Marketing Basics
Goals:
Key Terms:
Marketing Activities –as a consumer you are exposed to marketing activities all of the time. You see and hear advertisements for products and services. You see brand names on the packages of food you eat and on the clothes you and your friends wear. You read product descriptions online. You interact with sales people at you favorite retail stores. These are all examples of marketing.
There are less obvious but equally important marketing activities. These include storing products in warehouses and distribution centers and moving these products to the places where they will be used or sold. Establishing and accepting credit and arranging means of online payment are marketing activities. Businesses use marketing when they gather data on consumer needs, use this information to improve products, and test products before they are brought to market to be sold.
A great deal of marketing is not even aimed at the final consumers. Businesses market products to other businesses. These businesses then use the products and services in their own business process or sell them to the final consumer. More time and money is spent in business-to-business marketing than in marketing products and services to final consumers.
Marketing Business – all businesses must complete some form of marketing activities even if that is not their focus. Many businesses are involved in marketing. Marketing businesses include advertising agencies and marketing research firms. Transportation companies (trucking, railroad and air freight) move products from producers to consumers. Financial services companies issue and manage credit cards. They can provide loans to businesses for purchasing raw materials and finished goods. Wholesalers and retailers participate in the distribution, storage, and sale of products to connect manufacturers and their consumers. Marketing activities are an important part of the US economy.
Marketing Functions – marketing activities can be organized into seven functions. Each function occurs every time a product or service is developed and sold. Consumers take part in one or more of the marketing functions when they make purchases.
Product and Service Management – designing, developing, maintaining, improving, and acquiring products and services that meet consumer needs. Producers and manufacturers develop new products. Other businesses obtain these products for resale. Services are created and provided by the employees of the service business.
Distribution –involves determining the best way for customers to locate, obtain, and
use the products and services of an organization. Careful shipping, handling and storage
of products is necessary for effective distribution.
Selling – is communicating directly with potential customers to determine and satisfy
their needs. Selling can be face to face. Selling can also be performed using a telephone
or other technology to communicate directly with a customer.
Marketing-information management – obtaining, managing, and using marketing
information to improve business decision-making and the performance of marketing
activities.
Financial analysis – budgeting for marketing activities, obtaining necessary funds
needed for operations, and providing financial assistance to customers so they can
purchase the business’ products and services. Customers must have the resources and
methods to pay for their purchases. Businesses must receive timely payments so they
can continue to operate.
Pricing –setting and communicating the value of products and services. Customers must
be able to easily identify the price of items that interest them or they will move on to
another choice. Customers want to know that they are getting a fair value for their
money. Prices must be set low enough that consumers are willing to pay the price, but
high enough so that the business makes a profit.
Promotion –communicating information about products and services to potential
customers. Advertising and other promotional methods are used to encourage
consumers to buy. Advertising may occur in a number of ways – television, newspapers,
magazines, radio, direct mail, and the Internet.
Marketing Strategy – marketing is an important and costly part of business operations. Marketing often costs 50% or more of the selling price of a product or service. For a company to make a profit, marketing must be carefully planned. It must be done well, but at a low cost. Consumers usually have many choices of products and services. If they are not satisfied with one company, they will look to a competitor to meet their needs. Careful marketing will aid a company in understanding and meeting customer needs. Successful marketing results in satisfying exchanges between businesses and consumers.
Marketing Planning – is aimed at satisfying customer needs better than competitions do, resulting in sales and profits. A company’s plan that identifies how it will use marketing to achieve its goals is called marketing strategy.
This is a two step process. Step one is to identify a target market. A target market is a specific group of consumers who have similar wants and needs. Focusing on a target market makes it easier to develop products and services that specific groups of customers want.
The second step is to create a marketing mix. A marketing mix is the blending of four marketing elements – product, distribution, price, and promotion. A successful marketing mix satisfies the wants and needs of the target market. It also provides a profit for the company.
