©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. WHAT IS MARKETING?? 1 CHAPTER 19

©2013 Cengage Learning. All Rights Reserved.

Business Management, 13e


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CHAPTER 19

WHAT IS MARKETING??



Importance of Marketing

● Marketing—a set of activities that gets products from producers to consumers

● The role of the marketing manager

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Nature of Marketing● Marketing activities

● Buying- obtaining product to be resold● Selling- providing info to customers to help them make a

purchase● Transporting-moving products from manufacturing site to where

customers will buy them● Storing- holding products until customer purchases● Financing- obtaining credit when buying end extending credit

when selling● Researching- studying buyer interests and needs● Risk taking- assuming risks of loss that may occur● Grading and valuing- grouping goods according to quality or size

and assessing price value

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Nature of Marketing

● Cost of marketing- half or more of the price the consumer pays goes toward marketing costs

● Role of marketing- customer oriented; direct activities toward satisfying customers

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Market Identification● Whom to serve- customer profile based on

characteristics such as age, income, gender, family status, etc.

● Where to serve- limit to certain geographic area based on climate, city, rural, etc.

● Identifying target markets- groups of people with similar needs to whom the company plans on selling their product(s)

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The Marketing Mix-4 Ps

● Product● Price● Distribution (place)● Promotion

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ELEMENTS OF THE MARKETING MIX

● Product- can be defined as all attributes, both tangible and intangible, that customers received in exchange for the purchase price





● Price- the amount of money given to acquire a product. The price must be high enough to cover the costs of producing and marketing the product.





● Place (Distribution)- the set of activities required to transport and store products and make them available to customers





● Promotion- providing information to consumers that will assist them in making a decision to persuade them to purchase a product or service

● Advertising and personal selling



Developing a Marketing Plan

● Marketing plan—detailed written description of all marketing activities that a business must accomplish in order to sell its products; written for a specific time period, often one year

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PRODUCT



The Product Life Cycle● Introduction stage- brand new product enters

market; sales low & profits low● Growth stage- other brands are available;

sales & profits are growing● Maturity stage- many competing brands that

are very similar; sales highest but profits drop● Decline stage- new product is introduced that

is better and customers begin to switch; sales & profits drop

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Product Life Cycle

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Product Categories● Industrial goods- designed for use by other

businesses● Consumer goods- designed for personal or

home use● Types of consumer products

● Convenience goods● Shopping goods● Specialty goods● Unsought goods

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Convenience Goods

● Inexpensive items that consumers purchase regularly without much thought



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Shopping Goods

● Products that consumers purchase less frequently; have higher price and require some buying thought.



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Specialty Goods

● Products that customers insist upon having and are willing to search for until they find them



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Unsought Goods

● Products that consumers do not shop for and for which they have no strong need; consumers typically don’t think about these products



Steps in Product Development

● Develop an idea for a new product that customers want to buy.

● Turn the idea into a workable product design.● Be able to produce the product and make it

available to consumers at a price they are willing to pay.

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Creating Product Ideas

● Consumer research (questionnaires, online research, consumer panels, etc.)

● Product research● Pure research- research done without a specific

product in mind● Applied research- solves existing product

problems or design improvements

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Creating Product Ideas

● Designing new products● Engineers & researchers build models (prototypes)

of products● Product is tested● Resources to produce large quantities are located● Cost to produce is calculated● Selling price must cover all costs

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Product Design Levels

● Basic product● Enhanced product● Extended product

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Product Selection

● Product line● Product assortment● Packaging● Branding

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Product Assortment Matrix

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Producing the Product

● Different types of manufacturing processes-taking raw materials and converting to finished product● Mass production● Continuous processing● Repetitive production● Intermittent processing● Custom manufacturing

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Producing the Product

● Mass production-assembly process that produces large number of identical products (often uses assembly line)

● Continuous processing-raw materials constantly move through specially designed equipment to change their form

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Producing the Product● Repetitive production- same thing is done over

and over to produce a product; activity is usually simple and may be part of a module or assembly process

