In this unit you will find
• Chapter 1
All Around Us
• Chapter 2
A N A LY Z E T H E A D
This ad invites readers to visit the state of Economic
West Virginia for a vacation. What is the main
theme? How does the picture work with the
Market Talk Marketing promotes and
sells products such as food and clothing,
or services such as a haircut or a vacation
in West Virginia. Do you think marketing
promotes ideas, as well?
Think and Write Print ads use powerful Product
visual components and interesting, catchy
writing to draw in the reader. Read the
slogans in this ad. Do you think they work? IMPLEMENTATION
Why or why not? Look through magazines or Organization
newspapers and write down three slogans Management
you think are effective. Next, select a state Staffing
or a country that interests you and write a
slogan for it that would encourage tourism.
Go to marketingessentials.glencoe.com/ BUDGET
u1/ad for an extended activity. Cost of Sales
Cost of Promotion
Income and Expenses
In this unit
Foundations of Marketing
Functions of Marketing
Pricing Promotion Selling
Marketing Is All
After reading this chapter, you should be
• Deﬁne marketing
• Explain the four foundations of marketing
• List the seven functions of marketing
• Understand the marketing concept
• Analyze the beneﬁts of marketing
• Apply the concept of utility
• Describe the concept of market
• Differentiate consumer and industrial
• Describe market share
• Deﬁne target market
• List the components of the marketing
GUIDE TO THE PHOTO
Market Talk In the United States, it is rare to
be far from an ad of some sort. A passing hiker
in a national park might be wearing a T-shirt
with a corporate logo. A sign on the side of a
country road could announce fresh eggs for
sale. In a mall or a major city, the marketing is
much more intense. Everywhere you look, you
see signs, brands, and ads.
Quick Think Promotion is only one aspect of
marketing. How would you deﬁne marketing and
all the activities that fall under its umbrella?
2 UNIT 1 - THE WORLD OF MARKETING
Performance indicators represent key skills and
knowledge. Relating them to the concepts explained
in this chapter is your key to success in DECA events.
These acronyms represent DECA events that involve
knowledge of concepts in this chapter.
AAAL FMAL MMS TMDM
AAML FMDM* QSRM TSE*
ADC* FMML RMAL VPM
BSM FSRM RMML
EMDM HMDM* SMDM*
In all these DECA events, you should be able to
follow these performance indicators:
• Distinguish between economic goods and services
• Determine the forms of economic utility that
• Explain the concept of marketing strategies
• Explain the concept of market and market
• Select target market
All the events with an asterisk (*) also include this
• Describe the nature of target marketing in a
Some events include additional performance
indicators. These are:
FMDM Target ﬁnancial products for speciﬁc markets
SMDM Identify target markets for a sports/
ADC Develop a customer/client proﬁle
HMDM Determine potential lodging markets
EMDM Identify online target market
TSE Design a customer/client proﬁle
Check your understanding of DECA perfor-
mance indicators with the DECA activity in this
chapter’s review. For more information and
DECA Prep practice, go to marketingessentials
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 3
• Define marketing
• Explain the four
Marketing and the
foundations of marketing
• List the seven functions of
• Understand the marketing
• marketing BEFORE YOU READ
• goods Connect Do you think you have ever been influenced by
• services marketing? Explain why or why not and give examples if
• marketing concept necessary.
THE MAIN IDEA
Marketing is an umbrella term that includes many activities
and has many functions. To be a successful marketer, you
need to understand the foundations, functions, and basic tools
Draw an umbrella shape like the one below to organize the
marketing concepts you will read about in this section.
Factors thatgaffect price Consequences
The Scope of Marketing
Connect Relate the You already know a lot about marketing because it is all
definition of marketing around you. You have been a consumer for many years and you
to the functions of have made decisions about products you liked and did not like.
marketing and to the As you study marketing, you will analyze what businesses do to
marketing concept. influence consumers’ buying decisions. That practice will help
you make the transition from thinking like a consumer to think-
ing like a marketer.
4 UNIT 1 - THE WORLD OF MARKETING
• MARKETING IDEAS The definition of marketing
includes marketing ideas, such as eating healthful foods.
What other ideas have you seen marketed?
Marketing is a broad term that includes clothing, and candy. Intangible items that
many activities and requires many skills. have monetary value and satisfy your needs
Marketing is the process of planning, pric- and wants are services. Intangible means
ing, promoting, selling, and distributing ideas, you cannot physically touch them. In most
goods, or services to create exchanges that cases, services involve a task, such as cook-
satisfy customers. Note that marketing is a ing a hamburger or cutting hair. Banks, dry
process. This means it is ongoing and it cleaners, amusement parks, movie theaters,
changes. As a marketer, you need to keep and accounting offices all provide economic
up with trends and consumer attitudes. The services.
products, ideas, or services you develop and Every time someone sells or buys some-
the way you price, promote, and distribute thing, an exchange takes place in the mar-
them should reflect these trends and atti- ketplace. The marketplace is the commercial
tudes. All functions of marketing support environment where such trades happen. It is
this effort. Current marketing practices focus the world of shops, Internet stores, financial
on customers and maintaining a close rela- institutions, catalogs, and much more.
tionship with them.
