Chapter 6 - Marketing

44 Principles
Principlesof
ofMarketing
Marketing
Business
Business
Essentials
Essentials 6e
6e
Ronald
RonaldJ.J.Ebert
Ebert
Ricky
RickyW.
W.Griffin
Griffin
MARKETING
© 2007 Prentice Hall, Inc. PowerPoint Presentation by Charlie Cook

All rights reserved. The University of West Alabama
WHAT IS
MARKETING?
© 2007 Prentice Hall, Inc. All rights reserved. 11–2

What Is Marketing?
Marketing is:
“An organizational function and a set
of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders”
(AMA – American Marketing Association)

Delivering Value

What Is Marketing?
Delivering Value
What attracts buyers to buy one product
instead of another?
Consumers desires for many goods and
services and unlimited
But, limited financial resources force them
to be selective
they buy products that offer the best value
when it comes to meeting their needs and
wants
What Is Marketing?
Value and Benefits
Value of a product
 compares a product’s benefits with its costs
Benefits of a product includes:

 the functions of the product
 the emotional satisfaction associated with
owning, experiencing, or possessing the
product

What Is Marketing?
Value and Benefits
Benefits of a product includes:
 Every product has costs
 A satisfied customer perceives the benefits
derived from the purchase to be greater than
its costs
Benefits
Value =
Costs

What Is Marketing?
Value and Benefits
The marketing strategies of
leading firms focus on increasing
value for customers
Thus, marketing resources are
deployed to add benefits and
decrease costs of products
 To provide greater value

What Is Marketing?
Value and Benefits
To satisfy customers, a company may:
1.Develop new product that performs
better
 Provides greater performance benefits
2.Keep a store open longer hours during
a busy season
 Greater shopping convenience benefits
3.Offer price reduction
 Lower costs benefits
What Is Marketing?
Value and Utility
What are the benefits buyers get
from a firm’s goods or services
Those benefits provide
customers with UTILITY
Utility is the ability of a product
to satisfy a human want or need
What Is Marketing?
Value and Utility
Marketing strives to provide utility
in the following ways:
1.Form utility
2.Time utility
3.Place utility
4.Possession utility
What Is Marketing?
Value and Utility
1.Form utility
Marketing has a voice in
designing products with
features that customers want

What Is Marketing?
Value and Utility
2. Time utility
Marketing creates time utility by
providing products when
customers will want them

What Is Marketing?
Value and Utility
3. Place utility
Marketing creates a place
utility by providing products
where customers will want
them

What Is Marketing?
Value and Utility
4. Possession utility
Marketing arranges a possession
utility by transferring product
ownership for customers by:
Setting selling prices
Setting terms for customer credit
payment
Providing ownership documents
Goods, Services
And
Ideas
What Is Marketing? (cont’d)
Goods, Services And Ideas
The marketing of GOODS --

applies to two types of
customers:
i.Those who buy consumer goods
ii.Those who buy industrial goods

Consumer Goods
Tangible goods that consumers
may buy for personal use
Firms that sell goods to consumers
for personal consumption are engaged
in consumer marketing
e.g. a car, perfume, medicine,
cellphone, clothes
Industrial goods
Physical items used by companies
to produce other products
Firms that sell goods to other
companies are engaged in industrial
marketing (B2B – business to
business)
E.g. bulldozers, steel, plastic
Marketing of SERVICES
Products with intangible
(nonphysical) features
 Professional advice, timely information for
decisions, arrangements for a vacation
Service Marketing
 The application of marketing services
 E.g. insurance companies, airlines, health

