Download What is Marketing?

What is Marketing?
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.
Major Marketing Functions
Exchange Functions: all companies –
manufacturers, wholesalers and retailers –
buy and sell to market their merchandise.
Buying includes obtaining raw materials to make
products, knowing how much merchandise to keep
on hand and selecting suppliers.
Selling creates possession utility by transferring
the title of a product from seller to customer.
Major Marketing Functions
. . . (continued)
Physical
Distribution
Functions:
involve the flow of goods from producers
to customers. Transportation and storage
provide time utility and place utility and
require careful management of inventory.
Transporting involves selecting a mode of
transport that provides an acceptable delivery
schedule at an acceptable price.
Storing goods is often necessary to sell them at
the best selling time.
Major Marketing Functions
. . . (continued)
Facilitating Functions:
functions take place.
help the other
Financing helps at all stages of marketing. To buy raw
materials, manufacturers often borrow from banks or receive
credit from suppliers. Wholesalers may be financed by
manufacturers, and retailers may receive financing from the
wholesaler or manufacturer.
Finally, retailers provide
financing to customers.
Standardizing sets uniform specifications for products or
services. Grading classifies products by size and quality,
usually through a sorting process. Together they facilitate
production, transportation, storage and selling.
Major Marketing Functions
. . . (continued)
Facilitating Functions:
(continued)
Risk Taking – even though competent
management and insurance can minimize risks –
is a constant reality of marketing because of such
losses as bad-debt expense, obsolescence of
products, theft by employees and product-liability
lawsuits.
Gathering market information is necessary to
make all marketing decisions.
Types of Utility
Utility – the ability of a good or service to
satisfy a human need
Form utility – created by production
Place utility – created by marketing
Time utility – created by marketing
Possession utility – created by marketing
Types of Utility. . .
(continued)
Form utility is created by converting raw
materials into finished products.
Place utility is created by making a product
available at a location where customers wish to
purchase it.
Time utility is created by making a product
available when customers wish to purchase it.
Possession utility is created by transferring title
(ownership) to the buyer.
The Marketing Concept
The marketing concept is a business
philosophy that involves the entire
organization in the process of satisfying
customers’ needs while achieving the
organization’s goals.
Firm talks to potential customers to determine
needs for goods or services
Firm develops a good or service to satisfy that
need
Firm continues to seek ways to provide customer
satisfaction
History of Marketing Concept
Early 20th Century – production orientation
emphasized increased output and efficiency.
(Marketing limited to taking orders and distributing the finished product)
1920’s – sales orientation stressed advertising,
bigger sales forces and high-pressure selling
techniques. (Marketing now added promoting products through
personal selling)
1950’s – customer orientation emphasized
determining customer needs and then designing
products and services.
Carrying Out the Marketing Concept
Firm must determine what its present and
potential customers want.
Firm must then find out what customers
think about its products, the company and
its marketing efforts.
Given this information, the firm will decide
where to direct its marketing strategy.
Carrying Out the Marketing Concept
Firm must put its marketing resources into
action by:
Providing a product that satisfies customers’ need
Pricing product at acceptable level to buyers and
to make a profit
Promoting the products so buyers know it is
available and its ability to satisfy their needs
Ensuring product is distributed where and when
customers want it
Obtaining marketing information about the
effectiveness of its marketing efforts
What is a Market?
A market is a group of
organizations, or both, that
in a given category and
ability, willingness and
purchase products.
individuals or
need products
that have the
authority to
Market Classifications
Two classifications include:
consumer
markets
and
business-to-business
markets
Consumer markets – purchasers and/or
household members who intend to
consume or benefit from the products and
do not buy products to make profits
Market Classifications. . .
