Chapter_10_Notes by zhangyun


									Chapter 10
10-1 Marketing Basics
   After finishing this section, you will be able
       Define important marketing concepts
       Identify the steps in a marketing strategy
       Describe the consumer decision-making process
Understand Marketing
   Marketing- organizational function and a set
    of processes for creating, communicating, and
    delivering value to customers and managing
    customer relationships in ways that benefit
    the organization and its stakeholders
   A complex but key part of every business
Marketing Activities
   As a consumer, you are exposed to marketing
    activities all the time.
   You see or hear advertisements for products and
   You see the brand names on packages of food and
   You read descriptions on a company’s Web site
   You interact with salespeople at a retail store
   There are less obvious but equally important
    marketing activities:
   Storing products in warehouses and
    distribution centers
   Moving the products to places where they will
    be used or sold
   Establishing and accepting credit
   Arranging means of online payment
   Not all marketing is aimed toward final
   Businesses market products and services to
    other businesses
   More time and money is spend in business-to-
    business marketing than business to
Marketing Businesses
   All businesses must complete some marketing
    activities even if it is not its focus.
   Many businesses are directly involved in
   Marketing businesses include:
   Advertising agencies
   Market research firms
   Transportation companies such as:
       Trucking
       Railroad
       Air freight
   Shipping and delivery companies- provide express pickup
    and delivery of documents and packages
   Financial service companies- issue and manage credit cards
    and grant loans to businesses
   Wholesalers and retailers- store, distribute, and sell products
Marketing Functions
   Marketing activities can be categorized into
    seven functions, each of which take place
    every time a product or service is developed
    and sold.
   Product and service management- designing,
    developing, maintaining, improving, and
    acquiring products and services that meet
    consumer needs
       Other businesses are involved in product/service
        management when they obtain products for
       Services are created and provided by the
        employees of a service business
   Distribution- involves determining the best
    ways for customers to locate, obtain, and use
    the products and services of an organization
       Careful shipping, handling, and storing of
        products are needed for effective distribution
   Selling- communicating directly with
    potential customers to determine and satisfy
    their needs
       Can be face-to-face, over the phone, or
        videoconferencing with a customer
   Marketing-information management-
    obtaining, managing, and using market
    information to improve business decision-
    making and the performance of marketing
       Includes market research and the creation of
        databases with information about products,
        customers, and competitors
   Financial analysis- budgeting for marketing
    activities, obtaining needed funds, and
    providing financial assistance to customers
       Customers must have the resources to pay for
        their purchase
       Businesses must receive timely payments to
        continue to operate
   Pricing- setting and communicating the value
    of products and services
       Customers must easily be able to identify the
        price or they will move on to another product
       Consumers want to know they are getting a fair
        value for their money
   Promotion- communicating information
    about products and services to potential
       Advertising is done through tv, newspapers,
        magazines, radio, direct mail, and the Internet
       Other methods include; contests, product
        displays, and sponsorships
   Why is it important for businesses to
    consider/complete each of the seven
    marketing functions?
   Marketing activities often cost 50% or more
    of the selling price of a product.
   In order for a company to make a profit,
    marketing must be carefully planned.
Marketing Planning
   Marketing strategy- company plan that identifies how it will
    use marketing to achieve its goals
   Developing a marketing strategy is a two step process:
   Step 1
   Target market- a specific group of consumers who have
    similar wants and needs
   Many companies try to promote their products to a wide
    group of consumers with similar wants and needs.
   Focusing on a target market makes it easier for companies to
    develop products and services that specific consumers want.
   Step 2
   Marketing mix- blending of four marketing
    elements –product, distribution, price, and
   A successful marketing mix satisfies the
    wants and needs of the target market and
    provides profit for the company.
Develop a Successful Marketing
   To increase the chances of developing a
    product or service that meets customer needs
    and can be sold at a profit, companies adopt a
    marketing orientation.
   Marketing orientation- considers needs of
    customers when developing marketing mix
   Business people don’t assume they know
    what customers want.
   They use research to study customers and
    their needs.
       Results of the research used to plan marketing
        mix to meet customer needs
   Why are both steps in developing a
    marketing strategy important to the success
    of businesses?
   Effective marketing begins with customers
   Many new businesses fail because owners
    have an idea for a product but fail to consider
    customers and their needs.
   If customers do not see a need for a product or
    think they have better choices the product
    won’t succeed
   Businesses can develop products for two
    types of consumers:
   Final consumers- people who buy products
    and services for their own use
   Business consumers- people, companies, and
    organizations that buy products for the
    operation of a business for incorporation into
    other products and services, or for resale to
    their customers
Consumer Decision Making
   Consumer decision-making process- specific
    sequence of steps consumers follow to make a
   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.
