Transcript What Is Marketing

SECTION 1.1
What Is Marketing
What Is Marketing
Marketing is the process of developing,
promoting, and distributing products to
satisfy customers' wants and needs.
SECTION 1.1
What Is Marketing
Products = Goods and Services
Goods: Hammers, automobiles, soda pop,
clothing, and computers
Services: Dry cleaners, amusement parks,
attorneys, and movie theaters
Exchange: Buying or selling a good or service
SECTION 1.1
What Is Marketing
Foundations of Marketing
15% of Test
Building on these four foundations helps you to
acquire marketing skills that are relevant to your
own career development.
 Business, Management, and
Entrepreneurship
 Communication and Interpersonal Skills
 Economics
 Professional Development
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SECTION 1.1
What Is Marketing
Functions of Marketing
35% of Test
These functions define marketing as it is
applied in business operations.
 Distribution
 Financing
 Marketing-Information Management
 Pricing
 Product/Service Management
 Promotion
 Selling
Slide 1 of 4
SECTION 1.2
Economic Utilities
Economic Utilities
Economic utilities reflect the value that
producers and marketers add to raw materials
when they make them into products and offer
them for sale to the public.
 Form utility
Form Utility is NOT
 Place utility
A marketing utility.
 Time utility
 Possession utility
 Information utility
SECTION 1.2
Economic Utilities
Form Utility
Changing raw materials or putting parts
together to make them more useful.
 Example: The parts of a lounge chair—
the wood frame, the fabric, the glue and
nails, and the reclining mechanism—are
less useful by themselves. Putting them
together adds form utility.
SECTION 1.2
Economic Utilities
Place Utility
Having a product where customers can buy it.
 Example: Selling directly to the customer
through catalogs.
SECTION 1.2
Economic Utilities
Time Utility
Having a product available at a time
convenient for customers.
 Example: Retailers offer large supplies
of backpacks in the late summer, near
the beginning of the school year.
SECTION 1.2
Economic Utilities
Possession Utility
Exchange of a product for some monetary
value.
 Example: Taking credit cards and checks
rather than just cash enables customers to
buy products.
SECTION 1.2
Economic Utilities
Information Utility
Providing information so the customer is
comfortable buying.
 Example: Salespeople explain
features of products.
 Example: Packaging explains
qualities and uses.
 Example: Advertising informs
consumers about products.
SECTION 2.1
The Marketing Concept
What is a Market?
A market is all potential customers who
share common needs and wants and who
have the ability and willingness to buy the
product.
SECTION 2.1
The Marketing Concept
The Marketing Mix
The marketing mix comprises four basic
marketing strategies known as the four Ps:
 Product
 Place
 Price
 Promotion
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SECTION 2.1
The Marketing Concept
The Marketing Mix
Product strategies include what product to
make, how to package it, what brand name to
use, and what image to project.
Place strategies deal with how and where a
product will be distributed.
Slide 2 of 3
SECTION 2.1
The Marketing Concept
The Marketing Mix
Price strategies should reflect what
customers are willing and able to pay.
Promotion strategies deal with how
potential customers will be told about the
new product, what the message will be,
when and where it will be delivered, and
with what inducements to buy.
Slide 3 of 3
SECTION 2.1
The Marketing Concept
Target Marketing
Target marketing is focusing all marketing
mix decisions on the specific group of
people you want to reach.
SECTION 2.2
Market Segmentation
Market Segmentation
Dividing the total market into smaller
groups of people who share specific needs
and characteristics is the essence of
market segmentation.
SECTION 2.2
Market Segmentation
Analyzing Markets
Businesses may segment a market by:
 demographics
 psychographics
 geographics
 product benefits
SECTION 2.2
Market Segmentation
Demographics
Demographics refers to statistics that
describe a population in terms of personal
characteristics. These include:
 age
 gender
 income
 ethnic background
SECTION 2.2
Market Segmentation
Psychographics
Psychographics involves studies of
consumers based on social and psychological
characteristics.
In addition to segmenting people by their
leisure time interests, marketers observe
trends and changes in households, the
economy, politics, and the workplace.
