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Chapter Introduction
Section 1: The Changing Role
of Marketing
Section 2: The Marketing Mix
Section 3: Distribution
Channels
Visual Summary
The profit motive acts as an
incentive for people to produce
and sell goods and services.
Do you think advertisements
influence your buying habits? In
this chapter, read to learn how
businesses market and distribute
their goods and services.
The Development of Marketing
The focus of marketing is to maximize
sales by satisfying consumer wants
and needs.
SECTION 1
The Development of Marketing (cont.)
• Marketing’s main purpose today is to
convince consumers that a certain product
will add to their utility.
• Utility can be divided into four types:
– Form
– Place
– Time
– Ownership
SECTION 1
Market Research
Through market research, businesses
can determine what products
consumers are likely to buy and at
what prices.
SECTION 1
Market Research (cont.)
• In today’s global market, it is vital that
businesses find out what consumers want
through market research.
• Issues considered by market researchers:
– Who is their target audience?
– What advertising method will be most
effective?
SECTION 1
Market Research (cont.)
• Purposes of early market research:
– It helps producers determine whether
there is a market for their good or
service.
– It helps determine what the market is.
– It can indicate any changes in quality,
features, or design that should be made.
SECTION 1
Market Research (cont.)
• Market research can be done immediately
after a product is released for sale or after
it has been on the market for a while.
Changes in marketing strategy are made
accordingly.
• The first step in market research is
conducting a market survey.
SECTION 1
Market Research (cont.)
• The survey may be in the form of:
– a written questionnaire
– individual interviews
– focus group interviews
– an online questionnaire
SECTION 1
Market Research (cont.)
• Test-marketing is the final step before
offering a product for national distribution.
• If the product is not successful here, it may
be redesigned or discontinued.
View: Testing New Products
SECTION 2
The “Four P’s” of Marketing
The “four Ps” of marketing are product,
price, place, and promotion.
SECTION 2
The “Four P’s” of Marketing (cont.)
• Product—market research helps
determine what services to offer with the
product, how to package it, and what kind
of product identification to use.
– Product identification is meant to attract
consumers to look at, buy, and
remember a particular product.
SECTION 2
The “Four P’s” of Marketing (cont.)
• Price—in setting a price, a company has to
consider the costs of producing, advertising,
selling, and distributing the product, as well
as the amount of profit it hopes to make.
– Penetration price is one common
marketing strategy for a new product.
– Some industries may rely on
price leadership.
View: Factors of Price
SECTION 2
The “Four P’s” of Marketing (cont.)
• Place—where the product should be sold is
another decision of the marketing department.
– The location of the product within the store
itself is another consideration.
– Geographic location is also a factor.
SECTION 2
The “Four P’s” of Marketing (cont.)
• Promotion—use of advertising to inform
consumers that a new or improved service
is available and to persuade them to
purchase it.
SECTION 2
The “Four P’s” of Marketing (cont.)
• The type of promotion that a producer uses
depends on three factors:
– The product.
– The type of consumer that the company
wants to attract.
– The amount the company plans to
spend.
SECTION 2
The “Four P’s” of Marketing (cont.)
• Direct-mail advertising, free samples,
cents-off coupons, gifts and rebates are all
forms of promotion.
SECTION 2
Product Life Cycle
Most products go through a four-stage
life cycle consisting of introduction,
growth, maturity, and decline.
SECTION 2
Product Life Cycle (cont.)
• Most products go through a product life
cycle.
View: Product Life Cycle
SECTION 2
Product Life Cycle (cont.)
• The four stages of a typical product life
cycle include:
– Introduction
– Growth
– Maturity
– Decline
SECTION 3
Wholesalers, Retailers, Storage,
and Transportation
Goods are usually moved from
producers to consumers through
middlemen such as wholesalers and
retailers.
SECTION 3
Wholesalers, Retailers, Storage,
and Transportation (cont.)
• Few goods go directly from producer to
consumer.
• The channels of distribution are:
– Wholesalers
– Retailers
– E-commerce
View: Distribution of Consumer Goods
SECTION 3
Wholesalers, Retailers, Storage,
and Transportation (cont.)
• Part of the distribution process includes
storing goods for future sales.
• Transportation involves the physical
movement of goods from producers and/or
sellers to buyers.
• Businesses must consider the type of
product, size and weight of the product,
speed, and cost in transporting goods
within the channels of distribution.
SECTION 3
Other Distribution Channels
Direct marketing is done mainly
through catalogs and over the Internet.
SECTION 3
Other Distribution Channels (cont.)
• Distribution channels have expanded
rapidly in the last 15 to 20 years because
of club warehouse stores and direct
marketing.
• Direct marketing is done mainly through
catalogs and over the Internet.
VS 1
The main
purpose of
marketing is to
convince
consumers that a
certain product or
service will add to
their utility.
Product testing
helps marketers
predict whether or
not a new good
will sell well.
VS 2
When introducing a new product, businesses
need to keep the “Four Ps” of marketing in
mind.
VS 3
Goods are usually moved from
manufacturers to consumers through various
distribution channels like wholesalers and
retailers.
FIGURE 1
FIGURE 2
FIGURE 3
FIGURE 4
DFS TRANS 1
DFS TRANS 2
DFS TRANS 3
VOCAB1
marketing: all the activities needed
to generate consumer demand and to
move goods and services from the
producer to the consumer
VOCAB2
consumer sovereignty: the role of
the consumer as ruler of the market
when determining the types of goods
and services produced
VOCAB3
utility: the amount of satisfaction one
gets from a good or service
VOCAB4
market research: gathering,
recording, and analyzing data about
the types of goods and services that
people want
VOCAB5
market survey: information gathered
by researchers about possible users
of a product based on such
characteristics as age, gender,
income, education, and geographic
location
VOCAB6
test-marketing: offering a product for
sale in a small area for a limited
period of time to see how well it sells
before offering it nationally
VOCAB7
penetration pricing: selling a new
product at a low price to attract
customers away from an established
product
VOCAB8
price leadership: a practice in some
industries in which the largest firm
publishes its price list ahead of its
competitors, who then match those
announced prices
VOCAB9
promotion: use of advertising to
inform consumers that a new or
improved product or service is
available and to persuade them to
purchase it
VOCAB10
direct-mail advertising: type of
promotion using a mailer that usually
includes a letter describing the
product or service and an order blank
or application form
VOCAB11
product life cycle: series of stages
that a product goes through from first
introduction to complete withdrawal
from the market
VOCAB12
channels of distribution: routes by
which goods are moved from
producers to consumers
VOCAB13
wholesalers: businesses that
purchase large quantities of goods
from producers for resale to other
businesses
VOCAB14
retailers: businesses that sell
consumer goods directly to the public
VOCAB15
e-commerce: business transactions
conducted over the Internet