The Basics of Marketing

1. The Basics of Marketing Chapter 6

2. How Has Marketing Changed? 1. A change from a few activities to a variety of activities • Early uses were limited to moving products from producer to consumer • Today 9 functions are used to create satisfying exchanges

3. How Has Marketing Changed? 2. A change from an independent activity to an integrated activity • In the past marketing was done after other business planning was complete • Today marketing strategies are developed as a part of the business plan

4. How Has Marketing Changed? 3. A change from problem-solver to an Opportunity-provider • If inventory was too high or competitors were attracting customers away from a business, marketers were asked to increase sales and promotion efforts or to find weaknesses in in the competitor’s programs. • Today marking is responsible for identifying opportunities and helping a company plan for those opportunities

5. How Has Marketing Changed? 4. A change from an expense to an investment • Marketing can be very expensive • Effective marketing is an investment because it is responsible for matching a company’s offerings with market needs

6. Understanding the Marketing Concept • The marketing concept has changed the way businesses operate • It requires a change in the approach to business planning

7. Planning a Marketing Strategy • Planning that identifies how a company expects to achieve its goals is known as a strategy • The strategy used by a business provides the clearest indication of whether that business understands the marketing concept

8. How Does the marketing Concept Affect Planning?

9. Understanding the Customer • Today most consumers are well informed, experienced in gathering information and compare products and services before making a buying decision • If a buyer is dissatisfied with the purchase or finds a better choice later, s/he is likely to return the original product for a refund

10. Identifying Customer Needs • Successful companies are usually the ones that meet customer needs • Satisfying exchanges occur when you spend your money for products and services that meet your needs

11. Meeting Customer Needs is Not Easy • Many customers are not sure of their needs or have conflicting needs • Consumers typically have limited money available to satisfy their many needs/wants • The needs of individuals and groups of consumers can be quite different

12. Meeting Customer Needs is Not Easy • Businesses need to recognize that consumer needs can be quite different before they can develop products and services to meet those needs

13. Satisfying Customer Needs • Using the Marketing Concept leads businesses to utilize extensive marketing research; gathering consumer information and analyzing the information to categorize customers according to similar characteristics, needs and purchasing behavior. • Groups of similar consumers within a larger market are known as marketsegments

14. Market Segments • After segments have been identified, businesses determine which can be served most effectively AND have the strongest needs, the most resources, the least competition, or other characteristics which provide the business with opportunities for success • Studying and prioritizing market segments to locate the best potential based on demand and competition is known as marketopportunityanalysis

15. Planning the Offering • Much of the planning efforts of a company focus on determining what to sell and how it will be presented to the customer • A business that believes in the marketing concept uses a planning process that is based on customer needs

16. Marketing Mix • The marketingmix is the blending of product, distribution, price and promotion by the business • An effective strategy will combine to bring together the right product(s) to the selected market(s) at the time, in the location, and the price and with the information that best meets the consumers’ needs

17. Marketing Mix • Decisions in any one element of the marketing mix effects the other elements • Developing the best marketing mix requires the cooperation of many people, careful planning and creativity

18. Combining Parts of the Marketing Mix The parts of the marketing mix are combined to satisfy customers

19. Product Development • A product is more than the final or end result • Consider what makes your product different, or better, than the competitor’s offering • Unique design • Construction • Size • Color • Operation

20. Product Improvements • Accessories can be added to make a product easier to operate, more efficient, etc. • Providing service before or after the sale • Guarantees & warranties • Product use; multiple uses • Packaging; easy open/reseal, storage, information

21. Distribution Decisions • Critical; impacts customer satisfaction by making product available when and where customers want it • Poor distribution can lead to product damage during shipping • Few products are exchanged between producer and consumer; most businesses must involve others in distribution

22. Channel of Distribution • Organizations and individuals who participate in the movement and exchange of products and services from the producer to the final consumer • Includes activities such as order processing, product handling, transportation and inventory control

23. Product & Service Pricing • Price is the most difficult marketing decision to understand and plan • Interaction of supply & demand is important in setting the best price • Price cannot be set solely by supply & demand

24. Steps in Product Pricing • What is the objective or goal? • Example: Is the goal to increase sales volume or make the most profit possible on each item? The strategy is different in each case • Simply setting a price at or slightly lower than the competition may be necessary but can also create problems

25. Calculating Price • Production, marketing and operating costs make up a great percentage of the price of most products resulting in a very small net profit • If all components of a price are not considered or calculated carefully, there may be no profit available after expenses have been tallied