SECTION 2.2
Market Segmentation
Geographics
Geographics refers to segmentation of the
market based on where people live. Marketers
study geographics in relation to:
 ethnic concentrations
 age
 ethnic background
 income
SECTION 3.1
Capitalism
Basic Principles
In the United States, we have the freedom
to make decisions about where we work
and how we spend our money.
A free enterprise system encourages
individuals to start and operate their own
businesses.
SECTION 3.1
Capitalism
Competition
Competition is the struggle between
companies for customers. Competition is
an essential part of a free enterprise
system. It forces businesses to produce
better quality goods and services at
reasonable prices.
SECTION 3.1
Capitalism
Risk
Risk is the potential for loss or failure in
relation to the potential for improved earnings.
As the potential for earnings gets greater,
so does the risk.
SECTION 3.1
Capitalism
Profit
Profit is the money earned from conducting
business after all costs and expenses have
been paid.
Profit is the engine that drives a free
enterprise system.
SECTION 3.2
Government and Consumer
Functions
Determining Prices
Demand refers to consumer willingness and
ability to buy products. According to the law of
demand, if the price is low enough, demand for a
product usually increases.
Slide 2 of 4
SECTION 3.2
Government and Consumer
Functions
Determining Prices
Supply is the amount of goods producers are
willing to make and sell.
 higher prices = more products for sale
 lower prices = less products for sale
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SECTION 3.2
Government and Consumer
Functions
Determining Prices
Equilibrium exists when the amount of
product supplied is equal to the amount of
product demanded.
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SECTION 3.2
Government and Consumer
Functions
Surpluses
Surpluses of goods occur when supply exceeds
demand. When this happens, businesses
respond by lowering their prices in order to
encourage people to buy more of the product.
 Example: When grocery stores have lots
of produce, they price the produce low to
encourage people to buy.
SECTION 3.2
Government and Consumer
Functions
Shortages
When demand exceeds supply, shortages
of products occur. When shortages occur,
businesses can raise prices and still sell
their merchandise.
 Example: An oil shortage increases the
price of gasoline, so consumers who
want to drive their vehicles pay the
higher price.
SECTION 4.1
What Is an Economy?
What Is an Economy?
An economy, or economic system, is the
way a nation makes economic choices about
how the nation will use its resources to
produce and distribute goods and services.
SECTION 4.1
What Is an Economy?
Resources
Resources, also called factors of production,
are all the things used in producing goods and
services. They fall into four categories:
 land
 labor
 capital
 entrepreneurship
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SECTION 4.1
What Is an Economy?
Scarcity
Scarcity is the difference between wants
and needs and available resources.
 Example: Most underdeveloped nations
have natural resources, but do not have
capital or skilled labor to develop them.
SECTION 4.2
Understanding the Economy
The Business Cycle
Sometimes an economy grows, and at other
times it slows down. These recurring changes
are called the business cycle. The business
cycle has four phases:
 prosperity
 recession
 depression
 recovery
SECTION 5.2
Ethics and Social Responsibility
Business Ethics
Ethics are guidelines for good behavior. Ethical
behavior is based on knowing the difference
between right and wrong—and doing what is right.
Laws are made to address ethical concerns
involving products or marketing. The following
unethical practices are prohibited:
 bait-and-switch advertising
 price fixing
 selling unsafe products
SECTION 5.2
Ethics and Social Responsibility
Business Ethics
To make the right ethical choices, marketers
must answer these three basic questions:
1. Is the practice right, fair, and honest?
2. What would happen if the product were
marketed differently?
3. What practice will result in the greatest
good for the greatest number of people?
SECTION 6.1
The Global Marketplace
Defining International Trade
International trade involves the exchange of
goods and services between nations. Imports
are goods and services purchased from other
countries. Conversely, exports are goods and
services sold to other countries. These
exchanges occur between businesses but are
controlled by the governments of the countries
involved.
SECTION 6.1
The Global Marketplace
Interdependence of Nations
Most countries need to get some of their
goods and services from other nations. This is
called economic interdependence. There are
two types of advantages in international trade:
 absolute
 comparative
SECTION 6.1
The Global Marketplace
Absolute Advantage
Absolute advantage occurs when a country
has special natural resources or talents that
allow it to produce an item at the lowest cost
possible.
