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Marketing Indicator 1.01 Understand marketing’s role and function in business to facilitate economic exchanges with customers. A. Understand marketing’s role and function in business to facilitate economic exchanges with customers. REVIEW - What is Marketing? • Links producers to the customers who buy their goods and services • Includes ALL activities to get product from manufacturer to consumer that are guided by consumer’s wants and needs • 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. REVIEW Sales Concept VS. Marketing Concept • SC = Product development w/o proving demand, want or need. Created regardless of whether anyone wants/needs it. This is a good product idea because we think it is, not b/c customers are asking for it. • MC = Businesses must satisfy customers needs & wants in order to make a profit. • Businesses use the needs of customers as the primary focus during the planning, production, distribution, & promotion of a product or service. Identify Marketing Activities. • 4 foundations of Marketing • 7 functions of Marketing • SWOT Analysis • Marketing Mix (4 P’s) 4 Foundations of Marketing • Economics - study of allocating resources to maximize their uses • Business, Management, Entrepreneurship - study of operating and managing a business & all the skills and concept necessary • Communication Skills – interacting with people and organizations • Professional Development – ongoing growth within a career path 7 Functions of Marketing 1. 2. 3. 4. 5. 6. 7. Distribution Financing Marketing Information Management Pricing Product / Service Management Promotion Selling Define 7 Functions using 1 word: • • • • • • • channel management = distribution marketing-information management = data Pricing = price product/service management = lifecycle Promotion = communication Selling = personal (1 on 1) Financing = capital (investment, backing) SWOT Analysis MARKETING MIX – 4 P’s Interconnected/interdependent – actions in one P effect decisions for the other P’s Each P has countless alternatives The better you know your target market, the easier the decisions for the 4 P’s Successful combination = profitability • 4 P’s • • • • Product (Planning) Price Place Promotion PRODUCT PLANNING • Considers the direction in which the firm is heading and how marketing lines up with that direction • This thinking process provides the basis for all marketing goals and actions. • Analyzes who the customers are and what goods or services they need • Determines which goods or services to produce, sell, or provide • Since coordinating all of the pieces of marketing is an essential role of the marketer, thorough planning is necessary. PRICE/PRICING • Keeps two pricing issues in mind: • Customer’s perception of value • Selling firm’s objectives • Make a profit? • Goal is to strike the right balance. PLACE • DISTRIBUTION • Figures out which steps to take to ensure a timely delivery • Download it via Internet? • Transport it? How? • Store it? PROMOTION • Conducts activities to capture attention about a good or service • Each activity involves contact with a customer, whether in person or not. • Examples: • • • • Advertising—e.g., television commercials Personal selling—e.g., door-to-door sales, professional sales Publicity—e.g., press releases Sales promotion—e.g., logo-imprinted giveaways • Objectives include informing, persuading, and reminding. What items can be marketed? • Products (Goods & Services) • Organizations • Profit vs. Nonprofit • Places - Tourist attractions, Cities • Ideas – Stand Against Bullying, Click it or Ticket • People – politicians, actors, singers • Events – concerts, sports, olympics Two categories of products • Goods (tangible items) • Durable vs. Non-durable • Consumer vs. Industrial • Services (intangible) GOODS - TANGIBLE • Durable (long lasting – washing machine) • Nondurable goods (consumed within a short period of time such as gasoline, toothpaste) • Consumer goods are used for personal purposes (such as a laptop to write a history paper or a cell phone to call your best friend) • Industrial goods are used for business purposes (such as a commercial oven for a bakery) • The same good could be consumer and/or industrial. The goods’ use determines which it is. • A laptop used to type a history paper is? • A laptop used to bill customers is? SERVICES - INTANGIBLE Pay someone to do something for us because: • We do not have the skill (haircut) or expertise (lawyer, doctor) • We do not have the time (house cleaning) • We do not want to do it (lawn care) REVIEW categories of products • Goods – tangible purchases • Durable vs. Nondurable • Consumer vs. Industrial • Services – intangible purchases • Consumer vs. Industrial Where does Marketing Occur? • Everyday by people, in places, with communication • Marketing occurs wherever customers are Where have you recently seen an advertisement? Marketing IS EVERYWHERE! MARKETING CONCEPT DEFINITION = A philosophy of conducting business that is based on the belief that all business activities should be aimed toward satisfying consumer wants and needs while achieving company goals. Explain the elements of the MARKETING CONCEPT • Customer Orientation • Business focus on building relationships w/ customers to facilitate loyal, repeat customers for life. Do it their way. • Finding out what customers want and producing those products the way they want them • Customer Satisfaction • Meet or exceed customer’s expectations • Customer Needs / Wants • Desires of the consumers that convert into purchases Explain the elements of the MARKETING CONCEPT • Company Approach • Employees working together to satisfy their customers to earn profits • Company Commitment • All employees focused on the customers. • Do it better. Make/price the product better than the competition’s model. • Company Goals • Goals should be focused on satisfying customers • Do it with success in mind. Maintain your firm’s purpose while you apply the marketing concept. Explain the elements of the marketing concept. • CRM – (Customer Relationship Management) combines customer information via databases with customer service and marketing communication • Marketing Loyalty Programs – Rewards repeat customers • Product – business provides items that satisfy desires of consumers • Profits – Money business keeps after paying all expenses REVIEW Marketing Concept • FOCUS ON THE CUSTOMER! • WITHOUT THE CUSTOMER – NO $$$! What is Marketing’s Role in a Private Enterprise System? • Marketing fits into every facet of our lives, whether on a global scale or right in our own neighborhoods. • Provides benefits that make our lives better, promoting using natural resources more wisely, and encourage international trade. • Without marketing, we would all have to be self-sufficient. Explain the role of marketing in a private/free enterprise system. • Create awareness of product / service • Have access to product / service • Multiple channels to purchase product / service REVIEW Role of Marketing in the Private Enterprise System • People buy and sell goods and services daily so they can feed their families, increase profits, and hopefully hire others. • Domino effect – if one is knocked down the others will follow • If a person has a job, they have money. They can spend money on goods and services and pay others using their money. This keeps others employed. Describe ways in which consumers and businesses would be affected if marketing did not exist. • Society would remain self-subsistence style of living. • Less competition = Higher prices • Less choices, less improvements, less info. REVIEW - How would consumers and businesses be affected if marketing did not exist? • Our nation would have difficulty linking producers to consumers. • Our own routines would be different because marketing shapes everything we do. • Ex: Out of milk? Go to the store. What store? Where? BENEFITS OF MARKETING Marketing bridges the gap between you & maker/seller of an item. Marketing makes it easy for consumers to buy what they want/need. It creates new & improved products at lower prices BENEFITS OF MARKETING (cont.) • The 7 Functions of Marketing add value to a product/service. • Economic term for this: UTILITY = Added value • 5 economic utilities involved w/all products – only 4 directly related to marketing SIDE NOTE – 5 UTILITIES of MARKETING • Form • Involves changing raw materials, putting parts together to make them more useful – not directly related to marketing! • Deals with making/producing things • Place • Location – having the product where customers can buy it • Time • Having the product available when the customer wants/needs it • Possession • Exchange of a product/service for some monetary value • Information • Communication with the consumer BENEFITS OF MARKETING (cont.) • Lower prices • When Marketing activities increase demand • Manufacturers can make products in larger quantities • Reducing the cost of production • Lower price, higher sales, higher profit BENEFITS OF MARKETING (cont.) • New & Improved Products • When products/services become more popular (higher demand) • More competitors enter the marketplace • Increased competition, businesses look for ways to better satisfy wants & needs • Thus larger variety of goods & services REVIEW Marketing benefits our society. • Increased competition = Lower prices • Variety of goods/services • Mass communication about items • Foreign and domestic societies benefit REVIEW MARKETING Makes our lives better • Because problem solving is at the heart of marketing, each year we add some new products to our home, often at lower prices. • Promotes using the earth’s resources more wisely • If available resources are used sensibly, benefits can extend well into the future for the marketer, the nation, and the entire world. • Encourages trade between nations • Because resources are valuable to marketers, it doesn’t take them long to pinpoint where a particular resource can be found in abundance. • If our nation lacks a resource, we can usually trade something to get it. REVIEW The benefits to marketing are… “Marketing is beneficial to consumers because it brings new and improved products to the market, as well as lowering prices.” REVIEW How Does Marketing Benefit Our Society? • Marketing visibly benefits • our lives, • our natural surroundings, and • our global trade. B. Describe marketing functions and related activities Define the following terms using 1 word: 1. channel management = distribution 2. marketing-information management = data 3. Pricing = price 4. product/service management = lifecycle 5. Promotion = communication 6. Selling = personal (1 on 1) 7. Financing = capital (investment, backing) Explain the purposes of each marketing function. 1.Distribution – Transporting, storing, and handling goods from the manufacturer to the consumer. Large impact on pricing due to transportation costs. Channel management (a.k.a.) Distribution • Responsible for moving, storing, locating, and/or transferring ownership of goods and services • Main goal is to move products from the producer to the consumer. • Determines who will offer products and where they will be offered • Develops relationships with channel members • Assesses quality of vendor performance Explain the purposes of each marketing function. 2. Financing – Manage cash needs of a business on a daily basis for future needs. Most businesses struggle the first years Explain the purposes of each marketing function. • 3. MIM – (marketing information management) provides usable info. to make business decisions. Ex. Google Analytics, Surveys to determine preferences of products, develop prototype for testing, implement new process and gather info. about possible problems Marketing-information management (MIM) • Provides data that can be used for business decision-making • Provides data about effectiveness of marketing efforts • Provides data about customer satisfaction, customer loyalty, needs, and wants Explain the purposes of each marketing function. 