Foundations of Marketing
Ideas, Goods, and Services The practice of marketing depends on four
Marketing promotes ideas, goods, and key areas of knowledge. These are the four foun-
services. Politicians, for example, use market- dations of marketing. The marketing wheel
ing techniques to promote their platform, or on page 1 includes these four foundations.
ideas. Goods are tangible items that have The topics you will study in Marketing
monetary value and satisfy your needs and Essentials are based on these four foundations
wants such as cars, toys, furniture, televisions, of marketing:
Chapter 1 - Marketing Is All Around Us 5
1. Business, management, entrepreneur- Marketing Information Management
ship Understanding the basics of busi- Good business and marketing decisions
ness, management, and entrepreneurial rely on good information about customers,
concepts that affect business decision trends, and competing products. Gathering
making this information, storing it, and analyzing it
2. Communication and interpersonal are all part of marketing information man-
skills Understanding concepts, strategies, agement. Collecting information is done on
and systems needed to interact effectively a continual basis and through special market-
with others ing research studies. This is what marketers
3. Economics Understanding the eco- do to find out about customers, their habits
nomic principles and concepts that are and attitudes, where they live, and trends in
basic to marketing the marketplace. Have you ever been asked
4. Professional development Under- to complete a questionnaire about the ser-
standing concepts and strategies needed vice at a restaurant or other type of business?
for career exploration, development, and If so, you have participated in marketing re-
growth search. Companies conduct research so they
can be successful at marketing and selling
Seven Functions of Marketing
The seven functions include distribution, Pricing
financing, marketing information manage- Pricing decisions dictate how much to
ment, pricing, product/service management, charge for goods and services in order to make
promotion, and selling. The marketing wheel a profit. Pricing decisions are based on costs
on page 1 also includes these functions. These and on what competitors charge for the same
functions define all the aspects that are part of product or service. To determine a price, mar-
the practice of marketing. keters must also determine how much cus-
tomers are willing to pay.
Distribution is the process of deciding how
to get goods in customers’ hands. Physically
Product/service management is obtain-
moving and storing goods is part of distribu-
ing, developing, maintaining, and improv-
tion planning. The main methods of trans-
ing a product or a product mix in response
portation are by truck, rail, ship, or air. Some
to market opportunities. Marketing research
large retail chains store products in central
guides product/service management toward
warehouses for later distribution. Distribution
what the consumer needs and wants.
also involves the systems that track products
so that they can be located at any time.
Financing Promotion is the effort to inform, per-
Financing is getting the money that is suade, or remind potential customers about
necessary to pay for setting up and running a a business’s products or services. Television
business. Business owners often obtain bank and radio commercials are forms of promo-
loans to start a new business. Some also form tion. This type of promotion is called advertis-
corporations and may sell shares (or stock) of ing. Promotion is also used to improve a com-
the business. Financing also involves decisions pany’s public image. A company can show
such as whether to offer credit to customers. that it is socially responsible by recycling
Most retailers offer customers payment op- materials or cleaning up the environment.
tions such as MasterCard or Visa, while other Promotion concepts and strategies are used to
stores offer their own credit services. achieve success in the marketplace.
6 UNIT 1 - THE WORLD OF MARKETING
Selling most important. Everyone in an organiza-
Selling provides customers with the goods tion needs to recognize that repeat customers
and services they want. This includes selling keep a company in business. For example, the
in the retail market to you, the customer, and switchboard operator in a large corporation
selling in the business-to-business market to or the pizza delivery person must understand
wholesalers, retailers, or manufacturers. the marketing concept and be mindful of the
Selling techniques and activities include company’s goals. Everyone in an organization
determining client needs and wants and re- is an extension of that firm and must provide
sponding through planned, personalized com- the best possible service to its customers. Busi-
munication. The selling process influences nesses that stress the marketing concept with
purchasing decisions and enhances future all employees are successful.
