for customers. • Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year.

9. SECTION 1.2 Economic Utilities Possession Utility • Exchange of a product for some monetary value. • Example: Taking credit cards and checks rather than just cash enables customers to buy products.

10. SECTION 1.2 Economic Utilities Information Utility Providing information so the customer is comfortable buying. • Example: Salespeople explain features of products. • Example: Packaging explains qualities and uses. • Example: Advertising informs consumers about products.

11. SECTION 2.1 The Marketing Concept What is a Market? A market is all potential customers who share common needs and wants and who have the ability and willingness to buy the product.

12. SECTION 2.1 The Marketing Concept The Marketing Mix The marketing mix comprises four basic marketing strategies known as the four Ps: • Product • Place • Price • Promotion Slide 1 of 3

13. SECTION 2.1 The Marketing Concept The Marketing Mix Product strategies include what product to make, how to package it, what brand name to use, and what image to project. Place strategies deal with how and where a product will be distributed. Slide 2 of 3

14. SECTION 2.1 The Marketing Concept The Marketing Mix Price strategies should reflect what customers are willing and able to pay. Promotion strategies deal with how potential customers will be told about the new product, what the message will be, when and where it will be delivered, and with what inducements to buy. Slide 3 of 3

15. SECTION 2.1 The Marketing Concept Target Marketing Target marketing is focusing all marketing mix decisions on the specific group of people you want to reach.

16. SECTION 2.2 Market Segmentation Market Segmentation Dividing the total market into smaller groups of people who share specific needs and characteristics is the essence of market segmentation.

17. SECTION 2.2 Market Segmentation Analyzing Markets Businesses may segment a market by: • demographics • psychographics • geographics • product benefits

18. SECTION 2.2 Market Segmentation Demographics Demographics refers to statistics that describe a population in terms of personal characteristics. These include: • age • gender • income • ethnic background

19. SECTION 2.2 Market Segmentation Psychographics Psychographics involves studies of consumers based on social and psychological characteristics. In addition to segmenting people by their leisure time interests, marketers observe trends and changes in households, the economy, politics, and the workplace.

20. SECTION 2.2 Market Segmentation Geographics Geographics refers to segmentation of the market based on where people live. Marketers study geographics in relation to: • ethnic concentrations • age • ethnic background • income

21. SECTION 3.1 Capitalism Basic Principles In the United States, we have the freedom to make decisions about where we work and how we spend our money. A free enterprise system encourages individuals to start and operate their own businesses.

22. SECTION 3.1 Capitalism Competition Competition is the struggle between companies for customers. Competition is an essential part of a free enterprise system. It forces businesses to produce better quality goods and services at reasonable prices.

23. SECTION 3.1 Capitalism Risk Risk is the potential for loss or failure in relation to the potential for improved earnings. As the potential for earnings gets greater, so does the risk.

24. SECTION 3.1 Capitalism Profit Profit is the money earned from conducting business after all costs and expenses have been paid. Profit is the engine that drives a free enterprise system.

25. SECTION 3.2 Government and Consumer Functions Determining Prices Demand refers to consumer willingness and ability to buy products. According to the law of demand, if the price is low enough, demand for a product usually increases. Slide 2 of 4

26. SECTION 3.2 Government and Consumer Functions Determining Prices Supply is the amount of goods producers are willing to make and sell. • higher prices = more products for sale • lower prices = less products for sale Slide 3 of 4

27. SECTION 3.2 Government and Consumer Functions Determining Prices Equilibrium exists when the amount of product supplied is equal to the amount of product demanded. Slide 4 of 4

28. SECTION 3.2 Government and Consumer Functions Surpluses Surpluses of goods occur when supply exceeds demand. When this happens, businesses respond by lowering their prices in order to encourage people to buy more of the product. • Example: When grocery stores have lots of produce, they price the produce low to encourage people to buy.

29. SECTION 3.2 Government and Consumer Functions Shortages When demand exceeds supply, shortages of products occur. When shortages occur, businesses can raise prices and still sell their merchandise. • Example: An oil shortage increases the price of gasoline, so consumers who want to drive their vehicles pay the higher price.

30. SECTION 4.1 What Is an Economy? What Is an Economy? An economy, or economic system, is the way a nation makes economic choices about how the nation will use its resources to produce and distribute goods and services.

31. SECTION 4.1 What Is an Economy? Resources Resources, also called factors of production,are all the things used in producing goods and services. They fall into four categories: • land • labor • capital • entrepreneurship Slide 1 of 3

32. SECTION 4.1 What Is an Economy? Scarcity Scarcity is the difference between wants and needs and available resources. • Example: Most underdeveloped nations have natural resources, but do not have capital or skilled labor to develop them.