   Steps in the Consumer Decision-Making
   1. recognize a need
   2. gather information
   3. select and evaluate alternatives
   4. make a purchase decision
   5. determine the effectiveness of the decision
Step 1
   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.
   If it is a need that has been satisfied before,
    you will use previous experience to help make
    a decision.
Step 2
   People use information to make decisions.
   Choose sources that you trust and that provide
    information you understand.
   Using this information, you will select very
    few products that seem to meet your needs.
Step 3
   Once the choices are narrowed, you will
    compare them to determine if one appears to
    be a better choice or a greater value than the
Step 4
   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 that
    is best for you.
   The decision may also may be not to buy due
    to no satisfying choices or lack of experience
    to make a good choice
Step 5
   If the product was not what you expected, you
    will likely not purchase the product again.
Buying Motives
   Buying motives- reasons consumers decide
    what products and services to purchase
   Emotional buying motives- reasons to
    purchase based on feelings, beliefs, and
   Rational buying motives- guided by facts and
   Why is it important to follow all steps in the
    consumer decision-making process?
10-1 Assessment
   Complete the 3 assessment questions for
    section 10-1 located at the end of the packet.
10.2-Develop Effective Products and
   After finishing section two, you will know:
       Justify the importance of marketing research
       Identify the components of a product
       Describe how services differ from products
   Often products that are identified as new in
    advertisements are not new at all.
   Some type of change has been made in the product
    that may be a major improvement.
   The change may also be a minor one that provides
    little benefit to the customer.
   The business calls the product new to attract the
    attention of customers and encourage them to buy.
   Totally new products that have never been seen
    before by customers are not often introduced.
   Most products you use today are major or minor
    improvements in existing products.
   Example: A CD or MP3 player uses new technology
    to store and replay music.
   New improvements occur through the development
    of new technology or redesign of current products.
   Marketing research- finding solutions to problems
    through carefully designed studies involving
Plan Marketing Research
   Many types of research procedures can be used to
    solve marketing problems.
   Each type of research follows the scientific problem
    solving process:
   1. Define the marketing problem
   2. Study the situation
   3. Develop a data collection procedure
   4. Gather and analyze information
   5. Propose a solution
   Secondary research- analyzing existing
    information gathered for another purpose but
    used to solve a current problem
   Primary research- studies carried out to
    gather information specifically directed at a
    current problem
Types of Research Studies
   Surveys- gather information from people using a
    carefully planned set of questions
   Focus groups- small number of consumers take part
    in a group discussion
   Less structured way of gathering ideas, experiences,
    and opinions
   Group leader acts to identify areas of agreement and
    disagreement and to develop new ideas
   Observations- collect information by
    recording the actions of consumers rather
    than asking them questions
   Experiment- presents two carefully controlled
    alternatives to subjects in order to determine
    which is preferred or has better results
   Checkpoint>>
   Why is it important to follow all steps in the
    Marketing Research Study?
   Each part of the marketing mix is important
    when you decide to buy a product.
Parts of a Product
   Product- everything a business offers to
    satisfy a customer’s needs
   Basic product- simplest form of a product
   Not unique and usually available from several
   Product features- additions and improvements
    to the basic product
   Options- features offered to customers
   Example: When buying a car, features
    offered to customers include color, engine
    size, manual or automatic transmission.
   Brand name- unique identification for a company’s products
   Packaging- provides protection and security for the product
    before it is used
   May make product storage easier.
   Example: A new container for ground coffee is created with
    indentations that allow customers to pick it up easily with one
    hand. This was changed because some customers struggled
    with the original container.
   Package is also a convenient way to provide information to
    customers that helps them make a purchase decision or
    explain a product.
   Guarantee or warranty- if a product breaks or
    does not meet customer expectations, the
    company will repair, replace, or provide a
Product Planning Procedures
   New product planning is a costly and time-
    consuming process
There are six steps to new product
   idea development- generating new product
    ideas is a creative process
   idea screening- companies evaluate ideas to
    determine which have the best chance to be
   strategy development- target market is
    studied and alternative marketing mixes are
    developed and tested
   production and financial planning- the company
    develops a production procedure and identifies the
    facilities, equipment, and people that will be needed
    to produce the product.
   limited production and test marketing- if a new
    product idea makes its way through the planning
    process , a company may produce a limited quantity
    to test it on the market.
   full-scale production- if each of the preceding steps
    is completed successfully, the product will move
    into full-scale production and marketing.
   Checkpoint>>
   What are the components (parts) of a
   Services- activities that are consumed at the
    same time they are produced
   Intangible- having no physical form
   Marketers must find a way to describe the
    service in understandable ways.
   Effective service marketing is done in much the
    same way as product marketing; using the two-step
    marketing strategy:
   Step 1- identify the target market
   Step 2- develop a marketing mix that appeals to the
   In addition to the service itself, the marketing mix
    includes distribution, pricing and promotion.