Customer Relationship Management (CRM)
The Marketing Concept In today’s marketplace, customer relation-
The marketing concept is the idea that ship is most important. Customer relation-
a business should strive to satisfy customers’ ship management (CRM) is an aspect of
needs and wants while generating a profit for marketing that combines customer infor-
the firm. The focus is on the customer. For an mation (through database and computer
organization to be successful, all seven func- technology) with customer service and mar-
tions of marketing need to support this idea. keting communications. Marketers who spe-
The personnel responsible for those func- cialize in CRM try to create more meaning-
tions must understand the marketing concept ful one-on-one communications with the
and reach for the same goal in order to send customer by applying customer data (demo-
a consistent message to the customer. The graphic, industry, buying history, etc.) to
message is that the customer satisfaction is every communication.
1.1 AFTER YOU READ
Reviewing Key Terms and Concepts
1. Name two ideas that can be marketed.
2. Where do exchanges take place?
3. What is the main difference between consumers and industrial users?
Integrating Academic Skills
4. A customer purchases two tables at $149.99 each and would like them
to be delivered. Your company charges customers $50 for delivery and
the state imposes a 5 percent sales tax on furniture, but not on the
delivery charge. What is the total amount due from the customer?
5. List at least three ways the Internet has changed marketing functions.
Check your answers at marketingessentials.glencoe.com/1/read
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 7
• Analyze the benefits of
• Apply the concept of utility
BEFORE YOU READ
Use Prior Knowledge When did you last shop at a mall?
Did you witness any promotion effort? Did you compare
prices? What role did this play in your decision to buy?
THE MAIN IDEA
Marketing is a key part of our economy because it supports
competition and offers benefits to consumers.
Reproduce the figure below. As you read this section, note the
benefits of marketing and list the five utilities on lines jutting
out from one of the ovals.
Economic Benefits of Marketing
Through the study of marketing you will realize just how im-
Connect List your portant marketing is and how much it affects your life and the
own experiences lives of other consumers. Its impact is even more dramatic when
and observations you consider how it affects our economy and standard of living.
about how marketing Marketing plays an important role in an economy because it
benefits you personally. provides the means for competition to take place. In a competi-
tive marketplace, businesses try to create new or improved prod-
ucts at lower prices than their competitors. Those efforts force
8 UNIT 1 - THE WORLD OF MARKETING
high, manufacturers can produce products in
larger quantities. This reduces the unit cost of
each product. This is because the fixed costs
(such as the rent on a building) remain the
same whether the company produces 10 units
or 10,000 units. When a company produces a
larger quantity of a product, it spends less per
unit on fixed costs. The company can charge a
lower price per unit, sell more units, and make
more money. Here is an example using a fixed
cost of $20,000.
Quantity Fixed Cost
Produced Per Unit
As you can see, the increased quantity sig-
•NEW PRODUCTS One of the major economic nificantly reduces the fixed cost per unit.
benefits of marketing is the proliferation of new and In addition, when products become popu-
improved products. lar, more competitors enter the marketplace.
To remain competitive, marketers find ways
List three new and improved products you have seen
to lower their prices. Look at the DVD market
for some examples of this phenomenon. DVD
players were introduced in 1997. Since then,
there has been an explosion in the sales and
them to be efficient and responsive to con- rentals of DVDs and DVD players. Combina-
sumers. In addition, businesses look for ways tion DVD/CD/MP3 players were very costly
to add value to a consumer’s shopping expe- products when they were introduced on the
rience. Let’s look at the economic benefits of market, but now they can be purchased for
marketing to the economy and to consumers. less than $100.
New and Improved Products
Marketing generates competition, which in Added Value and Utility
turn fosters new and improved products. Busi- The functions of marketing add value to a
nesses always look for ways to satisfy custom- product. This added value in economic terms
ers’ wants and needs and to keep customers is called utility. Utilities are the attributes of
interested. This creates a larger variety of goods a product or service that make it capable of
and services. For example, personal computers satisfying consumers’ wants and needs.
have gotten smaller, lighter, more powerful, There are five economic utilities involved
and less expensive. As more people use com- with all products: form, place, time, posses-
puters, this market continues to grow. sion, and information. Although form utility
is not directly related to marketing, much of
Lower Prices what goes into creating new products, such as
Marketing activities increase demand, and marketing research and product design, makes
this helps to lower prices. When demand is it an integral part of the marketing process.