(continued)
Business-to-business markets
Producer markets – individuals and business organizations
that buy certain products to use in the manufacture of other
products
Reseller markets – intermediaries such as wholesalers and
retailers that buy finished products and sell them for a profit
Governmental markets - state or local governments that buy
goods and services to maintain internal operations and to
provide citizens with such products as highways, education,
water, energy and national defense
Institutional markets – churches, not-for-profit private
schools, hospitals, clubs, societies, charitable organizations
or foundations
Developing Marketing Strategies
A marketing strategy is a plan that will
enable an organization to make the best
use of its resources and advantages to
meet its objectives. It consists of:
 the selection and analysis of a target market
 the creation and maintenance of an appropriate
marketing mix - a combination of product, price,
distribution and promotion developed to satisfy a
particular target market
Developing Marketing Strategies. . .(continued)
A target market is a group of individuals, organizations or
both for which a firm develops and maintains a
marketing mix suitable for specific needs and
preferences of that group.
When selecting a target market, marketing managers:
 examine markets for their possible effects on the firm’s sales,
costs and profits.
 determine whether the firm has the resources to produce a
marketing mix that meets the needs of a particular target market
and if this is consistent with the overall objectives of the firm.
 analyze the strength and number of competitors already
marketing to this target market.
Developing Marketing Strategies. . .(continued)
When selecting a target market, marketing
managers generally take one of three
approaches:
Undifferentiated Approach
Concentrated
Market
Approach
Differentiated
Market
Approach
Segmentation
Segmentation
Developing Marketing Strategies. . .(continued)
1. Undifferentiated Approach – directing a
single marketing mix at the entire market for a
particular product
 Approach assumes that individual customers in a
target market for a specific kind of product have
similar needs and that the organization can satisfy
most customers with a single marketing mix
 One product with little or no variation, one price, one
promotional program aimed at everyone and one
distribution system to reach all customers (salt,
sugar, certain farm produce, etc.)
Developing Marketing Strategies. . .(continued)
Market segment is a group of individuals or
organizations within a market that share
one or more common characteristics.
Market segmentation is the process of
dividing a market into segments (groups)
and directing a marketing mix at a
particular segment or segments rather
than at a total market.
Developing Marketing Strategies. . .(continued)
Concentrated Market Segmentation – a
single marketing mix is directed at a single
market segment.
Differentiated Market Segmentation –
multiple marketing mixes are focused on
multiple marketing segments.
Review Table 13.3, page 377
Creating a Marketing Mix
Four elements (ingredients) of the
marketing mix include:
•
•
•
•
Product itself
Price of the product
Distribution means chosen (Place)
Promotion of the product
Creating a Marketing Mix. . .
(continued)
A firm may use one marketing mix to
reach one target market and a second
marketing mix to reach another market. (car
manufacturers produce economy and luxury cars to reach markets based on age, income and
other factors)
Product ingredient – includes decisions about
the product design, brand name, packaging,
warranties, etc.
Pricing ingredient – concerned with base price
and discounts of various kinds. Decisions are
intended to maximize profits or make room for new
models.
Creating a Marketing Mix. . .
(continued)
Distribution ingredient involves not only
transportation and storage but also the selection of
intermediaries.
Promotion ingredient focuses on providing
information to target markets through advertising,
personal selling, sales promotion and public
relations.
These ingredients of the marketing mix are controllable
elements.
A firm can vary each of them to suit its
organizational goals, marketing goals and target markets.
Review Figure 13.3, page 379
Marketing Mix and Marketing Environment
 Economic forces – effects of economic conditions on
customers’ ability and willingness to buy
 Socio-cultural forces – influences in a society and its culture
that result in changes in attitudes, beliefs, norms, customs,
and lifestyles
 Political forces – influences that arise through the actions of
elected and appointed officials
 Competitive forces – actions of competitors who are in the
process of implementing their own marketing plans
 Legal and regulatory forces – laws that protect consumers
and competition and government regulations that affect
marketing
 Technological forces – technological changes can create
new marketing opportunities but can also cause products to
become obsolete almost overnight. (music industry has to deal with
piracy and cd burners)