 Example: China produces close to
80 percent of all the silk in the world,
which gives them absolute advantage.
SECTION 6.1
The Global Marketplace
Comparative Advantage
Comparative advantage is the value that a
nation gains by selling the goods that it produces
most efficiently.
 Example: U.S. businesses have a comparative
advantage in producing technology related
goods and services.
SECTION 12.1
Selling
Knowing Your Product and Your Customer
The goal of selling is to help customers make
satisfying buying decisions.
Salespeople accomplish this by solving
customers’ problems and by understanding
their needs and wants.
Slide 2 of 2
SECTION 12.1
Selling
Product Features
Product features are the basic, physical,
or extended attributes of the product:
 Basic features are a product’s intended use.
 Physical qualities differentiate it from
competing brands and models.
 Additional features add value and justify
price differences between models.
SECTION 12.1
Selling
Customer Benefits
Customer benefits are the advantages or personal
satisfaction a customer will get from a good or service.
To determine customer benefits, salespeople need to
answer two questions about each product feature:
1. How does the feature help the product’s
performance?
2. How does the performance information give the
customer a personal reason to buy the product?
SECTION 12.1
Selling
Customer Buying Motives
Salespeople must know what motivates
customers to buy and what decisions
customers make before the final purchase.
Customers' motives fall into the following
categories:
 rational
 emotional
Slide 1 of 2
SECTION 12.1
Selling
Customer Buying Motives
A rational motive is a conscious, logical
reason for a purchase, such as dependability
or time savings.
An emotional motive is a feeling
experienced by a customer through
association with a product, such as social
approval, recognition, power, or prestige.
Slide 2 of 2
SECTION 12.1
Selling
Customer Decision Making
There are three distinct types of decision making:
 extensive
 limited
 routine
Decisions are based on a person’s previous
buying experience and the importance and
perceived risk of the purchase.
SECTION 12.1
Selling
Extensive Decision Making
Extensive decision making is used when
there has been little or no previous experience
with an item.
 Extensive decision making is used when
there is a high degree of perceived risk.
 It is usually used for goods and services
that are very expensive or have high value
to the customer.
SECTION 12.1
Selling
Limited Decision Making
Limited decision making is used when a
person buys goods and services that he or
she has purchased before but not regularly.
 In limited decision making, there is a
moderate degree of perceived risk.
 When making this type of decision,
the customer often needs some information
before buying.
SECTION 12.1
Selling
Routine Decision Making
Routine decision making is used when a
person needs little information about a product.
 In routine decision making, there is a
high degree of prior experience.
 It is usually used for goods and services
that have a low perceived risk (because
an item is inexpensive, is bought
frequently, or satisfaction with the
product is high).
12.1 Graphic Organizer
Types of Customer Decision-Making Processes
CUSTOMER
Expensive
or Highly
Valued Item
No
Experience
with Item
Information
Needed
Some
Experience
with Item
High
Product
Satisfaction
Much Prior
Experience
with Item
High
Perceived Risk
Moderate
Perceived Risk
Low
Perceived Risk
Extensive
Decision
Making
Limited
Decision
Making
Routine
Decision
Making
SECTION 12.2
Preparing for the Sale
The Preapproach
The preapproach is getting ready for the
face-to-face encounter in a selling situation.
Salespeople do the following to prepare for the sale:
Study their products.
Keep abreast of industry trends.
Research potential customers.
Develop familiarity with their company's
policies and procedures.
SECTION 13.1
The Sales Process
Steps of a Sale
Professional salespeople go through seven
steps when helping a customer make a
purchase.
1.
2.
3.
4.
5.
6.
7.
Approaching the customer
Determining needs
Presenting the product
Overcoming objections
Closing the sale
Suggestion selling
Relationship building
SECTION 13.1
The Sales Process
Steps of a Sale
Sometimes it is easy to
remember many steps
by creating a mnemonic
device, such as
ANPOCS for the steps of
a sale. What is the
significance of each
letter in this mnemonic
device? How is
“Customer Relationship
Building” part of the
sales process?
