What is Marketing?

1
What is Marketing?

• Marketing is the process of planning and
  executing the conception, pricing, promotion and
  distribution of ideas, goods and services to
  create exchanges that satisfy individual and
  organizational objectives.

2
Major Marketing Functions

• Exchange Functions all companies
  manufacturers, wholesalers and retailers buy
  and sell to market their merchandise.
• Buying includes obtaining raw materials to make
  products, knowing how much merchandise to keep on
  hand and selecting suppliers.
• Selling creates possession utility by
  transferring the title of a product from seller
  to customer.

3
Major Marketing Functions. . . (continued)

• Physical Distribution Functions involve the
  flow of goods from producers to customers.
  Transportation and storage provide time utility
  and place utility and require careful management
  of inventory.
• Transporting involves selecting a mode of
  transport that provides an acceptable delivery
  schedule at an acceptable price.
• Storing goods is often necessary to sell them at
  the best selling time.

4
Major Marketing Functions. . . (continued)

• Facilitating Functions help the other functions
  take place.
• Financing helps at all stages of marketing. To
  buy raw materials, manufacturers often borrow
  from banks or receive credit from suppliers.
  Wholesalers may be financed by manufacturers, and
  retailers may receive financing from the
  wholesaler or manufacturer. Finally, retailers
  provide financing to customers.
• Standardizing sets uniform specifications for
  products or services. Grading classifies
  products by size and quality, usually through a
  sorting process. Together they facilitate
  production, transportation, storage and selling.

5
Major Marketing Functions. . . (continued)

• Facilitating Functions (continued)
• Risk Taking even though competent management
  and insurance can minimize risks is a constant
  reality of marketing because of such losses as
  bad-debt expense, obsolescence of products, theft
  by employees and product-liability lawsuits.
• Gathering market information is necessary to make
  all marketing decisions.

6
Types of Utility

• Utility the ability of a good or service to
  satisfy a human need
• Form utility created by production
• Place utility created by marketing
• Time utility created by marketing
• Possession utility created by marketing

7
Types of Utility. . . (continued)

• Form utility is created by converting raw
  materials into finished products.
• Place utility is created by making a product
  available at a location where customers wish to
  purchase it.
• Time utility is created by making a product
  available when customers wish to purchase it.
• Possession utility is created by transferring
  title (ownership) to the buyer.

8
The Marketing Concept

• The marketing concept is a business philosophy
  that involves the entire organization in the
  process of satisfying customers needs while
  achieving the organizations goals.
• Firm talks to potential customers to determine
  needs for goods or services
• Firm develops a good or service to satisfy that
  need
• Firm continues to seek ways to provide customer
  satisfaction

9
History of Marketing Concept

• Early 20th Century production orientation
  emphasized increased output and efficiency.
  (Marketing limited to taking orders and
  distributing the finished product)
• 1920s sales orientation stressed advertising,
  bigger sales forces and high-pressure selling
  techniques. (Marketing now added promoting
  products through personal selling)
• 1950s customer orientation emphasized
  determining customer needs and then designing
  products and services.

10
Carrying Out the Marketing Concept

• Firm must determine what its present and
  potential customers want.
• Firm must then find out what customers think
  about its products, the company and its marketing
  efforts.
• Given this information, the firm will decide
  where to direct its marketing strategy.

11
Carrying Out the Marketing Concept

• Firm must put its marketing resources into action
  by
• Providing a product that satisfies customers
  need
• Pricing product at acceptable level to buyers and
  to make a profit
• Promoting the products so buyers know it is
  available and its ability to satisfy their needs
• Ensuring product is distributed where and when
  customers want it
• Obtaining marketing information about the
  effectiveness of its marketing efforts

12
What is a Market?

• A market is a group of individuals or
  organizations, or both, that need products in a
  given category and that have the ability,
  willingness and authority to purchase products.