Marketing of IDEAS
Marketers also promote ideas
For example:
 Advertisements that stress
the advantages of avoiding
fast foods, wearing our seat
belts or quitting smoking
Relationship Marketing
Emphasizes on building lasting
relationships with customers and
suppliers
Stronger relationships can result in:
 greater long-term satisfaction
 Customer loyalty
 Customer retention
Customer Relationship Management
An organized method that an enterprise
uses to build better information connections
with clients
This is to develop stronger enterprise-client
relationship
Marketers need to predict what clients will
want and buy -- information on customer
preferences
Information on customer
preferences can be gathered and
assembled through:
i.Data warehousing
ii.Data mining

i.Data warehousing
The compiling and storage of consumer data
Allows marketers to extract information that
enables them to find new clients
It identifies the best customers -- can be
posted on upcoming new product and supplied
with special information (e.g. post-purchase
service reminders)
i.Data mining
 Automates the massive analysis of data
 using computers to sift, sort, and search for
previously undiscovered clues about what customers
look at, react to, and how they might be influenced
 By knowing a client’s preferences -- can more
effectively use its resources to better satisfy those
particular needs -- building closer, stronger
relationships with customers

The Marketing
Environment

The Marketing Environment
Marketing strategies are strongly influenced by
powerful outside forces
Every marketing program must recognize the
factors in a company’s external environment
They include:
1. Political-legal environment
2. Sociocultural environment
3. Technological environment
4. Economic environment
5. Competitive environment
1. Political-legal Environment
Political activities (both global and
domestic) have profound effects on
marketing
For example:
Environmental legislation

For example:
The political push for alternative
energy sources -- creating new
markets and products for emerging
companies such as India’s Suzlon
Energy Limited (large wind turbines)

 Marketing managers strive to
maintain favorable political and
legal support
 to gain public support for their products
and activities - they use ad campaigns
to raise public awareness of important
issues
2. Sociocultural Environment
 Changing socio values force
companies to develop and
promote new products for both
individual consumers and
industrial customers

2. Sociocultural Environment
 For example
Some stores sell affordable organic food
(not just sold in specialty store) -- allows
larger audience
A growing number of wellness programs
are available to companies for improving
employees’ health

3. Technological Environment
 New technologies create new
goods and services
 Many products change our values
and lifestyles
 In turn, lifestyles changes often
stimulate new products
3. Technological Environment
 For example:
 Cell phones facilitate business
communication
 Prepackaged meals provide
convenience for busy household cooks
 Both free up time for recreation and
leisure
4. Economic Environment
 Determine spending patterns
by consumers, businesses and
government
 Thus influence marketing plans
for product offerings, pricing,
and promotional strategies
4. Economic Environment
 Marketers are concerned with
economic variables – inflation, interest
rats, and recession
 the general business cycle are
monitored -- to anticipate trends in
consumer and business spending

5. Competitive Environment
 Here marketers must convince buyers
to buy one company’s products rather
than those of some other sellers
 Consumers and commercial buyers
have limited resources -- every dollar
spent on one product is no longer
available for other purchases
 Each marketing program must make its
product the most attractive
 There are three types of competition
faced by marketers:
1. Substitute products
2. Brand competition
3. International competition
I. Substitute products
 Products that can fulfill the
same need
 May look alike or they may
seem very different from one
another
I. Substitute products
 For example:
 Your cholesterol level may be
controlled with either a physical
fitness or a drug
 They are two competing products
II. Brand competition
 Occurs between similar
products
 The benefits of products is
based on buyer’s perception

III. International competition
 Matches the products of
domestic marketers against
those of foreign competitors

FIGURE
FIGURE11.1
11.1 The
TheExternal
ExternalMarketing
MarketingEnvironment
Environment

STRATEGY:
THE MARKETING MIX

Strategy: The Marketing Mix
A company’s marketing managers
 Responsible for planning and implementing all the
activities that result in the transfer of goods and
services to its customers
Marketing plan
 A detailed strategy for focusing marketing efforts on
customers’ needs and wants
Marketing mix
 Product, pricing, place, and promotion (4Ps)