4. Pricing – Determining a value to charge in order to make a profit. Pricing • Establishes products’ prices • Determines whether prices need to be adjusted • Sets policies and objectives for prices Explain the purposes of each marketing function. 5. Product Service Management – Designing, producing, maintaining, improving, and obtaining products to meet customer’s wants and needs Product/Service Management • Helps to determine which products a business will offer and in what quantities • Aids in determining and developing a company’s/product’s image • Provides direction for other marketing activities based on changes in a product’s life cycle Explain the purposes of each marketing function. 6. Promotion - Communication that is used to inform, persuade, or remind customers about a business’s products. (Advertising) Promotion • Reminds customers about products/businesses • Informs customers about products/businesses • Persuades customers about products/businesses Explain the purposes of each marketing function. • 7. Selling - Determining and responding to customer’s needs and wants through personalized communication (face-to-face) • Selling • Creates a following of loyal customers • Completes the exchange transaction • Provides services for customers Describe the importance of each marketing function to marketing. CHANNEL MGT/Distribution is important to marketing because: • Gets products from producers to consumers so they are on hand when consumers want to buy. • Allows adequate supplies of products in the right place at the right time. • This function includes selecting methods of transporting products. • Some methods are less expensive than others. • Making the right decision helps to control expenses. Describe the importance of each marketing function to marketing FINANCING Without money, cannot purchase goods, pay employees, pay for promotions, pay for transporting goods, pay rent for the offices/stores, cannot buy equipment or supplies, etc. Describe the importance of each marketing function to marketing. Marketing-Information Management is important to marketing because: • Allows businesses to make decisions based on information gathered rather than making guesses • Goal is to forecast, or predict, what will be happening that might affect the business in the future. • Might lose money because they are not keeping up with the times or selling the right products Describe the importance of each marketing function to marketing. Pricing is important to marketing because • Affects how well a product will sell and how much profit the business will make • Businesses need to set prices that customers are willing to pay. • Prices need to cover costs and include sufficient profit. Describe the importance of each marketing function to marketing. Product/Service Management is important to marketing because • Involves deciding on the products that a business will produce or offer • Businesses must offer the products that customers want and need to be successful. • Helps businesses decide on the type of image they want customers to have of them and their products. • Rely on the marketing-information management function to provide the necessary data. Describe the importance of each marketing function to marketing. Promotion is important to marketing because • Can create and/or increase consumer demand for products. • Promotions inform customers about: • New products • Improved products • New uses for existing products • Special values on products • Helps to create an image or impression of a business. • A business might want to change its image to attract a different or expanded target market. • Coordinated advertising and public relations will get the message across. Describe the importance of each marketing function to marketing.. Selling is important to marketing because • This function is important because it involves contact with customers. • Other marketing functions pave the way for successful selling. • Businesses work to meet customers’ needs and sell them the most appropriate product. • All businesses have something to sell. Describe the importance of each marketing function to marketing. SELLING CONT. • Everyone benefits from selling. • Selling benefits businesses - Creates a desire for their products, Helps get their products into the hands of consumers • Selling benefits consumers by providing Help with their buying decisions, Information about new products • Selling can benefit society - Creates employment. Encourages economic growth Explain the interrelationships among marketing functions. MIM Pricing Promotion Financing PSM Distribution Selling How do they work together? The interrelationships among marketing functions • Can’t forget to advertise even if you have a great product • Can’t forget to have a sufficient supply of those great products in stock for an upcoming sale • Can’t forget to set prices that are competitive and attract customers • Forgetting any of these functions means your marketing effort won’t be as effective. • Your competitors will have an advantage…YIKES! ACTIVITY 1 • Think of 1 good and 1 service that you have used in the past 24 hours & write it down. Respond to the following questions for EACH: • How did you come to use these goods/services? • How did you find out about these goods/services? • Where did you obtain these goods/services? • How much did these goods/services cost? ACTIVITY 2 • Use your notes as a guide • In teams of 2: • List & Define each function using 1 word and provide 2 examples for each function. • List the 4 P’s of the Marketing Mix and provide 2 examples for each • Choose one of the functions and create a QUALITY multiple choice question to share with the class • Choose one of the 4 P’s and create a QUALITY multiple choice question to share with the class Short Answer Quiz 1. Give an example of a need and a want. 2. What is a target market? 3. Give an example explaining who is a customer and who is a consumer. 4. The marketing concept philosophy indicates that a business will satisfy the wants and needs of _______________ and still make a profit. 5. List the two categories of products and explain how they are different.