1. © 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

2. © 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

3. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 3 CHANGES IN TODAY’S MARKETING GOALS Explain how marketing today differs from marketing in the past. Show why understanding customers is crucial to applying the marketing concept. 4-1

4. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 4 Marketing Has Changed Understanding The Differences From few activities to many activities Was: Few activities Used to move products from producers to consumers Now: Large variety of activities Used for promotions & sales to persuade consumers Now includes research and consumer credit Must understand how to use all the marketing tools.

5. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 5 Marketing Has Changed Understanding The Differences From independence to integration Was: independent part of business Only understood if you had marketing background Marketers often worked alone / separate from business Now: integrated with other business functions Integrated: considered an essential part of the business. Involved in all important business decisions

6. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 6 Marketing Has Changed Understanding The Differences From problems to opportunities Was: a problem-solving tool looked to marketers if they faced a problem (inventory high) Now: used as an opportunity-creation tool Can not afford to wait for a problem to arise Continuously looking for Marketing Opportunities: include new markets and ways to improve a company’s offerings in current markets.

7. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 7 Marketing Has Changed Understanding The Differences From expense to investment Was: Very expensive; big expense When facing financial issues, cut costs in marketing dept Now: Effective marketing is a critical investment Matching company’s offerings with market needs Spend money on marketing to increase profits

8. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 8 What Does Marketing Marketing Mean to a Business? Reliable Auto Service (Page 93) Dee’s Designs (Page 94) Unsuccessful because: 1. Concerned only about the product/service 2. Believed they knew what the customer wanted 3. Did not study the market 4. Failed to use a variety of marketing tools.

9. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 9 PLANNING A MARKETING STRATEGY GOALS Understand how the marketing concept transforms business planning. Explain the importance of market seg- ments and market opportunity analysis. Discuss how businesses develop the right marketing mix. 4-2

10. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 10 Putting Marketing Up Front Marketing Concept: using the needs of customers as the primary focus during the planning, production, pricing, distribution, and promotion of a product/service. Strategy: Planning that identifies how a company expects to achieve its goals. Provides clearest indication of whether that business understands the marketing concept.

11. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 11 How Does the Marketing Concept Affect Planning? Without the marketing concept 1. Develop a product. 2. Decide on marketing activities. 3. Identify potential customers. With the marketing concept 1. Conduct research to identify potential customers and their needs. 2. Develop a marketing mix (product, distribution, price, promotion) that meets specific customer needs.

12. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 12 Understanding the Customer Identifying customer needs is difficult: Many customers are not sure of their needs or may have conflicting needs. Consumers have many needs but typically have limited amounts of money available to satisfy those needs. The needs of individuals and groups of consumers can be quite different.

13. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 13 Two Views of Consumers Businesses view consumers in two ways: 1.Customers are all alike and can be influenced to buy what a business offers. 2.Customers are quite different and we should select products and services to meet their unique needs.

14. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 14 Understanding the Customer Satisfying Customer Needs 1.Study markets to identify groups of consumers with unsatisfied needs on which they can focus their efforts. Market research allows businesses to gather and analyze consumer information. 2.Categorize customers according to similar characteristics, needs, and purchasing behavior. Market Segment: Smaller groups of similar consumers within the larger market.

15. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 15 Understanding the Customer Satisfying Customer Needs 3.Identify and Analyze Market Segments Determine which can be served most effectively Has the strongest needs Has the most resources Has the least competition Market Opportunity Analysis: studying and prioritizing market segment to locate the best potential based on demand and competition

16. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 16 Understanding the Customer Satisfying Customer Needs 4.Choose which market segment provides the most opportunities for success and focuses its efforts on that particular target market. Target Market: a clearly defined segment of the market to which a business wants to appeal.

17. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 17 Planning the Offering Marketing Mix – blend of the 4 marketing elements (Product, Place, Price, Promotion) Creating the right mix Developing products Making distribution decisions Pricing products and services Planning promotion

18. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 18 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

19. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 19 Creating the Right Mix Developing Products Improve Customer Satisfaction unique design, construction, size, color & operation accessories = products easier to operate & efficient Product improved by providing services related to purchase, delivery, installation, use, or maintenance of the product Product Packaging Protects the product and provides information

20. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 20 Creating the Right Mix Making Distribution Decisions Make the products available where and when the consumers want them. Poor distribution leads to dissatisfied consumers. Manufacturers rely for wholesalers and retailers to get products to the consumers. Retailers must locate sources of the products its customers want and obtain them.

21. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 21 Creating the Right Mix Pricing Products and Services Prices - competitive and allow them to make profit Calculating price must be accepted by customers, but cover all costs and allow for reasonable profit. Retailers use price tag or sticker to display price. Businesses commonly use discounts: mark-downs, allowances, trade-ins, and coupons. Credit used to allow customers to purchase a product without paying the full price at the time of purchase.

22. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 22 Creating the Right Mix Planning Promotion Communicates the value and benefits of the product/service to help consumers make decisions. Common Methods: advertising, personal selling, sales promotion, visual displays and publicity.

23. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 23 UNDERSTANDING CONSUMERS AND COMPETITORS GOALS Detail the stages of consumer decision making. Understand how business can use the marketing concept in various types of competition. 4-3

24. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 24 Consumer Decision Making Decision: a choice among alternatives. Decisions are made to satisfy a need or solve a problem. Consumers choose alternative which provides most satisfaction/greatest value. Stages of a Decision: Recognize, Identify, Evaluate, Decide, Assess

25. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 25 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

26. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 26 Consumer Decision-Making Stages Recognize a Need Urgent – process is quicker Not Urgent – takes the time to make educated decision Class examples

27. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 27 Consumer Decision-Making Stages Identify Alternatives Become interested in finding solution Interest leads to identifying alternatives and sources of information to help make effective decision

28. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 28 Consumer Decision-Making Stages Evaluate Choices Gather info on each alternatives identified Use Info to evaluate choices Better quality, More affordable, More available Which choice will better satisfy their needs Careful & Objective vs. Quick, Less Rational

29. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 29 Consumer Decision-Making Stages Make a Decision Comfortable with evaluation Decide: 1.Select one of the available choices 2.Gather more information 3.Do nothing

30. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 30 Consumer Decision-Making Stages Assess Satisfaction Did selected product – Satisfy the need? Yes – decision can be repeated next time the same need occurs. No – start the process over again Understanding the process helps marketers offer the right info at the right time, resulting in a more effective exchange

31. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 31 Relying On Information Information is gathered to improve decisions. Conducting research is an important marketing activity: Marketers are able to organize research and use the results Study potential and current customers Research competitors & their strengths, weaknesses Develop market information systems - collect and store data Understand how consumers make their decisions

32. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 32 Responding to Competition Intense competition (Most difficult competition) Pure Competition – many businesses, offering similar products Oligopoly – few companies, same products Businesses can adjust their marketing mix to create advantages for their products.

33. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 33 Responding to Competition Limited competition Monopoly - businesses facing little or no direct competition. Consumers often become dissatisfied with their lack of choices. Avoid competition - protect their location and concentrate on keeping their product unique.

34. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 34 Responding to Competition Monopolistic competition (most common) Many competitors. Consumers see the differences among the choices. Marketing concept most value to these businesses. Changes and improvements to products, distribution, price and promotion give them the advantage over their competitors.

35. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 35 THE VARIED ROLE MARKETING GOALS Explain how the role of marketing differs in various types of businesses. Identify ways marketing is used by non- business organizations. 4-4

36. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 36 The Varied Uses of Marketing Producers and Manufacturers Develop products/services needed by other businesses and other consumers. Main marketing-mix focus is Product. Rely on other businesses to make good decision about distribution, pricing, promotion

37. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 37 The Varied Uses of Marketing Channel Members: the businesses used to provide many of the marketing functions during the distribution process. Channels of Distribution: made up of all the businesses involved in completing marketing activities as products move from producers to the consumer. Less emphasize on Product Wholesalers emphasize distribution planning Retailers responsible for most final pricing decisions

38. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 38 The Varied Uses of Marketing Service Businesses Most work directly with customers Not through distribution channels Responsible for entire marketing mix. Product/Service = Must develop procedures to insure quality service every time. Distribution = convenient location and hours of operation Price = have more control, difficult for consumers to determine Promotion = unfamiliar services require much more promotion

39. © 2009 South-Western, Cengage LearningMARKETING Chapter 4 39 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 Marketing is important to non-business organizations because they must satisfy their customers’ needs in order to achieve their goals and max. their effectiveness.