1.Product
A good, a service, or an idea
designed to fill a customer’s need or
want
Conceiving and developing new
products -- a constant challenge for
marketers
1. Product
Need to consider the factor of change
i. Changing technology
ii. Changing wants and needs of customers
iii. Changing economic conditions
Meeting these changing condition --

means changing existing products to keep
pace with emerging markets and
competitors
Product Differentiation
The creation of a feature or image that
makes a product differ enough from
existing products to attract customers
Producers often product particular
features of products in order to
distinguish them in the marketplace
2. Pricing
Selecting the best price at which to sell
a product
Price must support a variety of costs
Operating
Administrative
Research costs
Marketing costs
2. Pricing
 Price too high -- customers turn to competitors
 Successful pricing -- means finding a profitable
middle ground between high and low price
 low prices -- larger sales volumes
 High prices -- limit market size but increase
profits per unit
Also attract customers by implying that a
product is of high quality
3. Place (distribution)
It refers to distribution
Placing a product in the proper
outlet (e.g. retail shop)

 Requires decisions about several
activities -- concerned with:
i. Getting the product from the producer
to the consumer
ii. Warehousing and inventory control
iii. Transportation options
iv. The channels through which they
distribute
3.Place (distribution)
For e.g. manufacturers sell goods to
other companies that, in turn,
distribute them to retailers
Others sell directly to major retailers
Others sell directly to final consumers

4. Promotion
 Refers to techniques for communicating
information about products
 Promotional tools include:
 Advertising
 Personal selling
 Sales promotions
 Publicity/Public relations
 Direct or interactive marketing
TARGET MARKETING
AND
MARKET SEGMENTATION
Target Marketing
Target Markets
Target markets are groups of
people with similar wants and
needs and who can be expected to
show interest in the same products
Usually the first step in the
marketing strategy
Target Marketing and Market Segmentation
Identifying Market Segments
 Some firms may market products to more than
one segment, for example:
General Motors -- offered automobiles with
various features and at various price levels
 Some businesses offer a narrower range of
products, for example:
Ferrari’s high-price sports cars aiming at
just one segment
Identifying Market Segments
 Members of a market segment must share
some common traits that affect their
purchasing decisions
 5 important variables include:
a) Geographic Segmentation
b) Demographic Segmentation
c) Geo-Demographic Segmentation
d) Psychographic Segmentation
e) Behavioral Segmentation
1. Geographic Segmentation
 Many buying decisions are affected by the
places people call home
 For example:
 Urban residents do not need agricultural equipment
 Sailboats sell better along the coasts
 Geographic variables -- the geographic units,
from countries to neighborhoods, that may be
considered in a segmentation strategy

2. Demographic Segmentation
 Demographic variables describe populations
by identifying traits, such as:
 age, income, gender, ethnic background, marital
status, race, religion, and social class
 A demographic segment can be a:
 single classification (ages 20-34)
 A combination of segments (ages 20-34, married
without children, earning $25,000-$44,999 a year)

TABLE
TABLE11.1
11.1Demographic
DemographicVariables
Variables
Age Under 5, 5–11, 12–19, 20–34, 35–49, 50–64, 65+
Education Grade school or less, some high school, graduated high school,
some college, college degree, advanced degree
Family life Young single, young married without children, young married with
cycle children, older married with children under 18, older married without
children under 18, older single, other
Family size 1, 2–3, 4–5, 6+
Income Under $9,000, $9,000–$14,999, $15,000–$24,999, $25,000–

$34,999, $35,000–$45,000, over $45,000
Nationality African, American, Asian, British, Eastern European, French,
German, Irish, Italian, Latin American, Middle Eastern,
Scandinavian
Race Native American, Asian, African American, Caucasian
Religion Buddhist, Catholic, Hindu, Jewish, Muslim, Protestant
Sex Male, female

3. Geo-Demographic Segmentation
 A combination of geographic and demographic
traits
 For example: Young Urban Professionals (well
educated, 25-34 years old, high paying
professional jobs, living in the “downtown” zip
codes of major cities)
 Segmentation is more effective -- greater
number of variables defines the market more
precisely
4. Psychographic Segmentation
 Psychographic variables such as
lifestyles, interests, and attitudes
 Unlike other segments, they can be
changed
 For example:
 Polish companies have overcome consumer
resistance by promoting the safety and
desirability of using credit cards rather than cash
5. Behavioral Segmentation
 Include such areas as:
 heavy users (buy in bulk)
 Situation buyers (Halloween – second
largest ‘holiday’ in terms of spending)
 Specific purpose (e.g. All Free is a new
detergent for people who have skin
reactions to additives in other
detergents)
Target Marketing and Market
Segmentation (cont’d)
Identifying Market
Segments
Geographic Demographic
Variables Variables
Psychographic
Variables