● Intermittent processing-short production runs to make predetermined quantities of different products

● Custom manufacturing- design and build unique products that meet specific needs of customers

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The Nature of Services

● How services differ from products● Form- intangible● Availability- must be available when & where

needed● Quality- cannot be separated from person or

business supplying the service● Timing- cannot be stored or held until needed

● Managing a service business

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Differences Between Services and Products

SERVICES● Intangible● Available only from the

person providing them● Quality depends on the skill

of the provider and may vary from provider to provider

● Cannot be stored

PRODUCTS● Tangible● Available whenever the

purchaser wants them● Quality depends on

manufacturing process but should not vary significantly among batches

● Can be stored for later use

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PRICE



Planning a Business Purchase

● What to purchase● When to purchase● From whom to purchase● How much to purchase

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Business Buying Processes

● New task purchase● Modified rebuy● Straight rebuy

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Payment Terms and Discounts

● List price● Payment terms● Discounts● Trade discount● Quantity discount● Seasonal discount● Cash discount

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Components of Price

● Selling price● Cost of goods sold● Operating expenses● Margin or gross profit● Net profit● Markup● Markdown

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Components of Selling Price

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Pricing Strategies

● Pricing to meet competition● Pricing to earn a specific profit● Profit based on consumer demand● Pricing to sell more products● Pricing to provide customer services

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Controlling Costs

● Careful purchasing and operating decisions● Factors that can affect costs

● Markdowns● Damaged or stolen merchandise● Returned merchandise

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PLACE (DISTRIBUTION)



Locating the Business

● Availability of raw materials● Transportation methods● Supply and cost of energy and water● Land and building costs● Labor supply● Location of customers● Economic and legal factors

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Production Planning

● Production planning activities● Inventory management- quantities of materials

and supplies needed to produce product● Human resource planning-types of jobs, number

of people needed, skills needed● Production scheduling- steps required, time to

complete each step, sequence of steps● Building layout● Improving production processes

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Purposes of Distribution

● Economic discrepancies● Economic utility

● Time utility● Place utility

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Channels of Distribution

● Channel members● Types of distribution channels

● Direct distribution● Indirect distribution● Integrated marketing channels

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Distribution Channels for Consumer Products

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Selecting a Channel of Distribution

● Different types of consumers require different channels of distribution

● Factors to consider● Perishability of the product● Geographic distance between producer and consumer● Need for special handling of the product● Number of users● Number of types of products manufactured● Financial strength and interests of the producer

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Transportation Decisions

● Common transportation methods● Railways● Trucks● Piggyback service● Airplanes

● Other transportation methods● Waterways● Pipelines● Containerization

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Product Handling

● Tracking products● Bar codes

● Product storage● Warehouses● Distribution center

● Order processing

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PROMOTION



Promotion as Marketing Communication

● Promotional mix● Consumer decision-making process

● Problem recognition● Information search● Alternative evaluation● Purchase● Post-purchase evaluation

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Advertising

● Advertising purposes and media choices● Planning and managing advertising

● Advertising budget● Timing of advertising● Advertising evaluation

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Advertising Purposes

● To inform and educate consumers● To introduce a product or business● To announce improvement or product change● To reinforce features and benefits● To increase frequency of use● To increase variety of uses● To convince people to enter a store● To develop a list of prospects● To make a brand, trademark, or slogan familiar● To improve the image of a company or product● To gain support for ideas or causes

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Types of Advertising Media

● Publication advertising● Mass media advertising● Outdoor advertising● Direct advertising● Display advertising● Internet advertising

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Truth in Advertising and Selling

● False advertising● Full disclosure● Substantiation● Penalties for violations

● Case-and-desist order● Corrective advertising● Fines

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Personal Selling

● Studying the wants of customers (buying motives)

● Presenting and demonstrating the product● Answering customer questions● Closing the sale● Follow-up

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Sales Promotions

● Coupons● Promotional material● Samples● Demonstration● Displays

● Self-service merchandising

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Documents

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. WHAT IS MARKETING?? 1 CHAPTER 19