13
Market Classifications

• Two classifications include consumer markets
  and business-to-business markets
• Consumer markets purchasers and/or household
  members who intend to consume or benefit from the
  products and do not buy products to make profits

14
Market Classifications. . . (continued)

• Business-to-business markets
• Producer markets individuals and business
  organizations that buy certain products to use in
  the manufacture of other products
• Reseller markets intermediaries such as
  wholesalers and retailers that buy finished
  products and sell them for a profit
• Governmental markets - state or local
  governments that buy goods and services to
  maintain internal operations and to provide
  citizens with such products as highways,
  education, water, energy and national defense
• Institutional markets churches, not-for-profit
  private schools, hospitals, clubs, societies,
  charitable organizations or foundations

15
Developing Marketing Strategies

• A marketing strategy is a plan that will enable
  an organization to make the best use of its
  resources and advantages to meet its objectives.
  It consists of
• the selection and analysis of a target market
• the creation and maintenance of an appropriate
  marketing mix - a combination of product, price,
  distribution and promotion developed to satisfy a
  particular target market

16
Developing Marketing Strategies. . .(continued)

• A target market is a group of individuals,
  organizations or both for which a firm develops
  and maintains a marketing mix suitable for
  specific needs and preferences of that group.
• When selecting a target market, marketing
  managers
• examine markets for their possible effects on the
  firms sales, costs and profits.
• determine whether the firm has the resources to
  produce a marketing mix that meets the needs of a
  particular target market and if this is
  consistent with the overall objectives of the
  firm.
• analyze the strength and number of competitors
  already marketing to this target market.

17
Developing Marketing Strategies. . .(continued)

• When selecting a target market, marketing
  managers generally take one of three approaches
• Undifferentiated Approach
• Concentrated Market Segmentation Approach
• Differentiated Market Segmentation Approach

18
Developing Marketing Strategies. . .(continued)

• Undifferentiated Approach directing a single
  marketing mix at the entire market for a
  particular product
• Approach assumes that individual customers in a
  target market for a specific kind of product have
  similar needs and that the organization can
  satisfy most customers with a single marketing
  mix
• One product with little or no variation, one
  price, one promotional program aimed at everyone
  and one distribution system to reach all
  customers (salt, sugar, certain farm produce,
  etc.)

19
Developing Marketing Strategies. . .(continued)

• Market segment is a group of individuals or
  organizations within a market that share one or
  more common characteristics.
• Market segmentation is the process of dividing a
  market into segments (groups) and directing a
  marketing mix at a particular segment or segments
  rather than at a total market.

20
Developing Marketing Strategies. . .(continued)

• Concentrated Market Segmentation a single
  marketing mix is directed at a single market
  segment.
• Differentiated Market Segmentation multiple
  marketing mixes are focused on multiple marketing
  segments.
• Review Table 13.3, page 377

21
Creating a Marketing Mix

• Four elements (ingredients) of the marketing mix
  include
• Product itself
• Price of the product
• Distribution means chosen (Place)
• Promotion of the product

22
Creating a Marketing Mix. . . (continued)

• A firm may use one marketing mix to reach one
  target market and a second marketing mix to reach
  another market. (car manufacturers produce
  economy and luxury cars to reach markets based on
  age, income and other factors)
• Product ingredient includes decisions about the
  product design, brand name, packaging,
  warranties, etc.
• Pricing ingredient concerned with base price
  and discounts of various kinds. Decisions are
  intended to maximize profits or make room for new
  models.

23
Creating a Marketing Mix. . . (continued)

• Distribution ingredient involves not only
  transportation and storage but also the selection
  of intermediaries.
• Promotion ingredient focuses on providing
  information to target markets through
  advertising, personal selling, sales promotion
  and public relations.
• These ingredients of the marketing mix are
  controllable elements. A firm can vary each of
  them to suit its organizational goals, marketing
  goals and target markets.
• Review Figure 13.3, page 379

24
Marketing Mix and Marketing Environment

• Economic forces effects of economic conditions
  on customers ability and willingness to buy
• Socio-cultural forces influences in a society
  and its culture that result in changes in
  attitudes, beliefs, norms, customs, and
  lifestyles
• Political forces influences that arise through
  the actions of elected and appointed officials
• Competitive forces actions of competitors who
  are in the process of implementing their own
  marketing plans
• Legal and regulatory forces laws that protect
  consumers and competition and government
  regulations that affect marketing
• Technological forces technological changes can
  create new marketing opportunities but can also
  cause products to become obsolete almost
  overnight. (music industry has to deal with
  piracy and cd burners)