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UNIT 6 NATURE AND SCOPE OF MARKETING “ONE CAN BE A SUCCESSFUL MARKETER ONLY IF ONE HAS ADOPTED THE PROPER MARKETING MIND-SET. THIS MEANS HAVING A CLEAR APPRECIATION FOR WHAT MARKETING COMPRISES AND WHAT IT CAN DO FOR THE ORGANIZATION. MORE IMPORTANT, IT MEANS DEVELOPING A PHILOSOPHY OF MARKETING THAT PUTS THE CUSTOMER AT THE CENTER OF EVERYTHING ONE DOES. MARKETING IS NOT INTIMIDATION OR COERCION. IT IS NOT HARD SELLING AND DECEPTIVE ADVERTISING. IT IS A SOUND, EFFECTIVE TECHNOLOGY FOR CREATING EXCHANGES AND INFLUENCING BEHAVIOR THAT, WHEN PROPERLY APPLIED MUST BE SOCIALLY BENEFICIAL.” 1 WHAT IS MARKETING? —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 WHICH MEANS WHAT? --Marketing is used to get goods from producers but it’s also about what is involved in the process of getting goods from producers to you, the consumer. 2 THREE PHASES OF MARKETING: PRODUCTIONS ORIENTED --EARLY 1900’S -FEW PRODUCERS, NOT MUCH VARIETY SALES ORIENTED --SOME COMPETITION --FOCUS ON EFFICIENCY, MARKETING STRATEGY CONSUMER ORIENTED --INCREASED COMPETITION --FOCUS ON CONSUMER --NICHE MARKETING 3 WHAT DO YOU THINK THE CONSEQUENCES WOULD BE IF A COMPANY PRODUCED PRODUCTS FIRST AND THEN ATTEMPTED TO FIND MARKETS IN WHICH TO SELL THE PRODUCT? HEARD OF CIRCUIT CITY’S DIVX? (read handout on divx – highlight important points as to where Circuit City went wrong.) 4 MARKETING A process that involves: 1) Planning – what should be produced to how should it be transported from manufacturer to your home. 2) Executing the conception – making the plan become a reality based on carefully laid out strategies. Did you create a desire for this product? 5 3) Pricing – must be determined Has a demand for this product been established? 4) Promotion—Does anyone know about your product? How did you prepare for its debut? Is there a burning desire to have your product? 5) Distribution of ideas – Have you advertised on TV, internet billboards, etc. Do you have a spokesperson? (ex: Geico Gecko lizard) 6) Distribution of goods and services – Do you have a plan for your goods being stored until the consumer is ready to purchase them? (ex: warehouses, etc) Do you have a plan for distribution in general? Logistics drawn in to deliver a company's goods and services to the correct place at the right time and at lowest possible costs 7) Create an exchange to satisfy individual and organizational objectives 6 Key to this entire unit: satisfying exchange relationships. Those that expect to be successful year after year must believe in the goal of customer satisfaction. 7 MARKETING: What to produce How to produce How much to produce What price What and when to pull from shelves When to introduce a product……. 8 MARKETING ACTIVITIES The success of a business rests on acceptable levels of sales, and sales depend on YOU. Marketing activities have the most direct impact on achieving success in sales. So how do/did we acquire new customers? MARKETING ACTIVITIES – What worked? 1. Make a list of all marketing activities you used in a year. 2. How many leads you got from each activity. 3. How many leads led to new customers. 4. What it cost for each activity and compare costs 5. Measure which marketing activities produced better results than others, enabling you to continue those that work and reassign the resource (money or time) to new activities that may produce better results. 9 Most common marketing activities that have the most direct impact on achieving success in sales 1. Buying—finding suppliers who can provide the right goods in the right quality and quantity and at a fair price 2. Selling—how well you do gaining customer satisfaction/loyalty by helping the customer buy your goods 3. Transporting—how do you get the goods from store to consumers residence—free delivery, their truck etc. 4. Storing—most businesses have some form of 10 warehousing your goods until sold or needed. Most common marketing activities continued 5. Financing—Do you want to renovate or expand? Will you accept credit cards? Additional expense? 1.8% of purchase price 6. Research and information gathering—how can you make good business decisions when you have not researched the needs/wants of the consumer. 7. Risk taking—there is a certain risk--fire, theft, and other factors can wipe a retailer out 8. Grading and valuing—what determines how goods/services should be priced? 11 WHAT IS THE COST OF MARKETING A PRODUCT --Marketing a product may be higher than cost of making product $.42 - $.59 FOR EACH DOLLAR SPENT 12 MARKETING DETERMINATION (before a company decides to make and distribute a product, it must): 1. IDENTIFY YOUR MARKET – who is the target? Did you use market research to identify target market? What group will be best served by your product. Considerations: age, gender, education, income, occupation, population. 2. LOCATION – where are they located? Is this a good geographic location for my product? Store location--Why this location? Good Traffic flow? Accessibility–-easy in and out, traffic light? What is around this location? Is it close to where target audience shops? 