26. Presenting Price to Customers • Price tag or sticker, catalogs, price sheets or presented by a salesperson • Discounts, markdowns, allowances, trade-ins, and coupons are all ways prices can be changed • Credit is also used to enable customers to purchase products without incurring the full cost at the time of purchase

27. Pricing Goals • To balance the cost of the product with the customer’s feelings about the value of the product • A fair price and a reasonable profit

28. Planning Promotion • Must be planned to communicate the value and benefits of a product/service to customers to aid them in decision-making • Advertising, selling and other promotional methods are valuable and powerful, but if they are misused they can have a negative impact with customers

29. Promotion Methods • Most common: advertising, personal selling, sales promotion, visual display and publicity • Promotional method varies based on the communications objectives the company wants to accomplish and the audience it wants to reach

30. Cost of Promotion • Cost varies in terms of cost per person, number of people reached, types of messages carried and other factors • Planning needs to be done in order to reach the specific audience with an understandable message in a way that helps the consumer make appropriate decisions

31. Promotion as an Economic Utility • Promotion cannot do a great deal to help a company that has a poor product, prices that are too high, or ineffective distribution • An effective promotional plan helps consumers decide from among the many choices available to them

32. Helping Consumers Make Decisions • Consumer decision-making has been studied extensively • A consumer decision-making sequence has been create as a result of the research conducted

33. Stages in Consumer Decision-Making • Recognizing a need • Identifying alternatives • Evaluating choices • Making a decision • Determining satisfaction

34. Understanding the Decision-Making Process • Knowing where customers are in the decision-making process is a very important marketing skill because it helps the marketer provide the right information at the right time resulting in a more effective exchange

35. Decision Improve with Information • Marketing is increasingly becoming a scientific process in which information is gathered to improve decisions and alternative methods are studied to determine which are mnost effective

36. Conducting Research • The study of potential and current customers is the most important for most businesses • Businesses must be able to clearly identify their customers, characteristics which make them different, their important needs, and how they make purchase decisions

37. Conducting research - continued • Businesses must research the competition • Business must identify the type of competition and the strengths and weaknesses of competing companies • Businesses must also study alternative marketing strategies to determine which are most effective and profitable

38. Marketing Information Systems • Sometimes abbreviated MkIS or MIS, a marketing information system is an organized method of collecting, storing, analyzing and retrieving information to improve the effectiveness and efficiency of marketing decisions

39. Marketing-Information Management • Definition: obtaining, managing and using market information to improve decision-making and the performance of marketing activities

40. Using Marketing to respond to Competition • Competing businesses allow consumers to select from a variety of products and services • Businesses that are unable to meet customer expectations better than their competitors may not be able to survive

41. Intense Competition • Pure Competition – market condition with a large number of suppliers offering very similar products

42. Limited Competition • Monopoly – market condition in which there is one supplier offering a unique product • Monopolistic Competition – market condition where there are many firms competing with products that are slightly different

43. Responding to Competition • Using the marketing concept and the full range of decisions within the marketing mix to develop products and services not only make the brand different from its competitors but more attractive to potential customers

44. How Businesses Use Marketing • While the entire marketing mix and all the marketing functions are important and necessary to creating satisfying exchange relationships, each type of business will need to place special emphasis on some marketing decisions.

45. Producers & Manufacturers • Producers & manufacturers focus on the product element of the marketing mix because they develop the products and services needed by other businesses and consumers • Distribution is the second most important factor for producers & manufacturers

46. Channel Members • Channel members are used to provide many of the marketing functions during the distribution process • Wholesalers emphasize distribution planning • many wholesalers help their customers with financing and provide marketing information • Retailers are responsible for most final pricing decisions and use a variety of promotion activities to encourage customers to purchase their products

47. Service Businesses • Most service businesses work directly with their consumers rather than through a channel of distribution so they are responsible for the entire marketing mix

48. Service Businesses • The product mix is very important • Since services are usually developed and delivered by people controlling the quality of the service each time is vital • The business must develop procedures to ensure the customer receives the expected quality of service every time

49. Service Businesses • Distribution is very important for service businesses as well since the service must be available where and when the customer wants it • If there is not a large enough quantity available , sales will be lost • Conversely, if the business offers more services than the customer wants, expenses will increase

50. Service Businesses • Pricing is easier for service businesses to control, however it is more difficult for customers to determine the appropriate price for a service or to compare prices since different companies may offer a service in different ways