Functions of Marketing

Marketing Functions Goal Students will be able to Explain the marketing concept Describe each marketing function and how it illustrates the marketing concept Explain each component of the marketing mix Illustrate the importance of marketing strategies in the marketing mix Explain the importance of target markets. 2

Marketing Functions Terms to know Market Customer Consumer Marketing Concept Marketing Functions Marketing Mix Target Market 3

Marketing Functions Marketing Concept Businesses must satisfy customers’ needs and wants in order to make a profit. The marketing concept is the plan to follow by businesses to become successful. Just like the phrase “if you build it they will come”, if you have the products/services that the customer wants - when they want it - at the right price - then customers will come! But this is easier said than done. It is important for a business to understand exactly who their true customers are so they can satisfy their wants and needs. 4

Marketing Functions Customers Consumers Purchase products Consume products Customers vs consumers is a very easy concept to understand, customers buy the product and consumers consume (use) the product. In many cases the customer and consumer are the same individual, however in some instances it is two different people. For instance think about children’s cereal. It is the parents that purchase the product but the consumers are the children. Therefore marketers need to make sure that their promotional strategy encompasses both customers and consumers. 5

Marketing Functions Market All potential customers who share common needs and wants, and who have the ability and willingness to buy the product. The market for products are all of the customers who might possible have an interest in your product. But it is important to note that the market are those who not only are interested in your product but who also are willing able to purchase your product. There might be lots of people who are interested in purchasing a very expensive sports car but not as many people have the ability to spend $100,000 or more on an exotic sports car. By understanding who the market for the product is, marketers are able to target those customers most likely to purchase their products, which is also known as the target market. 6

Marketing Functions Marketing Mix Four P’s Product Place Price Promotion The marketing mix, which is also known as the “four p’s” of marketing comprise the four basic marketing strategies. The marketing mix depends upon how well a business has identified their target market. The decisions that a business makes regarding the “four p’s” or marketing mix are interconnected. When deciding on a strategy for one area it will affect another area. 7

Marketing Functions Marketing Mix Product includes all aspects of the product Type of product Packaging Warranties Price strategies need to consider how much a customer is willing and able to pay while still making a profit. The product part of the marketing mix involves everything having to do with the product. What type of product will be produced? What color(s) will it be? How big will it be? What will the packaging look like? Will the product have a warranty? If so, what will it cover and how long will it last? All of these are questions and more are those that must be answered about the product. The pricing strategy can be complicated. A business must know exactly how much it costs them to sell a product before they can set the price. This not only includes how much to actually produce the product, but it must also include overhead costs such as the rent on the store, delivery and transportation charges, sales salaries, utility costs, etc. Once these costs are determined then the price must also take into account how much customers are willing and able to spend on the product. If the customers are not willing to pay the minimum required to produce the product then it may not be a good idea to product the product. 8

Marketing Functions Marketing Mix Place strategies must consider where best to sell the product and which channel of distribution will be used. Promotion strategies must consider how to inform, persuade, and remind customers about the product. The place strategy involves distribution. The types of distribution strategy used must consider things such as - direct distribution (producer to consumer) or indirect (producer to retailer to consumer). Once that is determined then the place where the product will be sold (what store) must be determined. The store must match the product to the target customer. For instance if you are selling very expensive jewelry you would not want to choose a low cost discount store as your outlet. The promotional strategy will determine how the customers will find out about your product. Products could be advertised on television, billboards, magazines, or the internet to name a few promotional mediums. Once again understanding who your target market is will determine the best way to reach them via promotional mediums. 9

Marketing Functions Marketing Information Management Product/Service Management Placement - Distribution Pricing Promotion Selling There are six functions of marketing. All marketing activities are divided into these six categories. 10

Marketing Functions Marketing Information Management Most information from marketing research Questionnaire’s about service or products. Information used to determine customers preferences. Marketing information management involves marketing research. This is a critical aspect to effective marketing. In order for businesses to execute the marketing concept they must have good information about what their customers want and to fully understand who their customer is. If you have ever been asked to fill out a questionnaire about a product or service, you have been involved in marketing research. 11

Marketing Functions Product/Service Management Obtaining, developing, maintaining, and improving a product or service. Decisions made mostly on marketing research. The product/service management function of marketing encompasses all aspects of the product. It is important that you base your product decisions on marketing research. By conducting marketing research, businesses are more likely to embrace the marketing concept. 12

Marketing Functions Placement - Distribution Deciding where and to whom to sell product. Physically moving and storing product. Primary methods of transportation are truck, rail, air, and ship. Includes systems that track products The distribution function involves deciding where the product and the distribution method, but it also involves how the product will be transported from the manufacturer to the retailer or end customer. Will it be shipped via trains, boats, airplanes, or trucks? The transportation method is somewhat determined by the type of product. For instance shipping a newly manufactured car from Japan would most likely be shipped via boat since it would be too expensive to ship the cars via planes, and trains don’t run between Japan and any other country. Distribution also includes inventory control methods. 13

Marketing Functions Pricing How much to charge for goods/services Maximizing profit Competitive pricing Gaining market share Creating customer perception of value The pricing function dictates how much to charge for goods and services to maximize the businesses profit. Knowing how much your competitors are charging and being competitive with their prices is very important. Other marketing strategies include gaining market share from your competitors or creating a customers perception of value. Customers expect to pay more for some products and are priced rather high even though the product may not that much to produce. Designer handbags that sell for hundreds of dollars are one example. Pricing products at a low price and advertising as a low cost leader is another option depending upon your product. 14

Marketing Functions Promotion Inform, persuade, or remind Advertising – television, radio, magazines Can be used to improve companies image Communicate information about product, services, images The role of promotion is to either inform potential customers about your product, persuade them to purchase your product, or continue to remind them about your product. Advertising can be used to tell people about your product or it can be used to make customers have a favorable opinion about your product. 15

Marketing Functions Selling Providing customers with goods and services they want. Retail selling Business-to-business sales. Determine customers needs and wants Respond through planned, personalized communication that influences customers Enhance future business opportunities The selling function includes both selling to the consumer and selling to businesses (called business-to-business sales). Selling includes personalized communication and determining customers’ wants and needs. 16