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CHAPTER 1: MARKETING IS ALL AROUND US
Section 1.1 Marketing and the Marketing Concept
Objectives:
1. Define Marketing
2. Explain the four foundations of marketing
3. List the seven functions of marketing
4. Understand the marketing concept
I. The Scope of Marketing
A. Marketing- process of planning, pricing, promoting, selling, and distributing ideas, goods,
or services to create exchanges that satisfy consumers.
1. Marketing is an ongoing process that is constantly changing.
2. Marketers must keep up with the trends and consumers of attitudes.
B. Ideas, Goods, and Services
1. Goods- tangible items that have monetary value and satisfy your needs and wants.
i. Cars, sporting equipment, electronics, clothing, food.
2. Services- intangible items that have monetary value and satisfy your needs and wants.
i. Intangible items are items that cannot be physically touched.
ii. Haircuts, banks, taxes, movies, fast food.
3. Ideas
i. Political platforms, eating healthy, saving energy, etc.
4. Buying and selling creates exchanges that takes place in the marketplace.
i. Marketplace is the commercial environment where the exchange happens
a. Shops, Internet stores, catalogs, financial institutions, etc.
C. Foundations of Marketing
1. Business, management, entrepreneurship
i. Understanding the basics of business, management, and entrepreneurial
concepts that affect business decision making.
2. Communication and interpersonal skills
i. Understanding concepts, strategies, and systems needed to interact effectively
with others.
3. Economics
i. Understanding the economic principles and concepts that are basic to
marketing.
4. Professional development
i. Understanding concepts and strategies needed for career exploration,
development, and growth.
D. Seven Functions of Marketing
1. Distribution
i. Deciding how to get the goods in the consumers’ hands.
ii. Physically moving and storing goods.
a. Move by truck, air, ship, rail.
b. Store in warehouse for later distribution.
2. Financing
i. Getting the money necessary to set up and run a business.
ii. Finance through a bank, stocks, offering credit to customers, investors.
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3. Marketing Information Management
i. Gathering, storing, and analyzing information.
ii. Collect data about customers’ habits and attitudes on a continual basis.
a. Where do they live, trends
iii. Completing a questionnaire
4. Pricing
i. Decisions that dictate how much to charge for goods and services in order to
make a profit.
ii. Decisions based on cost and competitors pricing for the same good or service.
iii. Must know what customers are willing to pay.
5. Product/Service Management
i. Obtaining, developing, maintaining, and improving a product or product mix
in response to market opportunities.
6. Promotion
i. Effort to inform, persuade, or remind potential customers about a business’s
products or services.
ii. TV and radio commercials are examples of advertising.
iii. Promotion also improves a company’s public image.
7. Selling
i. Provides customers with the goods and services they want.
ii. Selling in the retail market (to you), business-to-business (wholesalers,
retailers, or manufacturers).
E. The Marketing Concept
1. The Marketing Concept- the idea that a business should strive to satisfy customers’
wants and needs while generating a profit for the company.
2. The focus is on the customer.
3. Successful companies employ all seven functions to support this idea.
4. Repeat customers are a major role in every organization.
5. Customer Relationship Management (CRM)
i. Aspect of marketing that combines customer information with customer
service and marketing communications.
ii. Create more meaningful one-on-one communications with customers.
Reviewing Key Terms and Concepts
1. Name two ideas that can be marketed. (Conserving natural resources, adopting energysaving measures in the home, voting for a political party)
2. Where to exchanges take place? (the marketplace)
3. What is the main difference between consumers and industrial users? (consumers
purchase smaller quantities for their own use)
4. A customer purchases two tables @ $149.99 each and would like them to be delivered.
Your company charges customers $50 for delivery and the state imposes a 5% sales tax
on furniture, but not the delivery charge. What is the total amount due? $364.98; [(149.99
* 2) * 0.05] + $50
5. List at least three ways the Internet has changed marketing functions. (Internet reaches a
global audience, provides advanced inventory control, serve as a marketing tool,
customer relationship management, analyze market trends and desires.)
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Section 1.2 The Importance of Marketing
Objectives:
1. Analyze the benefits of marketing
2. Apply the concept of utility
I. Economic Benefits of Marketing
A. Marketing provides for competition to take place, which is an important role to our
economy.
B. New and Improved Products
1. Marketing generates competition which forces business to create new and improved
products.
i. Creates a larger variety of goods and services.
ii. Ex. Personal computers
C. Lower Prices
1. Marketing increases demand which helps lower prices.
i. Demand = high, more products produced in larger quantities.
a. This reduces unit costs per unit b/c fixed costs per unit are lower.
b. This allows the company to charge a lower price, sell more units, and
make more money.
c. Fixed costs example
iii. When products become popular, more competitors enter the marketplace
a. Marketers must find ways to lower prices to stay competitive.
b. DVD example
C. Added Value and Utility
1. Utility- attributes of a product or service that make it capable of satisfying
consumers’ wants and needs.
i. Functions of marketing add value to a product, or utility.
ii. Five economic utilities:
a. Form Utility- changing raw materials or putting parts together to make
them more useful. (not directly related to marketing, use marketing
research to create new products)
b. Place Utility- having a product where customers can buy it.
c. Time Utility- having a product available at a certain time of year or a
convenient time of day.
d. Possession Utility- coming into possession with the product.