Chapter 1 - Marketing Is All Around Us 9
Form utility involves changing raw mate-
rials or putting parts together to make them
more useful. In other words, it deals with mak-
Supermarket ing or producing things. The manufacturing
of products involves taking things of little value
Personal Shopper by themselves and putting them together to
Albertsons introduced its Shop ‘n’ Scan
create more value. If you consider the value of
technology by testing it—first in a handful of
a zipper, a spool of thread, and several yards
stores in Chicago, then expanding the test to
of cloth, each would have some value, but not
more than 100 stores in the Dallas area. The
tests started in October 2002. By October
as much as when you put all three together by
2004 the company was planning to roll out making a jacket.
the system in other cities. Form utility involves making products that
The system enables customers to use hand- consumers need and want. Special features
held scanners to scan and bag their purchases or ingredients in a product add value and in-
as they shop at several Jewel-Osco stores. crease its form utility. For example, electronic
controls on the steering wheel of an automo-
Focus on the Shopper
The technology has some other customer-
bile add value to the final product.
friendly features. A portable computer keeps
a running total of the prices of the items in
Place utility involves having a product
the cart. Customers can also use an express
where customers can buy it. Businesses study
pay station to ring up their purchases.
consumer shopping habits to determine the
Company Goals most convenient and efficient locations to sell
These customer-focused developments are
in keeping with the overall policies and objec-
Some businesses use a direct approach by
tives of the company:
selling their products through catalogs, and
• Focusing on customers
other businesses rely on retailers to sell their
• Building efficiency
products. The Internet offers even more op-
• Capitalizing on technology
The company has had success with Shop ‘n’
tions to businesses that want to sell their prod-
Scan. According to the Wall Street Journal, ucts directly to their customers without the
shoppers using the technology bought, on use of any intermediaries.
average, twice as many groceries as shop-
pers using regular carts. Time Utility
Time utility is having a product available
at a certain time of year or a convenient time
of day. For example, supermarkets and other
How does this technology add value food stores offer convenient shopping hours
(utility) to a customer’s shopping or they are open 24-hours a day. Retailers of-
experience? ten have extended shopping hours during
the busiest shopping season of the year, from
Thanksgiving till Christmas. Marketers in-
crease the value of products by having them
Go to marketingessentials.glencoe.com/ available when consumers want them.
1/tech to find a project on technology as
added value. Possession Utility
How do you come into possession of the
items you want? You generally buy them for
10 UNIT 1 - THE WORLD OF MARKETING marketingessentials.glencoe.com
a price. The exchange of a product for money Information Utility
is possession utility. Retailers may accept Information utility involves communica-
alternatives to cash, such as personal checks, tion with the consumer. Salespeople provide
debit or credit cards, in exchange for their information to customers by explaining
merchandise. They may even offer install- the features and benefits of products. Dis-
ment or layaway plans (delayed possession plays communicate information, too. Pack-
in return for gradual payment). Every one of aging and labeling inform consumers about
these options adds value to the product being qualities and uses of a product. The label
purchased. In fact, without these options, on a frozen food entrée will tell you the
some customers would not be able to buy the ingredients, nutritional information, direc-
items they want. In business-to-business situ- tions for preparation, and any safety pre-
ations, companies also grant their customers cautions needed.
credit. They may give them a certain period Advertising informs consumers about
(for example, 30 days) to pay a bill. This adds products, tells where to buy products, and
value to the products they sell. sometimes tells how much products cost.
Possession utility is involved every time Many manufacturers provide own-
legal ownership of a product changes hands. ers’ manuals that explain how to use
Possession utility increases as purchase options their products. Businesses have Web sites
increase. The Internet also provides consum- on the Internet where they provide detailed
ers with options to pay by providing secure information about their companies and
sites where credit cards are accepted. their products.
1.2 AFTER YOU READ
Reviewing Key Terms and Concepts
1. How does marketing help to lower prices?
2. In what way is marketing related to form utility?
3. Which utility is added by drive-through windows at fast-food
Integrating Academic Skills
4. In a business-to-business transaction, the seller offers the buyer a
2 percent discount for paying a bill early. Assuming the buyer took
advantage of this offer, how much would be discounted on a $10,000
5. Write a brief story (two to three paragraphs) about a young person
shopping at the local mall that incorporates all the benefits of
Check your answers at marketingessentials.glencoe.com/1/read
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 11
• Describe the concept of Fundamentals
• Differentiate consumer and
• Describe market share
• Define target market
• List the components of the
BEFORE YOU READ
• market Predict How do you think marketers decide where to
• consumer market advertise their products?
• industrial market
• market share THE MAIN IDEA
• target market The term market refers to all the people who might buy a
• customer profile product or service. The marketing mix is a set of four tools or
• marketing mix strategies the marketer uses to influence buying decisions.
Draw two diagrams like the ones below. In the first diagram,
record four terms about the concept of market. In the second
diagram, record the four Ps of the marketing mix.
Market and Market Identification
Connect Jot down The terminology found in this section is the foundation for
examples of ads you future work and study in marketing. You need to commit these
have seen or heard terms to memory so you can use them correctly when discuss-
and how they relate to ing marketing principles and practices. You will find that these
your reading. terms are used throughout this textbook. So let’s begin your
journey into becoming a marketer.
