© 2009 South-Western, Cengage LearningMARKETING 1 Chapter 4 THE BASICS OF MARKETING 4-1Changes in Today’s Marketing 4-2Planning a Marketing Strategy 4-3Deciphering Consumers and Competitors 4-4The Varied Role of Marketing CHAPTER 4

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 2 Focus Questions: What do you think is meant by the ad’s headline? What role does Visa play in helping businesses market products and services to customers? How do credit and financial services such as the ones described in this ad make it easier for businesses to participate in international commerce? ©VISA

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 3 CHANGES IN TODAY’S MARKETING 4-1

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 4 Marketing Has Changed Marketing Experiences Many people can only think of the bad experiences they have The times a sale item was not available or a product did not work as advertised Marketing is more than advertising

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 5 Marketing Has Changed Understanding the Differences From few to many Use to be marketing was getting people to buy what was produced Now marketing involves everything from product development to offer credit to customers From independence to integration Marketing used to be alone Now it is integrated—it is an essential part of all business

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 6 Marketing Has Changed Understanding the Differences cont… From problems to opportunities Marketing used to come in when there was a problem Too many products that have to be sold or competitors taking customers away Marketing now is involved from the beginning by creating market opportunities—finding new markets to sell products and to improve what is offered to the existing markets. From expense to investment When times were tough marketing used to be one of the first areas cut, now businesses know that money invested in marketing can help the whole business improve.

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 7 What Does Marketing Marketing Mean to a Business? Focus on customer needs The business were not successful because: They were concerned only with the product and service They believed they knew what the customer wanted They did not study the market They failed to use a variety of marketing tools available to them

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 8 PLANNING A MARKETING STRATEGY 4-2

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 9 Putting Marketing Up Front Planning that identifies how a company expects to achieve its goals is known as a strategy. Without a marketing concept a business first develops/creates a product and then decides how it will be marketed to customers Little to no consideration will be given to the needs of the customers With a marketing concept the company believes it will be most successful if it recognizes the needs of customers and understands that these needs will change over time.

© 2009 South-Western, Cengage LearningMARKETING How does the Marketing Concept Affect Planning? Without the Marketing Concept With the Marketing Concept 1. Develop a Product1. Conduct research to identify potential customers and their needs 2. Decide on marketing activities2. Develop a marketing mix (product, distribution, price, promotion) that meets the specific customer needs 3. Identify potential customers Chapter 4 10

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 11 Understanding the Customer Identifying customer needs Meeting customer needs is not easy 1.Customers are unsure of their needs 2.Customers have limited amounts of money to spend 3.The needs of individuals and groups of consumers can be quite different Even people within the same household can have different feelings Businesses deal with customer needs in two ways They believe they know the needs better than customers and just need to create the product and market it will to convince people to buy it They study the needs of people and develop products based on this information

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 12 Understanding the Customer Satisfying customer needs Business that are concerned with customer needs support the marketing concept They identify group with unmet needs Categorizes consumers according to similar characteristics, needs and purchasing behavior Market Segments—groups of similar consumers within a larger market Market Opportunity Analysis studies and prioritizes market segments to locate the best potential based on demand and competition A target market is a clearly defined segment of a market to which a business wants to appeal

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 13 Planning the Offering The marketing mix is the blend of the four marketing elements—product, distribution, price and promotion Creating the right mix Developing products Making distribution decisions (how to get it to consumers) Pricing products and services Planning promotion

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 14 Combining Parts of the Marketing Mix Product that offers choices Distribution that provides convenience Price that gives value Promotion that aids decision-making Satisfied customers

© 2009 South-Western, Cengage LearningMARKETING Virtual Marketing-Page 102 Chapter 4 15 Read and complete

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 16 UNDERSTANDING CONSUMERS AND COMPETITORS 4-3

© 2009 South-Western, Cengage LearningMARKETING Making Decisions Activity What steps do you use to make a decision when you are going to buy a product or service? Brainstorm and make a list of the things you do Chapter 4 17

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 18 Consumer Decision Making The stages of a decision 1.Recognize 2.Identify 3.Evaluate 4.Decide 5.Assess