UNDERSTANDING
CUSTOMER BEHAVIOR

The Consumer Buying Process
Problem /Need recognition

 The process begins when the consumer recognizes a
problem or need
 Also occurs when you have a chance to change your
buying habits
Information Seeking
 The search is not always extensive, but before making
major purchases, most people seek information from
personal sources, public source and experience.
ASM401/Chapter 668
Evaluation of Alternative
 Perhaps accumulated knowledge during the
information-seeking stages is combined with what
you knew beforehand.
 By analyzing product attributes (color, price,
prestige, quality, service record) you will compare
products before deciding which one best meets your
needs.
ASM401/Chapter 669
Purchase Decision
 Based on Rational motives and Emotional motives.
 Rational motives – reason for purchase a product that
are based on a logical evaluation of product attributes
(cost, quality, and usefulness)
 Emotional motives – Reason for purchasing a product
that are based on nonobjective factors (sociability,
imitation of others, and aesthetics)
ASM401/Chapter 670
Post purchase Evaluations

 Not all consumers are satisfied with their purchases.
These buyers are not likely to purchase the same
product(s) again and are much more apt to broadcast
their experience than are satisfied customers.
ASM401/Chapter 671
ORGANIZATIONAL
MARKETING AND BUYING
BEHAVIOR
Business Marketing
 Service Market
 Firms engaged in the business of providing services to the
purchasing public.
 E.g.: Disney World provide experience to the visitors.
 Industrial Market
 Includes businesses that buy goods to be converted into
other products.
 E.g.: Farmers selling flour to the bakery.

 Reseller Market
 It consisting of intermediaries including wholesalers and
retailers that buy and resell finished goods.
 E.g.: Car accessories shop
 Government and Institutional Market

 Government spends for durable goods, nondurables,
services and constructions.
 Institutional market consists of nongovernmental
organizations such as hospitals, museums, mosque and etc.

B2B Buying Behavior
 Differences in Buyers
 Organizational buyers purchase in large quantities and are
professional, specialized and well informed.
 Differences in the Buyer-Seller Relationship
 Consumer-seller relationship often impersonal, short-lived
and one-time interactions.

PRODUCT

Product
In developing marketing mix, marketers must
consider what customers really want when they
purchase products to plan strategies effectively.
1. The Value Package
 Product features- tangible and intangible qualities
that a company builds into its products.
ASM401/Chapter 677
Product
2. Classifying Goods and Services
• Classifying consumer products such as
convenience goods and services, shopping goods
and services and specialty goods and services.
(Table 11.2)
• Classifying organizational products such as
production items, expense items and capital items.
(Table 11.3)
ASM401/Chapter 678
Product
3. The Product Mix
 It can be defined as the group of products that a
company makes available for sale to consumer and
industrial.
 Product Lines is a group of products that are closely
related because they function in a similar manner or
are sold to the same customer group who will use
them in similar ways.
ASM401/Chapter 679
DEVELOPING NEW
PRODUCTS

Developing New Products
The process of expanding or diversify product
lines.
The New Product Development Process
 It is a long and expensive process.
 It requires many resources in R&D department to
exploring product possibilities because of these
factors:
1. High mortality rates for new ideas mean that only a few new
products reach the market.
2. Speed to market with a product is as important as care in
developing it.
ASM401/Chapter 681
Product Mortality Rates
It is estimated that it takes 50 new product
ideas to generate one product that finally
reaches the market.
The greatest factor in product failure is the lack
of significant difference.
Speed of market – The more rapidly a product
moves from the laboratory to the marketplace,
the more likely it is to survive.
ASM401/Chapter 682
Product Life Cycle
It is a series of stages through which it passes
during its commercial life.
Stages in product life cycle are:
1. Introduction
2. Growth
3. Maturity
4. Decline
ASM401/Chapter 683
IDENTIFYING PRODUCTS