12 UNIT 1 - THE WORLD OF MARKETING
Marketers know that their product or ser- The consumer market consists of con-
vice cannot appeal to everyone. To do their sumers who purchase goods and services for
job, they look for people who might have an personal use. Consumers’ needs and wants
interest in or a need for their product. They generally fall into a few categories that address
also look at people who have the ability to pay their lifestyles. For the most part, consumers
for their product. These people often share are interested in products that will save them
other similar needs and wants. All people who money, make their life easier, improve their
share similar needs and wants and who have appearance, create status in the community,
the ability to purchase a given product are or provide satisfaction related to some other
called a market. personal motivation.
You could be part of the market for video The industrial market or business-
games, but not be part of the market for an to-business (B-to-B) market includes all busi-
expensive car. Even though you may want an nesses that buy products for use in their
expensive car, you may not have the means to operations. The goals and objectives of
buy one. If you liked video games and had the business firms are somewhat different from
resources to buy or rent them, you would be those in the consumer market. Most relate to
part of the video game market. improving profits. Companies want to im-
prove productivity, increase sales, decrease
Consumer Versus expenses, or in some other way make their
Industrial Markets work more efficient.
There are different types of markets. A market Companies that produce products for sale
can be described as a consumer market or an in the consumer market consider the reseller
industrial market. of their products to be part of the industrial
• ADVERTISING in the INDUSTRIAL MARKET
This ad, published in Supermarket News, highlights
advantages to businesses who sell chicken to customers.
How do the objectives for purchases in the industrial
market differ from those in the consumer market?
Chapter 1 - Marketing Is All Around Us 13
1.1 Market Share
• Who Leads in the Camera
Market? A company’s percentage
of total sales in a given market is
its market share.
21.1% How do you think businesses use
26.3% the concept of market share in
their marketing programs?
Fuji Film Kodak
Go to marketingessentials.glencoe.com/1/figure/1
to find a project on market share.
market. Therefore, they require two distinct the market and as the size of the market in-
marketing plans to reach each market. creases or decreases in volume.
Market Share Target Market and
A market is further described by the to- Market Segmentation
tal sales in a product category. Examples of Businesses know they cannot convince
categories are video games, fax machines, everybody to buy their product or service.
cameras, ice cream, or soft drinks. For exam- They look for ways to offer their product or
ple, everyone who bought digital still cam- service to the people who are most likely to be
eras in February 2004 from photo specialty, interested. This involves segmenting, or break-
electronic/appliance stores, computer/office ing down the market into smaller groups that
superstores, mass merchandisers, the Inter- have similar needs. Market segmentation is
net, and through mail order were part the process of classifying customers by needs
of the $211,464,600 digital still camera and wants.
market. You already know that a market can be
A company’s market share is its percent- segmented into a consumer and an industrial
age of the total sales volume generated by all market. Within those markets, further seg-
companies that compete in a given market. mentation is possible. You will learn about
Knowing one’s market share helps marketers market segmentation in Chapter 2. The goal
analyze their competition and their status in of market segmentation is to identify the
a given market. (See Figure 1.1.) Market shares group of people most likely to become custom-
change all the time as new competitors enter ers. The group that is identified for a specific
14 UNIT 1 - THE WORLD OF MARKETING marketingessentials.glencoe.com
• MARKET SEGMENTATION A
professional photographer shops for a
top-performance camera to use as a work
tool while an amateur would look for a
basic, easy-to-use model.
How would marketing efforts differ for
these two types of cameras and customers?
marketing program is the target market. it is to eat this cereal. To reach parents, print
Target markets are very important because advertising in magazines such as Family Circle
all marketing strategies are directed to them. or Parenting might be used, and the ad mes-
When a business does not identify a target sage might stress health benefits.
market, its marketing plan has no focus. Iden- To develop a clear picture of their target
tifying the target market correctly is a key to market, businesses create a customer profile.
success. A customer profile lists information about the
target market, such as age, income level, ethnic
Consumers Versus Customers background, occupation, attitudes, lifestyle,
A product may have more than one target and geographic residence. Chapter 2 focuses
market. For example, manufacturers of chil- on this aspect of marketing. Marketers spend
dren’s cereal know that they need to target a lot of money and time on research to collect
children and parents differently. They have data so that they understand the characteris-
two target markets: one is the children (con- tics of their target market’s customer profile.
sumers) who will be asking for the cereal and This information helps them make intelligent
eating it. The other is the parents (customers) marketing decisions.