   Inseparable- consumed at the same time they are
   The person or technology must be available when
    and where the customer needs it
   Perishable- the availability of a service must match
    the demand for that service at a specific time
   Cannot be stored for later consumption
   Example: If all seats at a concert are filled, no more
    people will be able to hear that performance.
   Heterogeneous- there will be differences in
    the type and quality of service provided
   Because people usually provide services at the
    time they are consumed, there is less control
    over quality than is possible with products.
   Checkpoint>>
   In what ways are services different from
   Complete the three 10-2 Assessment
    Questions at the end of your packet.
10-3 Price and Distribute Products
   After finishing this section, you will be able
       Discuss how the selling price of a product is
       Differentiate between a direct and an indirect
        channel of distribution
   When you decide to purchase a product, how do you
    determine what to pay?
   Do you always pay the price that is marked on the
    product by the seller?
   Do you compare prices of several businesses to find
    the lowest price?
   Do you consider how much money you will have
    available to spend on other things?
   Buyers usually want to pay the lowest price possible
    and sellers what to charge the highest price possible.
Pricing Factors
   Supply and demand
   A product that has a ready supply will have a
    lower price than a product with a very limited
   If demand for a product is high, prices will
   Products with low levels of demand will have
    comparatively low prices.
   Uniqueness
   When a product has few competitors because it is
    unique, the price will be higher than similar
   Age
   When products are first introduced to the market,
    their prices will be high.
   As products age, the price gradually decreases.
   Season
   Many products are used at a particular time of year
   Examples: winter apparel, air conditioners, and
    holiday decorations.
   These products have high levels of sales for a short
    time and then almost no sales for the rest of the year.
   Prices will be highest right before and at the
    beginning of the season.
   Prices will be lower during other times of the year.
   Complexity
   Highly complex and technical products have higher
    prices than simple products.
   Products with many features and options will also
    cost more.
   Convenience
   If a product is easily available and the seller provides
    a high level of customer service, prices will go up.
   Customers expect to pay low prices if they shop at a
    large warehouse store that offers little service.
Price a Product
   Price- money a customer must pay for a
    product or service
   The price of a product changes as it moves
    from producer to consumer.
   The manufacturer sets a price that is paid by
    other businesses that will sell the product to
    the final consumer.
   The price is set by the business following a
    formula that identifies the components of the
   Selling Price = Product Costs + Operating Expenses + Profit
   Selling price- price paid by the customer for the
   Product costs- costs to the manufacturer of
    producing the product or price to businesses to buy
    the product
   Operating expenses- all expenses of operating the
    business associated with the product
   These can include; salaries, storage and display
    equipment, facilities, utilities, or taxes.
   Profit- amount of money available to the
    business after all costs and expenses have
    been paid.
   Gross margin- difference between selling
    price and the product costs
   Represents the amount of money on hand to
    pay for operating expenses and provide a
   Markup
   A pricing concept related to gross margin.
   Markup- amount added to the cost of a
    product to set the selling price.
   Markdown
   Businesses are not always able to sell products at the
    original price.
   If customer demand is not as high as projected, the
    selling season is ending, or if there is a flaw in the
    product, the business may have to take a markdown.
   Markdown- reduction from the original selling price
   Checkpoint>>
   What is the formula for calculating the
    selling price of a product?
   Distribution- locations and methods used to
    make a product of service available to the
    target market
   Channel of distribution- the route a product
    follows and the businesses involved in moving
    a product from the producer to the final
Need for Distribution Channels
   In complex economies, exchanges of goods
    are difficult due to several differences existing
    between producers consumers.
   Differences in Quantity
   Businesses produce or sell large amounts of
    each product to many consumers.
   Each consumer needs only a very small
    number of products at a given time.
   Differences in Assortment
   Businesses typically specialize in producing a
    specific type of product while consumers want to
    purchase a variety of products.
   Differences in Location
   It today’s global economy, thousands of miles often
    separate producers and consumers
   Businesses may need to distribute their products to
    customers in many countries.
   Differences in Timing
   Businesses gain efficiency by producing large
    amounts of a product at one time.
   Some agricultural products can only be
    produced at a specific time of the year.
   Consumers may want to buy products at
    different times than when they are produced.
Channels and Channel Members
   Channel members- businesses that take part in a
    channel of distribution
   Direct channel of distribution- products move from
    the producer straight to the consumer
   Indirect channel of distribution- includes one or
    more others businesses between the producer and
   Channel members may be: transportation
    companies, sales organization, or financial
   Retailers- final business in an indirect
    channel of distribution for consumer products
   Offer a range of products at convenient
    locations for consumers.
   Help consumers select the best products
   Provide financing and delivery services
   Assist manufacturers by storing, displaying,
    and advertising products.
   Checkpoint>>
   What is the difference between a direct and
    an indirect channel of distribution?
   Complete the two questions at the end of your

To top