Identifying Products - Branding
Branding Products – it is a process of using
names and symbols.
Brands are designed to signal uniform quality;
customers who try and like a product can return
to it by remembering its name or its logo.
Brand awareness is the extent to which a brand
name comes to mind when a consumer
considers a particular product category.
ASM401/Chapter 685
ASM401/Chapter 686
END OF CHAPTER 6

Chapter 6 - Marketing

Uploaded by

Copyright:

Available Formats

Chapter 6 - Marketing

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 6 - Marketing

Uploaded by

Copyright:

Available Formats

44 Principles

© 2007 Prentice Hall, Inc. PowerPoint Presentation by Charlie Cook

© 2007 Prentice Hall, Inc. All rights reserved. 11–2

(AMA – American Marketing Association)

© 2007 Prentice Hall, Inc. All rights reserved. 11–4

Benefits of a product includes:

© 2007 Prentice Hall, Inc. All rights reserved. 11–6

© 2007 Prentice Hall, Inc. All rights reserved. 11–7

© 2007 Prentice Hall, Inc. All rights reserved. 11–8

© 2007 Prentice Hall, Inc. All rights reserved. 11–12

© 2007 Prentice Hall, Inc. All rights reserved. 11–13

© 2007 Prentice Hall, Inc. All rights reserved. 11–14

The marketing of GOODS --

© 2007 Prentice Hall, Inc. All rights reserved. 11–17

© 2007 Prentice Hall, Inc. All rights reserved. 11–20

© 2007 Prentice Hall, Inc. All rights reserved. 11–24

© 2007 Prentice Hall, Inc. All rights reserved. 11–26

© 2007 Prentice Hall, Inc. All rights reserved. 11–27

© 2007 Prentice Hall, Inc. All rights reserved. 11–29

© 2007 Prentice Hall, Inc. All rights reserved. 11–30

© 2007 Prentice Hall, Inc. All rights reserved. 11–32

© 2007 Prentice Hall, Inc. All rights reserved. 11–33

© 2007 Prentice Hall, Inc. All rights reserved. 11–37

© 2007 Prentice Hall, Inc. All rights reserved. 11–42

© 2007 Prentice Hall, Inc. All rights reserved. 11–43

© 2007 Prentice Hall, Inc. All rights reserved. 11–44

© 2007 Prentice Hall, Inc. All rights reserved. 11–45

© 2007 Prentice Hall, Inc. All rights reserved. 11–46

Meeting these changing condition --

© 2007 Prentice Hall, Inc. All rights reserved. 11–52

© 2007 Prentice Hall, Inc. All rights reserved. 11–54

© 2007 Prentice Hall, Inc. All rights reserved. 11–60

© 2007 Prentice Hall, Inc. All rights reserved. 11–61

Age Under 5, 5–11, 12–19, 20–34, 35–49, 50–64, 65+

Income Under $9,000, $9,000–$14,999, $15,000–$24,999, $25,000–

Religion Buddhist, Catholic, Hindu, Jewish, Muslim, Protestant

Sex Male, female

© 2007 Prentice Hall, Inc. All rights reserved. 11–62

© 2007 Prentice Hall, Inc. All rights reserved. 11–66

© 2007 Prentice Hall, Inc. All rights reserved. 11–67

Problem /Need recognition

Post purchase Evaluations

© 2007 Prentice Hall, Inc. All rights reserved. 11–73

 Government and Institutional Market

© 2007 Prentice Hall, Inc. All rights reserved. 11–74

© 2007 Prentice Hall, Inc. All rights reserved. 11–75

© 2007 Prentice Hall, Inc. All rights reserved. 11–76

© 2007 Prentice Hall, Inc. All rights reserved. 11–80

© 2007 Prentice Hall, Inc. All rights reserved. 11–84

© 2007 Prentice Hall, Inc. All rights reserved. 11–87

You might also like