who need to approve of it and will be buy- An easy and fun way to understand cus-
ing it. To reach the children, marketers might tomer profiles is to look at magazines. If you
advertise on Saturday morning television pro- thumb through a magazine’s articles and ad-
grams specifically designed for children. The vertisements, you will know who reads the
advertising message might be how much fun publication. According to Seventeen magazine’s
Chapter 1 - Marketing Is All Around Us 15
tools marketing professionals or businesses
use and control in order to influence potential
customers. Marketers control decisions about
each of the four Ps and base their decisions on
the people they want to win over and make
Targeting Children into customers. Because of the importance of
You may have observed young children customers, some would add a fifth P to the
mesmerized by television commercials or list: people. Marketers must first clearly define
seen children crying when a parent re- each target market before they can develop
fuses to buy a product that a child had marketing strategies.
seen advertised on television. The four elements of the marketing mix
Messages to Children are interconnected. Actions in one area affect
Businesses that target young children decisions in another. Each strategy involves
generally create images that their prod- making decisions about the best way to reach,
ucts are fun and enjoyable. satisfy, and keep customers and the best way
Messages to Parents to achieve the company’s goals.
Some of these same companies target Let’s look at what each marketing mix
parents and send a different message component involves. Follow Figure 1.2
about their products—stressing qualities to see each of the four Ps illustrated and
that parents deem important, such as explained for Tropicana’s Light ‘n Healthy®
education, safety, or health. brand orange juice.
Product decisions begin with choosing
Do you think targeting children with
what products to make and sell. Much research
food products and toys is ethical?
goes into product design. A product’s features,
Should advertising to children be
brand name, packaging, service, and warranty
restricted? Why or why not?
are all part of the development. Companies
also need to decide what to do with prod-
ucts they currently sell. In some cases, those
Go to marketingessentials.glencoe
products require updating or improvements
.com/1/ethics to find a project on to be competitive. By developing new uses
ethical marketing techniques. and identifying new target markets, a com-
pany can extend the life of a product. In the
orange juice example illustrated in Figure 1.2,
Tropicana chose health conscious men and
Web site, the magazine targets teen girls and women as the target market for a new
young women who are interested in beauty, juice. It produced a lower-calorie, lower-
fashion, and entertainment. It is larger than carbohydrate orange juice and it selected a
any competitor in the 12- to 17-year-old market name—Light ‘n Healthy—that would appeal
and 97.9 percent of its readers have accessed to its target market.
the Internet regularly.
Marketing Mix The means of getting the product into
The marketing mix includes four basic the consumer’s hands is the place factor of
marketing strategies called the four Ps: prod- the marketing mix. Knowing where one’s
uct, place, price, and promotion. These are customers shop helps marketers make the
16 UNIT 1 - THE WORLD OF MARKETING marketingessentials.glencoe.com
1.2 Marketing Mix for a New Juice
•Light ‘n Healthy’s Four Ps Tropicana’s marketing department develops strategies for each brand of orange juice
in its product line. The four Ps of the marketing mix focus on the customer profile for a specific target market. The
Light ‘n Healthy brand targets men and women who are health conscious and want to stay physically fit.
Would you have made different choices about the four Ps to introduce this product? If so, what would you have
P RO D U C T
P L AC E
people shop in
the product and
orange juice, the
deciding how to
place decision was
match the target
an easy one.
has a third less
sugar and a
third fewer calories than
regular orange juice.
P RO M OT I O N
Tropicana decided to
run humorous ads in
Health magazine and on
television that showed
the image it wanted
for its Light ‘n Healthy
To be competitive,
Tropicana priced its
Light ‘n Healthy brand in
line with other premium
Go to marketingessentials.glencoe.com/1/figure/2
to find a project on the marketing mix.
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 17
Pay as You Go Wireless Phones
The Roxy i90c phone from Boost is created for active young women. The Roxy
brand represents freedom, fun, and individual expression, all of which are
reflected in the design and custom features of the Roxy phone.
The Right Ring Tones
The Roxy wireless phone features ring tones such as Funky Town, Girls Just
Wanna Have Fun, and California Dreamin’. The phone is preloaded with
Java™ games, including Tetris® and Snood® from THQ and Blazing
Boards™ by Cybiko. As with all Boost Mobile’s models, the Roxy
wireless phone comes with Boost 2WAY™, the long-range walkie-
Price and Place
Advertisements for the Roxy phone focus on girls involved in
sports. The suggested retail price is $199, which includes
$25 in wireless service credits that are loaded on activation.
The limited edition Roxy phone is available at select Quiksilver
Boardrider Club stores, select Surf & Specialty stores that
carry the Quiksilver and Roxy brands, as well as Best Buy, Good
Guys, Wherehouse Music, and Nextel Retail Stores. Boost Mobile
customers pay for the minutes only as they need them through the
purchase of Re-Boost™ cards, which are available in $20, $30, and $50
denominations and may be purchased as needed at all authorized Boost Mobile
retailers (such as Nextel and Target) and 7-Eleven stores.