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 19 Consumer Decision-Making Stages Consumers make a series of decisions when deciding on a purchase. Recognize a need Identify alternatives Evaluate choices Make a decision Assess satisfaction

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 20 Consumer Decision-Making Stages Stage 1: Recognize a need This could be a fast process or could take a long time Ex: You realize you are hungry when you are out shopping Ex: You will need to move into an apartment when you graduate

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 21 Consumer Decision-Making Stages Stage 2: Identify the alternatives Sometimes there are a lot of choices and sometimes they are limited Ex1: You realize you are hungry when you are out shopping, so you look at the choices at the mall Ex2: You will need to move into an apartment when you graduate, there are only 5 complex in the city you are moving to,

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 22 Consumer Decision-Making Stages Stage 3: Evaluate the Choices Decide if one choice is more available than others, is more affordable or is “better” in some way. Ex1: You realize you are hungry when you are out shopping, so you look at the choices at the mall, you could go to the food court (cheap) or a sit down place (more expensive) Ex2: You will need to move into an apartment when you graduate, there are only 5 complex in the city you are moving to, one place has a gym in the complex, another has a pool

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 23 Consumer Decision-Making Stages Stage 4: Decide Once the consumer is comfortable the decision is made and choice is selected Ex1: You realize you are hungry when you are out shopping, so you look at the choices at the mall, you could go to the food court (cheap) or a sit down place (more expensive), you go with the fast food choice Ex2: You will need to move into an apartment when you graduate, there are only 5 complex in the city you are moving to, one place has a gym in the complex, another has a pool. You choose the apartment that is more expensive but has a gym on site

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 24 Consumer Decision-Making Stages Stage 5: Assess Satisfaction The final step is to assess and determine if the decision was a good choice or not. If it was a good decision, the purchase maybe repeated again later. If it was a bad decision there is a good chance it will not be repeated Ex1: You realize you are hungry when you are out shopping, so you look at the choices at the mall, you could go to the food court (cheap) or a sit down place (more expensive), you go with the fast food choice but the food was cold and nasty. BAD Choice Ex2: You will need to move into an apartment when you graduate, there are only 5 complex in the city you are moving to, one place has a gym in the complex, another has a pool. You choose the apartment that is more expensive but has a gym on site and the apartment was perfect. Good Choice

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 25 Responding to Competition Intense competition—business compete with others offering very similar products Ex. Paper Towel Usually companies rely on price and promotion to get customers to buy their products since there are few if any differences between companies Limited competition—little or no direct competition Ex. Theme Parks (there are not many around) Monopolistic competition—there are many competitors but customers can see the differences Ex. Cars

© 2009 South-Western, Cengage LearningMARKETING Digital Digest—Page 108 How does good inventory management affect consumer satisfaction? How can detailed sales data help gauge the effectiveness of a sales promotion? Chapter 4 26

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 27 THE VARIED ROLE MARKETING 4-4

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 28 The Varied Uses of Marketing Producers and manufacturers usually focus the most on the product element of the marketing mix. Even if they do not sell directly to customers they need to know what people want to buy Channel members focus on the distribution process and pricing processes of the marketing mix Wholesalers get the products to retailers and the retailers price them to sell to customers. Service businesses have unique marketing challenges. Since they work directly with their customers they have to handle all elements of the marketing mix Services usually have more control over pricing than other businesses because there are less material costs.

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 29 Non-Business Organizations Primary focus is on something other than providing products and service for a profit Examples Government agencies Churches Schools Museums Professional organizations

© 2009 South-Western, Cengage LearningMARKETING Chapter 4 30 Marketing By Non-Business Organizations Government agencies Services are usually paid for by taxes so citizens do not have a choice (fire, police, garbage, snow removal, etc.) Governments are trying to keep citizens more informed though websites to increase customer service If people are happy more people will move in to the city and there are more taxes collected Nonprofit organizations These business do not operate for profit BUT they need to provide a product and service people need so the marketing mix is very important Example: The Red Cross helping is disaster areas Supporting non-business organizations—They often look for help from businesses who understand marketing