SECTION 13.1
The Sales Process
The Approach in Retail Selling
There are three methods you can use in the
initial approach to retail customers:
 the service approach
 the greeting approach
 the merchandise approach
SECTION 14.2
Handling Customer Objections
Four-Step Process for Handling Objections
Successful salespeople have learned to use a
very basic, four-step strategy when answering
all objections:
 Listen carefully.
 Acknowledge the customer's objections.
 Restate the objections.
 Answer the objections.
Slide 1 of 4
SECTION 14.2
Handling Customer Objections
Specialized Methods of Handling Objections
There are six specialized methods for
handling objections:
 boomerang
 question
 superior point
 denial
 demonstration
 third party
SECTION 15.1
Customer Buying Signals
Closing the Sale
Closing the sale is obtaining positive
agreement from the customer to buy. All your
efforts up to this step of the sale have involved
helping your customer make buying decisions.
SECTION 15.2
Effective Selling
Suggestion Selling
Suggestion selling is selling additional
goods or services to the customer, items
that will ultimately save time and money
or make the original purchase more enjoyable.
SECTION 18.1
Display Features
What is Visual Merchandising?
Visual merchandising refers to the
coordination of all physical elements in
a place of business and is used to project
the right image to its customers.
The "right" image invites interest in the
merchandise or services, encourages
purchasing, and makes customers feel
good about where they are doing business.
Slide 1 of 2
SECTION 19.1
Advertising Media
Advertising and its Purpose
Advertising is any paid form of nonpersonal
promotion of ideas, goods, or services by an
identified sponsor. Advertising is either
promotional or institutional.
Promotional advertising is designed to
increase sales. It introduces new products and
businesses, encourages an interest in products,
and explains products and service features.
Slide 1 of 2
SECTION 19.1
Advertising Media
Advertising and its Purpose
Institutional advertising attempts to create
a favorable impression and goodwill for a
business or an organization by providing
positive information about a business.
Slide 2 of 2
SECTION 21.1
Distribution
Distribution—How It Works
The channel of distribution is the path a
product takes from producer or manufacturer
to final user. This is a place decision, one of
the four Ps of the marketing mix.
SECTION 21.1
Distribution
Direct and Indirect Channels
Channels of distribution are classified as direct
or indirect.
Direct distribution occurs when the goods or
services are sold from the producer directly to the
customer; no intermediaries are involved.
Indirect distribution involves one or more
intermediaries.
SECTION 26.1
Pricing Concepts
Basic Pricing Concepts
There are three basic pricing concepts that
you will want to consider in determining the
price for any given product:
 cost-oriented pricing
 demand-oriented pricing
 competition-oriented pricing
SECTION 26.2
Setting Prices
Steps in Setting Prices
These are the six steps in determining a price
for an item:
1. Determine pricing objectives.
2. Study costs.
3. Estimate demand.
4. Study competition.
5. Decide on a pricing strategy.
6. Set price.
SECTION 28.1
Marketing Information Systems
Defining Marketing Research
Marketing research links the consumer,
customer, and public to the marketer through
information. Marketing information is used to
identify marketing opportunities, solve
marketing problems, implement marketing
plans, and monitor marketing performance.
SECTION 28.1
Marketing Information Systems
Why is Marketing Research Important?
Given the high failure rate of new products on the market,
marketing research can make or break a business.
Marketing research helps businesses:
 plan future operations to increase sales and profits
 decide what products to produce
 decide where to sell products
 decide how to promote products
 decide how to price products
 solve marketing problems
 anticipate future marketing potential
 keep track of current markets and competitors
SECTION 28.1
Marketing Information Systems
Who Uses Marketing Research?
Marketing research is valuable for organizations
of any size.
Marketing research is useful to:
 businesses
 state and federal governments
 trade associations
SECTION 31.2
Packaging and Labeling
Functions of Packaging
A package is a selling tool. Its functions include:
 promoting and selling the product
 defining product identity
 providing information
 meeting customer needs
 ensuring safe use
 protecting the product