Transcript 2-mktg-basics

Marketing Functions
Utility
Marketing Concept
What Is Marketing?
Products – goods and
services that have
monetary value
Goods – things you can touch or hold
Services – you can’t physically touch –
tasks performed for a customer
Marketing connects business’ to
their customers.
An exchange
takes place
every time
something is
sold in the
marketplace.
When the producer is someone
other than the consumer, some
form of exchange takes place.
Business, Management, Entrepreneurship
Communication and Interpersonal Skills
Economics
Professional Development
Activities that work together to get
goods and services from producers to
consumers
Each is essential
Obtaining, developing, maintaining, and
improving a product or a product mix in
response to market opportunities.
Businesses must satisfy customers’ needs
and wants in order to make a profit
When Henry Ford first created the Model T, he was the only
one mass producing cars. He didn’t have to think about “The
Marketing Concept.” But, as more and more producers
started making cars, they had to think about what customers
need and want in order to stay in business.
Click on the Model T Ford to see
Henry Ford’s thoughts about car
color in the early 1900’s.
Imagine if, in today’s world, you could only
buy black. Many customers would not be
very happy!
If automobile manufactures do not give their
customers a choice (what they want), they will
not stay in business.
That concept is true for all businesses.
You must give the customer what they need and
want.
That is what we mean by The Marketing Concept
Businesses must know
their customers . . .
Businesses must satisfy customers’ needs and
wants in order to make a profit
 Marketing bridges the gap between you
and the maker or seller of an item
Economic Benefits of Marketing
New and Improved Products -businesses look for opportunities to
please the customer
Economic Benefits of Marketing
Lower Prices – marketing activities add
value and increase demand. When
demand is high, manufacturers can
produce at a lower price. They can
sell at a lower price but increase the
quantity sold. Thus, profits are higher
even though prices are low.
It adds VALUE
In economic terms, utility does not mean
your closet or the electric company.
Added Value = Utility
Attributes of a product or
service that make it capable of
satisfying consumers’ wants and
needs.
Changing raw materials or putting parts together to make them more
useful – making and producing things.
• Sand into glass
• Wood into paper
• Silk into fabric
Having a product where customers can buy it.
Location – may be through a catalog or at a
retailer (actual store) – or, Internet.
Transporting the product to the location.
Having a product available at a certain
time of year or a convenient time of day.
• Planning and ordering
• Time of day and week
• Time of year: holidays and
seasons
Possession Utility
The exchange of a product for some
monetary value.
Cash
Personal checks
Credit cards
Installments
(layaway)
Information Utility
Involves communication with the consumer.
• ads
•packaging
• signs
• displays
•owner’s manuals
Form utility is a
function of
production, NOT
marketing
 Place
 Time
 Possession
 Information
 Market – all potential customers who have
the ability and willingness to buy
Consist of
consumers
who purchase
goods and
services for
personal use.
Business-to-business (B-to B) markets
include all businesses that buy
products for use in their operations.
A company’s percentage of the total sales
volume generated by all companies that
compete in a given market.
Focusing all decisions on a very specific group of
people who you want to reach.
To develop a clear picture of their target
market, businesses create a customer profile.
It lists information about the target market,
such as age, income level, occupation,
attitudes, lifestyle, and geographic residence
Customers –
people who
buy the
product
Consumers –
people who
actually use the
product
Is mom the customer or the consumer? The kids?
Product
Place
Price
Promotion
 What product to make
 How to package it
 What brand name to use
 What image to project
 How and where a
product will be
distributed.
 Reflect what customers are willing and able to pay.
How potential customers will be told
about the new product
What the message will be
When and where it will be delivered
What inducements are there to buy
The elements are interconnected
Product
Place
Price
Promotion
Contains countless alternatives.
Management must select a combination of
marketing mix decisions that will satisfy target
markets and achieve organizational goals.
Market segmentation is a way
of analyzing a market by specific
characteristics in order to create
a target market
Demographics
Psychographics
Geographics
Behavioral
Age
 Baby Boom Generation
 Generation X
 Generation Y
Gender
Income
 Disposable income –
money left after taking
out taxes
 Discretionary income –
money left after paying
for basic living
necessities such as
food, shelter, and
clothing
Marital Status
Ethnic Background
Involves grouping people with similar
lifestyles, as well as shared attitudes,
values, and opinions.
 Activities
 Attitudes
 Personality & Values
Looking at the benefits desired by
consumers, shopping patterns, and
usage rate. Market benefits, not just
the physical characteristics of a
product
Many businesses find that the 80/20 rule
applies.
80 % of a company’s sales are generated by 20
% of its loyal customers.
Mass marketing not as popular as it once was.
Niche marketing (the current trend) –
markets are narrowed down and defined with
extreme precision.