Developing a Successful Marketing Strategy – Many business people believe they know what the consumers want. They produce a product and then begin to plan how they will market it to consumers. This approach to marketing typically results in an emphasis on advertising and promotion in order to attract the attention of potential customers and convince them to buy the company’s product. If the product does not appeal to customers, the business will be forced to cut prices. Lower profits or even losses may be the result.
To increase the chances of developing a product that meets the consumers needs and can be sold at a profit, companies adopt marketing orientation. A marketing orientation considers the needs of consumers when developing a marketing mix. With a marketing orientation, businesses don’t assume that they know what the consumers want. They use research to study consumers and their needs. The results of the research are used to plan a marketing mix designed to satisfy those needs.
Understanding Customers – effective marketing begins with customers. Think of a recent product or service that you purchased and why you made the choice you did. You likely had several products that would have meet your needs. You considered those choices and selected the one that you believed would provide the most satisfaction for the money you had to pay.
Many new businesses fail because the owners have an idea for a product but they fail to consider customers and their needs. If a product appeals to a group of customers with unsatisfied needs, it has a real chance of success. If customers do not see a need for a product or believe they have other choices that are better or less costly, the product will likely not succeed.
businesses can develop products for two types of consumers. Final consumers are persons who buy products and services mostly fot their own use. Business consumers are persons, companies, and organizations that buy products for the operation of a business, for incorporation into other products and services, or for resale to customers.
Customer Decision-Making – the specific sequence of steps consumers follow to make a purchase is known as the consumer decision-making process. Both the steps and the sequence of decisions are the same for all consumers. The length of time taken to complete the process and the information used to complete each step might be quite different from one consumer to the next.
Decision making begins with a need. You may be hungry, or you may want to plan an evening’s entertainment with friends. If the need is urgent, you will try to satisfy it right away. If it is less important, you may put it off or even ignore it. It the need is one that is familiar to you and you have satisfied it before, you will often use past experience to help make a decision. If it is a new need, you may have a hard time deciding how to make the best choice because you have no similar experience.
People use information to make decisions. You may talk to friends or a trusted adult. An advertisement, magazine article, or an Internet site may catch your attention because it provides information related to an important need. You choose sources that you trust and that provide information you understand. Using this information, you will select a very few products that seem to meet your needs. Once your choices are narrowed, you will compare them to determine if one appears to be a better choice or greater value than the others.
Based on the information you have obtained and the urgency and importance of the need, you will make a decision. The decision is usually to buy the product you have decided is best for you. The decision may be not to buy because you have not found a satisfying choice or you do not have the money you need at this time. You may then go back to a previous step and look at other choices or gather more information.
If you decide to purchase a product, you will complete the purchase and use the product you chose. Based on that experience you will decide if you made a good choice. If you like the product, you will likely make the same decision next time you have the same need. If the product was not what you expected, you will be unlikely to purchase that product again.
Buying Motives – the reasons consumers decide what products and services to purchase. Understanding the motives of consumers helps businesses plan a marketing mix.
Some purchasers are guided by emotions. Emotional buying motives are reasons to purchase based on feelings, beliefs and attitudes. If you are concerned about protecting your family and possessions, you may decide to buy a home security system. Purchases of gifts and cards for holidays and occasions are triggered by feelings of love and affection.
Rational buying motives are guided by facts and logic. You may want the most cost-effective car, so you consider fuel use and repair costs of various models. When choosing a college to attend, you compare the costs of tuition and the reputation of the college in the major you paln to study.
Assignments:
Go to Online Resources (see link below). Select Chapter 10.
1 - Click on and complete the Crossword Puzzle, When you are finished, print out your puzzle, write your name on it and turn it in for a grade.
2 - Click on Net Bookmarks
The U.S. Census Bureau provides very detailed data that help businesses make marketing strategy decisions. Access the web site shown below and click on the link for Chapter 10. Click on the American FactFinder link and locate census information on your community. Study the data and locate (1) the number of people who are 15-19 years old and the number of people who are 20-24 years old and (2) the number of renter-occupied and owner-occupied homes in your community. How might that information be used by businesses?
http://www.census.gov
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