**exchange of a product for money
**retailers accepting checks, debit or credit cards, trades, loans,
layaways,
**possession utility is involved in every legal transaction
f. Information Utility- communicating with the customer.
Reviewing Key Terms and Concepts
1. How does marketing help to lower prices? (encouraging competition)
2. In what ways is marketing related to form utility? (creates the products that are marketed)
3. Which utility is added by drive-thru windows at fast food restaurants? (Time utility)
4. $200.00; ($10,000 * .02)
5. Should indicate familiarity with these benefits: new and improved products, lower prices,
and added value and utility.
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Section 1.3 Fundamentals of Marketing
Objectives:
1. Describe the concept of market
2. Differentiate consumer and industrial markets
3. Describe market share
4. Define target market
5. List the components of the marketing mix
I. Market and Market Identification
A. Market- people who share similar needs and wants and are capable of buying products.
1. Example markets: video games, expensive cars, boats, laptops, etc.
B. Consumer vs. Industrial Markets
1. Consumer Market- consumers who purchase goods and services for personal use.
i. Generally, consumers are interested in products that will save them money,
make their life easier, improve their appearance, create status in the
community, or provide satisfaction.
3. Industrial Market- business-to-business (B-to-B) market includes all businesses that
buy products for use in their operations.
i. Companies want to improve productivity, increase sales, decrease expenses,
or more efficient.
C. Market Share- a company’s percentage of the total sales volume generated by all
companies that compete in a given market.
1. Need to know market share to analyze competition and status in a market.
2. Market share changes as new competitors enter the market.
D. Target Market and Market Segmentation
1. Target Market- Group of people most likely to become customers.
i. Breaking down the market into smaller groups that have similar needs
(segmentation)
ii. Market segmentation- classifying customers by wants and needs.
iii. Goal of market segmentation is to identify the target market.
iv. Marketing strategies are directed to the target market.
v. Identifying the target market is key to success.
2. Consumer vs. Customers
i. A product may have more than one target market.
ii. Consumers are those who will use the product, customers are those who will
buy the product.
iii. Customer Profile- lists information about the target market
a. age
b. income
c. ethnicity
d. occupation
e. attitudes
f. lifestyle
g. geographic residence
E. Marketing Mix- Four P’s (Price, Product, Place, Promotion)
1. Marketers use and control the four P’s in order to influence potential customers.
2. Marketers must 1st clearly define each target market before they develop marketing
strategies.
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3. Product
i. What products to make and sell
ii. Product features, brand name, packaging, service, and warranties
iii. Update or improve current products
4. Place
i. Means of getting the product into the consumer’s hands
ii. How and where a product will be distributed
iii. Sell directly to consumers or use intermediaries
iv. Transportation methods
v. Stock levels
5. Price
i. What is exchanged for the product
ii. Reflect what consumers are willing and able to pay
iii. Pricing strategies
a. list price or suggested retail price
b. discounts
c. allowances
d. credit terms
e. payment periods for industrial customers
f. promotional periods
6. Promotion
i. Decisions about advertising, personal selling, sales promotion, and publicity
ii. Promotional Strategies
a. Telling customers about a product
b. Communicating the message, selecting the media, special offers, and
timing of the message
Reviewing Key Terms and Concepts
1. What is the difference between consumer and industrial markets? (Consumer markets
purchase goods and services for personal use, industrial markets purchase products and
services for use in their business operations)
2. What is the relationship among market segmentation, target markets, and customer
profiles? (Market segmentation refers to the breaking down of a market in to smaller
groups that have similar needs, and then pitching marketing efforts to this group. The
group chosen is the target market. Customer profile refers to specific information such as
age, income, etc., about the target market)
3. Name the four P’s of the marketing mix and explain the importance of a target market for
each of them. (Product, Place, Price, Promotion; means through which sellers reach their
target market. The product, price, & promotion have to appeal to the target market, and
the place has to be where the target market will buy.)
4. Total sales in ice cream is $4.4 billion. Breyer’s sales were $650,417,792. What is their
market share? (14.78%)
5. Write a customer profile for a magazine of your choice.
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Chapter 1 Summary
Section 1.1
 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.
 Four foundations of marketing are: Business, Management, entrepreneurship;
Communicating and Interpersonal Skills; Economics; Professional Development
 Seven functions of marketing: Distribution, Selling, Financing, Marketing Information
Management, Pricing, Product/Service Management, Promotion
 The marketing concept is a focus on customers’ needs and wants while generating a
profit.
Section 1.2
 Benefits of marketing are: New and Improved Products; Lower Prices; Added Value
(Utility)
 Economic utilities: Form; Place; Possession; Time; Information
Section 1.3
 A market is all people who share similar needs and wants and who have the ability to
purchase given products
 Market share is a firm’s percentage of total sales of all competitors in a given market
 Four P’s of the marketing mix: Place, Product, Price, Promotion
 Marketing decisions and strategies for the four P’s are based on the target market.
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