Identify the target market and provide a customer profile for the Roxy brand
wireless phone. Explain Boost Mobile’s marketing mix decision (four Ps) for
the Roxy phone and its Mobile service.
Go to marketingessentials.glencoe.com/1/case to find
a project on customer profiles.
place decision. Place strategies determine transportation methods and what stock
how and where a product will be dis- levels are most effective.
tributed. For global companies, it may mean In the Tropicana orange juice example,
making decisions about which products the place decision was to sell 64-fluid-ounce
will be sold in which countries and which containers of the Light ‘n Healthy brand
retail outlets or other means of selling in food stores that have refrigerated cases.
the product will best reach the customer. You see these products primarily in super-
Can the product be sold directly to the markets, convenience stores, and mass mer-
consumer, or are intermediaries necessary? chandise retailers with food departments,
Other place decisions include deciding which such as Smart & Final, Wal-Mart, or Costco.
18 UNIT 1 - THE WORLD OF MARKETING marketingessentials.glencoe.com
Price period of time, for example. This technique is
Price is what is exchanged for the product. frequently used to launch new products.
Price strategies should reflect what customers
are willing and able to pay. To that end, market- Promotion
ers must consider the price they will charge Promotion refers to decisions about adver-
their industrial customers, including resell- tising, personal selling, sales promotion, and
ers. Pricing decisions also take into account publicity.
prices the competition charges for comparable
products. Promotional Strategies
Promotional strategies deal with how po-
Pricing Strategies tential customers will be told about a com-
Price strategies therefore include arriv- pany’s products, including the message,
ing at the list price or manufacturer’s sug- the media selected, special offers, and the
gested retail price, as well as discounts, allow- timing of the promotional campaigns. Figure
ances, credit terms, and payment period for 1.2 highlights the Tropicana Light ‘n Healthy
industrial customers. ad campaign. In that campaign, images were
On occasion, a company may use special carefully created to match a key feature of the
promotional pricing that would adjust the product. Ads for orange juice with added cal-
suggested retail price. A manufacturer may cium or vitamins might have different graph-
decide to use a promotional price for a fixed ics and might run in different magazines.
1.3 AFTER YOU READ
Reviewing Key Terms and Concepts
1. What is the difference between consumer and industrial markets?
2. What is the relationship among market segmentation, target markets,
and customer profiles?
3. Name the four Ps of the marketing mix and explain the importance of a
target market for each of them.
Integrating Academic Skills
4. If total sales in the ice cream category were $4.4 billion and Breyers’s
sales were $650,417,792, what would be its market share? Round your
answer to the tenth decimal place.
5. Write a customer profile for a magazine of your choice. Support your
description by describing sample articles and advertisements from
Check your answers at marketingessentials.glencoe.com/1/read
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 19
Strong interpersonal skills,
CHARLES SPIVEY resourcefulness, creativity,
ARTIST DEVELOPMENT contact management, and
What do you do at work?
Artist development is all about
helping my client take the next MBA degrees provide core-
step, depending on where he level skills that are valuable in
or she is in his or her career. a variety of careers.
Some already have a couple
albums under their belt, while
others are looking to record
a ﬁrst demo. Fundamentally,
I am a people broker. If a
client needs a new Web site, I connect her to the best
Web people I know. If a singer needs a new headshot, I
hand him over to my best photographer. If a band needs
200 people at a show, I talk to every newspaper and radio
person I know and get them to push the band.
abound for MBA graduates in
virtually every ﬁeld you can
What skills are most important to you?
People skills, without a doubt, are the most important
aspects of my job. I know that PR means public relations
but I think it means people relations. Know your clients,
know your friends, and know your business partners.
They’re all people and want to be treated like people, not
proﬁt centers. My undergraduate education had nothing to
do with music, PR, or management, but my MBA course load of marketing classes
has certainly paid big dividends. The best lessons I’ve learned have come from
other people in the business—people I admire and look up to.
What is your key to success?
It’s important to set high goals and be tenacious, but also have the ability to
accept failure and see it as an opportunity to grow. Sure I want to succeed every
time I pick up the phone to market my clients, but I have to be willing to accept
the rejection that often comes in the music business; I just dust myself off and
come back for more.
Why might MBA-level marketing courses Go to marketingessentials.glencoe.com/1/
be helpful, even in a career that was not careers to ﬁnd a career-related activity.
speciﬁcally the focus of those courses?
20 UNIT 1 - THE WORLD OF MARKETING marketingessentials.glencoe.com
CHAPTER 1 REVIEW
• Marketing is deﬁned as 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.
