Download Chapter 4 Marketing Begins with Customers Study Guide

Chapter 4
Marketing Begins with
Customers
Study Guide
What are the four
basics of marketing?
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Understanding the marketing concept
Planning a marketing strategy
Responding to competition
Integrating marketing into the business
What are the seven
marketing functions?
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Product/Service Management
Distribution
Selling
Marketing-Information Management
Financing
Pricing
Promotion
Effective marketing is an
investment because . . .
It is responsible for matching a company’s
offerings with market needs
Why is having a superior
product or service not
sufficient to assure
success in business?
Businesses must respond to customer needs
and desires, or they will take their business
elsewhere
What is the marketing
concept?
Using the needs of customers as the primary
focus during the planning, production,
distribution, and promotion of a product or
service
If a new business regards
marketing as an
investment rather than as
an expense, what is a
common mistake that it is
more likely to avoid?
It is likely to avoid the mistake of cutting
marketing expenditures when it faces a cash
squeeze, because it realizes that marketing
will increase future profits
What is wrong with
treating marketing
mainly as a problemsolving tool?
Treating marketing mainly as a problemsolving tool may deprive a business of the
many opportunities that marketers can identify
and create when marketing is used to uncover
new markets and seek out ways to improve
customer satisfaction
When a business uses
the marketing concept,
what is the first step in its
planning process?
The first step in the planning process with the
marketing concept is to conduct research to
identify potential customers and their needs
Putting Marketing Up
Front
Planning that identifies how a company
expects to achieve its goals is known as a
strategy.
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A good marketing mix is
based on what?
Customer needs and wants
Understanding the
Customer
• Identifying customer needs
• Satisfying customer needs
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Businesses tend to deal
with customer needs in
one of two ways. What
are the two ways?
• Customers are all alike and can be
influenced to buy what a business offers.
• Customers are quite different and they
select products and services to meet their
unique needs.
What is a market
segment?
A group of similar customers within a larger
market – categorized according to similar
characteristics
Two Views of
Consumers
• Customers are all alike and can be
influenced to buy what a business offers.
• Customers are quite different and they
select products and services to meet their
unique needs.
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Planning the Offering
• The marketing mix
• Creating the right mix
o Developing products
o Making distribution decisions
o Pricing products and services
o Planning promotion
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Chapter 4
What is a market
opportunity analysis?
• It prioritizes market segments to locate the
best potential
What are the elements
of the marketing mix?
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Product Development
Distribution
Pricing Products and Services
Promotion
Parts of the product
development decision
that can improve
customer satisfaction
Special Features
are ____________
such
as
unique design, construction, size, color, or
_______________________
operation, accessories
______________________.
What is the most difficult
marketing decision to
understand and plan?
Why?
Pricing products and services. Marketers must
try to balance the costs of the product with the
customer’s feelings about the value of the
product/service
In pricing products and
services, what must
marketers try to
balance?
The costs of the product with the customer’s
feelings about the value of the product
How do consumers
measure or define
value of a product or
service?
• Better quality
• More/better service
• Lower Prices
What are the most
common forms of
promotion?
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Advertising
Personal selling
Sales
Promotion
Visual display
Publicity
Under what conditions
would promotion not
be helpful to a
company?
If the company has a poor product,
excessively high prices, or ineffective
distribution
How might aggressive
promotion be useless if
distribution is
ineffective?
No matter how effective a promotional campaign,
sales will not increase if the product cannot get to the
consumer
Name three reasons it is
difficult to meet
customer needs
• They may not be sure of their needs or have
conflicting needs
• They have limited resources with which to
satisfy their needs
• People have very different needs
What do consumers with
different needs require?
Specialized products and services
Name several ways
businesses can alter the
prices they charge
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Prices can be altered with discounts
Markdowns
Allowances
Trade-ins
Coupons
Extensions of credit
Why is it important for
businesses to
understand the
consumer decisionmaking process?
So they can provide the consumer with the
right information at the right time to facilitate a
satisfying exchange
What benefit do
consumers get from a
large number of
competitors in a particular
industry?
• More choices
• Cheaper prices
• Convenience
List the three types of
competition?
• Intense
• Limited
• Monopolistic
Of the three types of
competition, which is
the most difficult type of
competition? Why do
you think this is so?
