Fundamentals of Marketing Chapter 1, Section 3

10/9/2015Page 2 Critical Thinking… Take 2-3 minutes to reflect on one recent marketing trend you have noted (either through the media or by your own observation) You will share your observation in a few minutes!

10/9/2015Page 3 Key Terms Market Consumer market Industrial market Market share Target market Customer profile Marketing mix

10/9/2015Page 4 Market and Market Identification FYI: There are A LOT of terms in this section that are important for your future studies in Marketing…PAY ATTENTION AND TAKE GOOD NOTES!

10/9/2015Page 5 The Reality… Marketers know that their products or services cannot appeal to EVERYONE It is essential that marketers look for people who: –A) have an interest or need for their product and, –B) have the ability to pay for their product

10/9/2015Page 6 Market All people who share similar needs and wants and who have the ability to purchase a given product

10/9/2015Page 7 Consumer versus Industrial Markets Consumer Market –Consists of consumers who purchase goods and services for personal use –Consumers’ purchase goods and services based on these main areas: Save money Make life easier Improve appearance Create status in the community Provide satisfaction related to some other personal motivation

10/9/2015Page 8 Consumer Versus Industrial Market Industrial Market –Also called business-to-business (B2B) market, includes all businesses that buy products for use in their operations. –Goals are different in this market: Increase profits Improve productivity Increase sales Decrease expenses Make their work more efficient

10/9/2015Page 9 Consumer versus Industrial Market Companies producing products for the consumer market classify resellers as a part of the industrial market Therefore, these companies require two distinct marketing plans to reach each market!

10/9/2015Page 10 Market Share A market is further defined by the total sales in the product category Market Share –A company’s percentage of total sales volume generated by all companies that compete in a given market

10/9/2015Page 11 Market Share, cont. Knowing one’s market share helps marketers analyze their competition and their status in a given market Market shares change all the time as new competitors enter the market and the size of the market increases or decreases in volume

10/9/2015Page 12 Target Market and Market Segmentation Businesses know that not EVERYONE will buy their products or services They look for ways to offer their products or services to the people who are most likely to be interested This involves segmenting, or breaking the market into smaller groups that have similar wants and needs

10/9/2015Page 13 Target Market and Market Segmentation Segmentation goes beyond classification into the consumer or industrial market Market segmentation seeks to find the group of people most likely to become customers The group that is identified for a specific marketing program is the target market

10/9/2015Page 14 Target Marketing – Why? Identifying a target market is very important because all marketing strategies are directed at this group. When a business fails to identify a target market, its marketing plan has no focus. Identifying a target market correctly is a key to success.

10/9/2015Page 15 Consumers versus Customers A product may have more than one target market Case Study Example: Build-a-Bear knows they need to target children and parents differently.

10/9/2015Page 16 Consumers versus Customers, cont. Case Study Example, cont.: Children are the consumers, the ones who will ask for the bears and play with them Parents are the customers, the ones who need to approve it, and the ones who will pay

10/9/2015Page 17 Customer Profiles Lists information about the target market such as –Age –Income Level –Ethnic Background –Occupation –Attitudes –Lifestyle –Geographic Residence Businesses develop these to get a clear picture of their target market

10/9/2015Page 18 Think Critically & Discuss… Work in a group of four (4) to build a customer profile for Dierberg’s You will share with the class in 10 minutes Be prepared to back up your ideas!

10/9/2015Page 19 Marketing Mix These are the tools marketing professionals use and control to influence potential customers Include the four basic P’s of marketing strategies: –Product –Place –Price –Promotion

10/9/2015Page 20 Marketing Mix, cont. Some would add a 5 th “P”, PEOPLE, as it is necessary to have a clearly defined target market before you can create marketing strategies All of the “P’s” are interconnected –Actions in one area, affect decisions in another

10/9/2015Page 21 Product This “P” revolves around making decisions about what to make and sell Some marketing strategy examples of this P include: –Features of the new iPhone –The brand name of a new Nabisco breakfast food –How to package a new organic Hershey candy bar –What the warranty of a Sony Bravia LCD will entail –How to update and improve the Ford Focus so it can remain competitive

10/9/2015Page 22 Place The means of getting the product into the consumer’s hands It is important to know where one’s target market shops! Examples of marketing decisions based on place include: –Whether a local bakery should build additional stores on the Illinois side of the river –Whether Build-a-Bear should create a website where customers can purchase their products –Whether Tropicana should have products shipped via air or rail

10/9/2015Page 23 Price What is exchanged (monetarily) for the product This strategy must consider what customers are willing and able to pay Examples of pricing strategy decisions include –Toyota’s suggested manufacturer’s retail price on the Camry –Wal-Mart offering credit terms (i.e., their own credit card) at their stores –Hollister having an “End of Summer Sale” on select items

10/9/2015Page 24 Promotion Deal with how potential customers will be told about a company’s products Examples of promotion strategy include –The 2010 Nike Shock campaign: The message used (language, style, approach) The media that is used to spread the word about the shoe The special offers Nike will employ to create buzz and business The timing of the campaigns and the product roll-out

10/9/2015Page 25 Quick Review… What is the difference between the consumer and industrial markets? What is the relationship among market segmentation, target markets, and customer profiles? Name the four P’s of the marketing mix and explain the importance of a target market for each of them.