• There are four foundations and seven functions of marketing. The marketing concept is a
focus on customers’ needs and wants while generating a proﬁt.
• Three beneﬁts of marketing are new and improved products, lower prices, and added value
(utility). Five economic utilities are form, place, time, possession, and information.
• A market is deﬁned as all people who share similar needs and wants and who have the
ability to purchase given products.
• Market share is a ﬁrm’s percentage of total sales of all competitors in a given market.
• The four Ps of the marketing mix are product, place, price, and promotion. Marketing
decisions and strategies for the four Ps are based on the target market.
Deﬁne each of the following terms in writing.
1. marketing (p. 5) 6. consumer and industrial markets (p. 13)
2. goods and services (p. 5) 7. market share (p. 14)
3. marketing concept (p. 7) 8. target market (p. 15)
4. utility (p. 9) 9. customer proﬁle (p. 15)
5. market (p. 13) 10. marketing mix (p. 16)
11. Deﬁne marketing. (1.1) 16. What is a market and in what ways can a
12. Identify and explain the four foundations of market be identiﬁed? (1.3)
marketing. (1.1) 17. What is market share? (1.3)
13. List the seven functions of marketing. (1.1) 18. Deﬁne a target market. (1.3)
14. Explain the marketing concept. (1.1) 19. What are the four components of the
15. What is meant by utility and what are the marketing mix? (1.3)
ﬁve economic utilities? (1.2)
Chapter 1 - Marketing Is All Around Us 21
CHAPTER 1 REVIEW
20. Workplace Skills
The Right Choice Assume you are a salesperson in a computer store. A
customer is hesitant about buying a mid-priced laptop computer you are showing.
The customer’s objection is that it will sell for much less in a year. Do you think
the customer is correct? What would you say?
21. Technology Applications
Understanding Market Functions With two or three classmates, use a word
processing program to write a short report about a new fruit beverage that you
believe will be popular with teenagers. Assume your team develops this new
product and wants to start selling it. Consider all seven marketing functions
(distribution, ﬁnancing, information management, pricing, product/service
management, promotion, and selling) in your report and explain for each function
how it applies to the marketing of your new product.
22. Math Practice
Figure the Market Share Calculate Nikon’s market share if total sales in the
digital camera market are $211,464,600 and Nikon’s sales are $120,305,671?
Round your answer to the tenth decimal place.
23. The Cost of Marketing
It is often said that marketing costs represent about 50 percent of the selling
price of an item. Select a product that you have recently purchased or a product
that interests you and research (on the Internet, in magazines and newspapers,
etc.) what type of marketing has been done for this product. List all the examples
you can ﬁnd. Do you think all the items on the list were good marketing ideas?
Why or why not?
24. Explain the Marketing Concept
Write a 200-word essay to convince a friend that maketing is more than just
merchandising—displaying products in stores. Include how important consumers
are to marketers by explaining the marketing concept.
22 UNIT 1 - THE WORLD OF MARKETING
CHAPTER 1 REVIEW
25. Understand Target Markets
and the Marketing Mix
Select an existing product that interests
you. Look at how it is advertised in print or
on television and the Internet. Research Role Play:
your product’s price and where it is sold. Beneﬁts of Marketing
Identify its target market and the four Ps of Situation You are to assume the role of a
its marketing mix. Then change the target marketing student at your local high school.
market for the product. Your marketing teacher (judge) has asked
Activity Show how the four Ps of the you to put together a presentation about
marketing mix must be revised to focus on the importance of marketing in our society.
your newly deﬁned target market. Prepare a This presentation will be made to a group of
written report and an oral presentation using incoming freshmen that have little knowledge
presentation software. of marketing or of its importance.
26. Research Customer Activity You are to prepare an outline of
Relationship Management your presentation on the importance of
marketing and present it to your marketing
Use magazine articles, Internet sources,
teacher (judge) for approval.
and your own observations to research
efforts made by companies to develop Evaluation You will be evaluated on how
close relationships with customers. Analyze well you meet the following performance
the effectiveness of customer relationship indicators:
management (CRM). What pitfalls have • Explain marketing and its importance in a
been experienced by companies and what global economy
successes have been reported? • Describe marketing functions and related
Activity Prepare a three-page written report, activities
complete with citations from appropriate • Determine
sources, to document the research you have forms of
done on the topic of CRM. economic
• Explain types
27. Check an Online Dictionary activities
Visit the American Marketing Association’s
• Prepare simple
(AMA) Web site and use its online dictionary
to review its deﬁnition of marketing, as well
as other key marketing terms covered in this
For more information and DECA Prep
practice, go to marketingessentials.glencoe
marketingessentials.glencoe.com Chapter 1 - Marketing Is All Around Us 23