Intense competition because the product is
very similar and consumers can find a
replacement very easily
What is pure
competition?
Many businesses offering the same product
What is an oligopoly?
Only a few companies compete in the same
market, consumers see few if any differences
What is some of the typical
responses a business can make
to deal with intense
competition?
• Emphasize price
• Emphasize promotion – convince customers that their products
were better, relatively minor differences as being important,
unique brand names and images – more personalized or
detailed information, non-traditional methods or media
• Distribution can focus on making the product available at
better locations and times, with more careful handling, or
greater customer service
• Pricing can offer alternative methods of payments, greater
ease of obtaining credit, extended time for payment, or
leasing
Explain limited
competition and how
businesses respond.
• Little or no direct competition – Monopoly
• Don’t have to worry so much about price or
promotion
• Business concentrates on maintaining its
advantage in the market
• Customers often become dissatisfied with
their lack of choice
Explain monopolistic
competition and how
businesses respond.
• Many competitors, some differences among the choices
• It is important for the companies to have clearlyidentified differences that result in customers selecting
their brands
• Companies in monopolistic competition find the
marketing concept to be of most value
• Focus different groups of customers and try to identify
their needs
• They make changes to the marketing mix that not only
make the brand different from its competitors but more
attractive to potential customers
Why does monopolist
competition allow
businesses to benefit most
from the marketing
concept?
Because the businesses with monopolies do not have
to pay much attention to consumer needs, and
businesses facing intense competition tend to rely
primarily on price. Monopolistic competition gives a
business an opportunity to differentiate its products to
win customers from other businesses.
What are the five stages
of the consumer decisionmaking process?
Purchase
Problem
Recognition
Information
Search
Alternative
Evaluation
Postpurchase
Evaluation
Name three things that
businesses use
marketing research for.
• To identify customers, characteristics that make
groups of customers different from others, their
needs, and how they make purchase decisions
• To identify the type of competition and the strengths
and weaknesses of competing companies
• To determine which are most effective and which
are most profitable marketing strategies
From a consumer
perspective, which type
of competition offers
the most choice? The
least choice?
Intense competition offers the most choice;
limited competition offers the least
Explain what is meant
by a “channel of
distribution.”
The businesses that work cooperatively to
move products from the producer to the
consumer
Another name for a
channel member is?
Middleman
List two types of channel
members and what part(s)
of the marketing mix the
focus their efforts on.
• Wholesalers emphasize distribution planning; many
help their customers with financing and provide
marketing information
• Retailers are responsible for most final pricing
decisions and use a variety of promotion activities
to encourage consumers to purchase their products
What is a markup and
how is it calculated?
• A markup covers a business’s operating
expenses, taxes, and whatever profit it
builds into its price before it passes a
product on to another member of the
channel or the end user
• The difference between the price a business
pays for a product and the price it plans to
sell the product for. Expressed as a
percentage of the price paid by the
business
• MU = Profit / Cost
Who is responsible for
adding the markup to a
product?
The middleman
A video game store
charges $28 for a video
game that is purchased for
$22. What is the markup
on the video game?
Round to the nearest
percent.
MU = $27 - $15 = 8
8/15 = 53.3 = 53%
A gift shop purchased 25
handmade scarves for
$10.50 each. If the price is
marked up 20%, what will
the customer be charged
for each scarf?
MU = $10.50 * .2 = $2.10
$10.50 + 2.10 = $12.60
What is the gross profit
margin and how is it
calculated?
• The gross profit margin is the difference
between the price it plans to sell the product
for and the price a business pays for a
product.
• MU = Profit / Cost
A sweatshirt shop pays a
local supplier $15 for each
sweatshirt and charges
customers $27. What is
the gross profit margin on
each sweatshirt? Round
to the nearest percent.
GPM = $27 - $15 = 8
8/27 = 29.6 = 30%
List three challenges
faced by service
businesses?
• The work directly with their consumers rather
than through a channel of distribution, so
they are responsible for the entire marketing
mix
• More difficult to control quality of the service
• Distribution planning must be available
where and when the customer wants it
• Difficult to promote since the customer can’t
see or examine them
Why should not-for-profit
organizations worry
about marketing?
Because satisfying their customers’ needs is
necessary if they are to achieve whatever
their goals are and maximize their
effectiveness