Introduction To Marketing Marketing Functions Utility Marketing Concept

What Is Marketing? The process of developing, promoting, and distributing products to satisfy customers’ needs and wants.

Products – goods and services that have monetary value

Goods – things you can touch or hold

Services – you can’t physically touch – tasks performed for a customer                                               Services – you can’t physically touch – tasks performed for a customer

Marketing is based on Exchange Marketing connects business’ to their customers.

Exchange An exchange takes place every time something is sold in the marketplace.

EXCHANGE When the producer is someone other than the consumer, some form of exchange takes place.

Foundations of Marketing Business, Management, Entrepreneurship Communication and Interpersonal Skills Economics Professional Development

Functions of Marketing Activities that work together to get goods and services from producers to consumers Each is essential

Distribution Deciding where and to whom products need to be sold to reach the final users.

Financing Getting the money necessary to operate a business

Marketing Information Management Getting information to make sound business decisions. Usually obtained through marketing research

For example, after a stay at a luxury hotel, you fill out a form rating the service and accommodations.

Pricing How much to charge to maximize profits

Product Service Management Obtaining, developing, maintaining, and improving a product or a product mix in response to market opportunities.

Promotion Communicating with potential customers to inform, persuade, or remind them about a business’s products

Selling Planned, personalized communication that influences purchasing decisions

The Marketing Concept Businesses must satisfy customers’ needs and wants in order to make a profit

When Henry Ford first created the Model T, he was the only one mass producing cars. He didn’t have to think about “The Marketing Concept.” But, as more and more producers started making cars, they had to think about what customers need and want in order to stay in business. Click on the Model T Ford to see Henry Ford’s thoughts about car color in the early 1900’s.

Imagine if, in today’s world, you could only buy black Imagine if, in today’s world, you could only buy black. Many customers would not be very happy!

The Marketing Concept If automobile manufactures do not give their customers a choice (what they want), they will not stay in business. That concept is true for all businesses. You must give the customer what they need and want.

That is what we mean by The Marketing Concept Businesses must know their customers . . . Businesses must satisfy customers’ needs and wants in order to make a profit

Economic Benefits of Marketing Marketing bridges the gap between you and the maker or seller of an item

Economic Benefits of Marketing New and Improved Products --businesses look for opportunities to please the customer

Economic Benefits of Marketing Lower Prices – marketing activities add value and increase demand. When demand is high, manufacturers can produce at a lower price. They can sell at a lower price but increase the quantity sold. Thus, profits are higher even though prices are low.

Economic Benefits of Marketing It adds VALUE

Added Value = Utility In economic terms, utility does not mean your closet or the electric company.

There are five types of Utility: Added Value = Utility Attributes of a product or service that make it capable of satisfying consumers’ wants and needs. There are five types of Utility:

Form Utility Changing raw materials or putting parts together to make them more useful – making and producing things. Sand into glass Wood into paper Silk into fabric

Having a product where customers can buy it. Place Utility Having a product where customers can buy it.

It Involves Location – may be through a catalog or at a retailer (actual store) – or, Internet. Transporting the product to the location.

Time Utility Planning and ordering Time of day and week Having a product available at a certain time of year or a convenient time of day. Time Utility Planning and ordering Time of day and week Time of year: holidays and seasons

Possession Utility The exchange of a product for some monetary value.

Payment may be made by Cash Personal checks Credit cards Installments (layaway)

Information Utility Involves communication with the consumer. ads packaging signs displays owner’s manuals

Which types of utility are related to marketing? Form utility is a function of production, NOT marketing

These utilities ARE directly related to marketing: Place Time Possession Information

Market – all potential customers who have the ability and willingness to buy

Consumer Markets Consist of consumers who purchase goods and services for personal use.

Industrial Markets Business-to-business (B-to B) markets include all businesses that buy products for use in their operations.

Market Share A company’s percentage of the total sales volume generated by all companies that compete in a given market.

Target Marketing Focusing all decisions on a very specific group of people who you want to reach.

Customer Profile To develop a clear picture of their target market, businesses create a customer profile. It lists information about the target market, such as age, income level, occupation, attitudes, lifestyle, and geographic residence

Customers – people who buy the product Consumers – people who actually use the product Is mom the customer or the consumer? The kids?

Marketing Mix Basic marketing strategies – the four P’s Product Place Price Promotion

Product Strategies What product to make How to package it What brand name to use What image to project

Place Strategies How and where a product will be distributed.

Price Strategies Reflect what customers are willing and able to pay.

Promotion Strategies How potential customers will be told about the new product What the message will be When and where it will be delivered What inducements are there to buy

The Marketing Mix Product Place Price Promotion The elements are interconnected Product Place The Marketing Mix Price Promotion

The Marketing Mix – The 4 P’s Contains countless alternatives. Management must select a combination of marketing mix decisions that will satisfy target markets and achieve organizational goals.

Analyzing Markets Market segmentation is a way of analyzing a market by specific characteristics in order to create a target market

Types of Segmentation: Demographics Psychographics Geographics Behavioral

Demographics – statistics that describe a population in terms of personal characteristics. Age Baby Boom Generation Generation X Generation Y Gender

Income Disposable income – money left after taking out taxes Discretionary income – money left after paying for basic living necessities such as food, shelter, and clothing

Marital Status

Ethnic Background

Psychographics Involves grouping people with similar lifestyles, as well as shared attitudes, values, and opinions. Activities Attitudes Personality & Values

Geographics – Segmentation based on where people live

Behavioral Segmentation Looking at the benefits desired by consumers, shopping patterns, and usage rate. Market benefits, not just the physical characteristics of a product

Behavioral Segmentation Many businesses find that the 80/20 rule applies. 80 % of a company’s sales are generated by 20 % of its loyal customers.

Mass Marketing Vs Segmentation Mass marketing not as popular as it once was. Niche marketing (the current trend) – markets are narrowed down and defined with extreme precision.