13 CHARACTERISTICS OF MARKETS WHO WHERE WHAT WHO IS THE TARGET? WHERE ARE THEY LOCATED? WHAT ARE THEIR NEEDS AND WANTS? IT ALL STARTS WITH MARKET RESEARCH THAT IDENTIFIES YOUR TARGET AUDIENCE? Target markets are groups of customers with very similar needs to whom the company plans to sell its product. If company can find a group of people with similar needs, it can more easily develop a product to satisfy each of them. MAKES SENSE, DOESN’T IT? 14 Possible target markets for BICYCLES Use attached worksheet to complete questions Age 6-10 first bike Leisure biking comfortable low maintenance Competitive Biking Mountain biking Lightweight touring 15 Possible target markets for BICYCLES Use computer to research, if necessary 1. Describe how products will be different for each of the target markets. Age 6-10 first bike:___________________________________________________________________________ __________________________________________________________________________________________ Leisure biking (comfortable, low maintenance):_____________________________________________________ __________________________________________________________________________________________ Competitive biking___________________________________________________________________________ __________________________________________________________________________________________ Lightweight touring___________________________________________________________________________ __________________________________________________________________________________________ Mountain biking______________________________________________________________________________ __________________________________________________________________________________________ 2. How will marketing have to be different for each target audience? Age 6-10 first bike:___________________________________________________________________________ __________________________________________________________________________________________ Leisure biking (comfortable, low maintenance):_____________________________________________________ __________________________________________________________________________________________ Competitive biking___________________________________________________________________________ __________________________________________________________________________________________ Lightweight touring___________________________________________________________________________ __________________________________________________________________________________________ Mountain biking______________________________________________________________________________ __________________________________________________________________________________________ TIPS: SUGGEST DIFFERENDCES IN WHERE THE BICYCLES ARE SOLD, THE INFORMATION NEEDED, PRICES CHARGED, AND HOW THEY ARE PROMOTED. 16 FOUR P’S OF MARKETING PRODUCT PRICE PLACE PROMOTION 17 PRODUCT: WHAT DOES THE CONSUMER WANT? Did you do your research? PRICE: HOW DO YOU DETERMINE WHAT IS FAIR AND WHAT THE MARKET WILL BEAR? (ex: the price must be high enough to cover the costs of producing and marketing the product. To be considered also: number of competing products and their prices; demand for the product; whether the product will be sold for cash or credit; will coupons, discounts, or promotion methods be used to attract customers, etc. Pricing is not an easy marketing decision, is it!! 18 PLACE (or distribution) Retail activities to transport and store products and make them available to customers. Are you (as the manufacturer) going to sell your product directly to the retailer or use a wholesaler which will then sell to the retailer? Are you selling on-line only? A catalog? PROMOTION: What method am I going to use to provide information to consumers that will assist them in making a decision and persuade them to purchase a produce or service FROM ME? HOW DO I COMMUNICATE WITH MY TARGET MARKET? SOURCE—the business CHANNEL –radio, TV, internet site; social media, etc. MESSAGE—information in the promotion 19 RECEIVER – the customer MARKETING PLAN SIMILAR TO BUSINESS PLAN YOU WILL DEVELOP Yes, we’re getting you ready for the Business Plan you will be doing in a few weeks. --WRITTEN DESCRIPTION OF ALL MARKETING ACTIVITES THAT A BUSINESS MUST ACCOMPLISH IN ORDER TO SELL A PRODUCT --GOALS --TARGET MARKET --MARKETING MIX --HOW TO EVALUATE TO DETERMINE SUCCESS --HOW TO EVALUATE WHETHER GOALS REACHED 20 Types of Consumer Products Products can be classified into two groups: 1.Industrial Goods – products designed for use by another company. Ex: bricks purchased by building contractors, aluminum purchased by aircraft manufacturers, computers purchased by accounting firms. 2. Consumer Goods – products designed for personal or home use. Ex: jewelry, furniture, magazines, computer games. Consumer goods require careful marketing attention because there are so many products and brands available. A product CAN BE both a consumer and industrial good: Ex: computers can be purchased for by individuals as well as businesses. 21 Four types of consumer goods: CONVENIENCE GOODS— products a consumer purchases frequently with minimal time and effort—generally inexpensive--candy and gum, milk, gasoline SHOPPING GOODS— higher margin of profit. More expertise required in selling the product: ex: appliances, furniture, cars SPECIALTY GOODS— consumer more conscious about image, brand name, quality. Higher priced. ex: fine jewelry, designer clothing, high end autos UNSOUGHT GOODS— a company has to go out to the consumer and convince the customer of the need for this product: ex: life insurance, stocks and bonds, funeral ins., etc. 22 PRODUCT LIFE CYCLE (Successful products move through predictable stages throughout their product lives) LET’S USE COMPUTERS AS OUR EXAMPLE 1) INTRODUCTION (expansion) (IBM, APPLE) new product so little if any competition; sales and profits increase rapidly; price high 2) GROWTH (peak) Competitors who were sitting on the sidelines waiting to see how you would do have now decided to enter the market. Competition increased; demand still higher than supply so high price; high profits; new improvements introduced – increased marketing 3) MATURITY (contraction) Market saturation—little difference Increased marketing, profits dwindle 4) DECLINE (trough) Only the strong survive. Competition dwindles, efficient companies survive 23