33. SECTION 4.2 Understanding the Economy The Business Cycle • Sometimes an economy grows, and at other times it slows down. These recurring changes are called the business cycle. The business cycle has four phases: • prosperity • recession • depression • recovery

34. SECTION 5.2 Ethics and Social Responsibility Business Ethics Ethics are guidelines for good behavior. Ethical behavior is based on knowing the difference between right and wrong—and doing what is right. Laws are made to address ethical concerns involving products or marketing. The following unethical practices are prohibited: • bait-and-switch advertising • price fixing • selling unsafe products

35. SECTION 5.2 Ethics and Social Responsibility Business Ethics • To make the right ethical choices, marketers must answer these three basic questions: • 1. Is the practice right, fair, and honest? • 2. What would happen if the product were marketed differently? • 3. What practice will result in the greatest good for the greatest number of people?

36. SECTION 6.1 The Global Marketplace Defining International Trade International trade involves the exchange of goods and services between nations. Imports are goods and services purchased from other countries. Conversely, exports are goods and services sold to other countries. These exchanges occur between businesses but are controlled by the governments of the countries involved.

37. SECTION 6.1 The Global Marketplace Interdependence of Nations • Most countries need to get some of their goods and services from other nations. This is called economic interdependence. There are two types of advantages in international trade: • absolute • comparative

38. SECTION 6.1 The Global Marketplace Absolute Advantage • Absolute advantage occurs when a country has special natural resources or talents that allow it to produce an item at the lowest cost possible. • Example: China produces close to 80 percent of all the silk in the world, which gives them absolute advantage.

39. SECTION 6.1 The Global Marketplace Comparative Advantage • Comparative advantage is the value that a nation gains by selling the goods that it produces most efficiently. • Example: U.S. businesses have a comparative advantage in producing technology relatedgoods and services.

40. SECTION 12.1 Selling Knowing Your Product and Your Customer The goal of selling is to help customers make satisfying buying decisions. Salespeople accomplish this by solving customers’ problems and by understanding their needs and wants. Slide 2 of 2

41. SECTION 12.1 Selling Product Features Product features are the basic, physical, or extended attributes of the product: • Basic features are a product’s intended use. • Physical qualities differentiate it from competing brands and models. • Additional features add value and justify price differences between models.

42. SECTION 12.1 Selling Customer Benefits Customer benefits are the advantages or personal satisfaction a customer will get from a good or service. To determine customer benefits, salespeople need to answer two questions about each product feature: 1. How does the feature help the product’s performance? 2. How does the performance information give the customer a personal reason to buy the product?

43. SECTION 12.1 Selling Customer Buying Motives • Salespeople must know what motivates customers to buy and what decisions customers make before the final purchase. Customers' motives fall into the following categories: • rational • emotional Slide 1 of 2

44. SECTION 12.1 Selling Customer Buying Motives • A rational motive is a conscious, logical reason for a purchase, such as dependability or time savings. • An emotional motive is a feeling experienced by a customer through association with a product, such as social approval, recognition, power, or prestige. Slide 2 of 2

45. SECTION 12.1 Selling Customer Decision Making There are three distinct types of decision making: • extensive • limited • routine Decisions are based on a person’s previous buying experience and the importance and perceived risk of the purchase.

46. SECTION 12.1 Selling Extensive Decision Making • Extensive decision makingis used when there has been little or no previous experience with an item. • Extensive decision making is used when there is a high degree of perceived risk. • It is usually used for goods and services that are very expensive or have high value to the customer.

47. SECTION 12.1 Selling Limited Decision Making • Limited decision making is used when a person buys goods and services that he or she has purchased before but not regularly. • In limited decision making, there is a moderate degree of perceived risk. • When making this type of decision, the customer often needs some information before buying.

48. SECTION 12.1 Selling Routine Decision Making • Routine decision making is used when a person needs little information about a product. • In routine decision making, there is a high degree of prior experience. • It is usually used for goods and services that have a low perceived risk (because an item is inexpensive, is bought frequently, or satisfaction with the product is high).

49. 12.1 Graphic Organizer Types of Customer Decision-Making Processes CUSTOMER Expensive or Highly Valued Item No Experience with Item Information Needed Some Experience with Item HighProduct Satisfaction Much PriorExperiencewith Item High Perceived Risk Moderate Perceived Risk Low Perceived Risk Extensive Decision Making Limited Decision Making Routine Decision Making

50. SECTION 12.2 Preparing for the Sale The Preapproach The preapproach is getting ready for the face-to-face encounter in a selling situation. Salespeople do the following to prepare for the sale: • Study their products. • Keep abreast of industry trends. • Research potential customers. • Develop familiarity with their company's policies and procedures.