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					In this unit you will find

• Chapter 1
  Marketing Is
  All Around Us

• Chapter 2
  The Marketing
  Plan




xxvi
                                                                                          ANALYSIS
          A N A LY Z E T H E A D
                                                                                          SWOT
            This ad invites readers to visit the state of                                 Economic
            West Virginia for a vacation. What is the main
                                                                                          Socio-Cultural
            theme? How does the picture work with the
            words?                                                                        Technological
                                                                                          Competitive
            Market Talk Marketing promotes and
            sells products such as food and clothing,
                                                                                         STRATEGY
            or services such as a haircut or a vacation
                                                                                         Promotion
            in West Virginia. Do you think marketing
                                                                                         Place
            promotes ideas, as well?
                                                                                         Price
            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




                                                                                          CONTROL
                                                                                          Evaluation
                                                                                          Performance Measures
                                                                                          Performance Analysis




                                                                           In this unit
                                                                           Foundations of Marketing
                                                                               Economics
                                                                           Functions of Marketing
                                                                               Pricing        Promotion    Selling




marketingessentials.glencoe.com                                                                                      1
   CHAPTER                           1
Marketing Is All
Around Us
   Chapter Objectives
   After reading this chapter, you should be
   able to:
   • 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
     markets
   • Describe market share
   • Define target market
   • List the components of the marketing
     mix


   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
                                      marketing creates
                                  • Explain the concept of marketing strategies
                                  • Explain the concept of market and market
                                      identification
                                  • Select target market
                                     All the events with an asterisk (*) also include this
                                  performance indicator:
                                  • Describe the nature of target marketing in a
                                     specific industry
                                     Some events include additional performance
                                  indicators. These are:
                                  FMDM Target financial products for specific markets
                                  SMDM Identify target markets for a sports/
                                             entertainment event
                                  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
                                    .glencoe.com/1/DECA


marketingessentials.glencoe.com                      Chapter 1 - Marketing Is All Around Us   3
       SECTION 1.1

         OBJECTIVES
• Define marketing
• Explain the four
                                Marketing and the
  foundations of marketing
• List the seven functions of
  marketing
• Understand the marketing
                                Marketing Concept
  concept


          KEY TERMS
•   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
                                    of marketing.

                                    STUDY ORGANIZER
                                    Draw an umbrella shape like the one below to organize the
                                    marketing concepts you will read about in this section.

                                                                     Functions

                                                  Factors thatgaffect price Consequences
                                                             inl
                                                            Sel



                                               Economics
                                                                    Foundations




                                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
                                                    their products.
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
   Distribution is the process of deciding how
                                                    Product/Service Management
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.
                                                    Promotion
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.
business opportunities.
                                                   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
  Math
  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?
  Economics
  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
     SECTION 1.2

        OBJECTIVES
• Analyze the benefits of
  marketing
                                 The Importance
                                 of Marketing
• Apply the concept of utility


            KEY TERM
• 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.

                                    STUDY ORGANIZER
                                    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.




                                                 Utility
                                              Added Value
                                                                       Benefits of
                                                                       Marketing
                                                Form
                                                       Place



                                 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
                                                                  10,000                   $2.00
                                                                         ($20,000      10,000)
                                                                 200,000                     .10
                                                                        ($20,000       200,000)


                                                              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
 marketed lately.
                                                          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
                                                      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
                                                  Place Utility
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
                                                  products.
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
        restaurants?

     Integrating Academic Skills
     Math
     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
        invoice?
     Writing
     5. Write a brief story (two to three paragraphs) about a young person
        shopping at the local mall that incorporates all the benefits of
        marketing.


                      Check your answers at marketingessentials.glencoe.com/1/read

marketingessentials.glencoe.com                              Chapter 1 - Marketing Is All Around Us   11
       SECTION 1.3


  market
         OBJECTIVES
• Describe the concept of      Fundamentals
                               of Marketing
• Differentiate consumer and
  industrial markets
• Describe market share
• Define target market
• List the components of the
  marketing mix


          KEY TERMS
                                     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.

                                     STUDY ORGANIZER
                                     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                          Product
                                                       Share

                                                       Market                         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.
                                         Sony
                                         21.1%                       How do you think businesses use
                 Others
                 26.3%                                               the concept of market share in
                                                                     their marketing programs?




           Fuji Film                           Kodak
           7.2%                                17.5%

                  Olympus
                  10.7%
                                Canon
                                17.2%




                          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
                                                      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.

                                                  Place
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
       done differently?


      P RO D U C T
                                                                            P L AC E
   Product
                                                                   Since most
   decisions
                                                                   people shop in
   include naming
                                                                   supermarkets for
   the product and
                                                                   orange juice, the
   deciding how to
                                                                   place decision was
   match the target
                                                                   an easy one.
   market’s needs.
   Tropicana’s
   Light ‘n
   Healthy brand
   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
                                                                                                         oranges exercising.
                                                                                                                  This
                                                                                                                   reinforced
                                                                                                   the image it wanted
                                                                                                   for its Light ‘n Healthy
                                                                                                   brand.
                                       PRICE

                            To be competitive,
                            Tropicana priced its
                            Light ‘n Healthy brand in
                            line with other premium
                            orange juices.




                          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-
       talkie feature.
       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
  Math
  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.
  Language Arts
  5. Write a customer profile for a magazine of your choice. Support your
     description by describing sample articles and advertisements from
     the magazine.


                      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
                                                                           organization

                                             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

                             FPO -
          hand him over to my best photographer. If a band needs
                                                     Copy TK
          200 people at a show, I talk to every newspaper and radio
          person I know and get them to push the band.
                                                                           Entry-level opportunities
                                                                           abound for MBA graduates in
                                                                           virtually every field you can
                                                                           imagine.

               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



SECTION 1.1
• 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.


SECTION 1.2
• 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.


SECTION 1.3
• 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
                                                           utility created
                                                           by marketing
                                                           activities
                                                         • Explain types
                                                           of business
27.   Check an Online Dictionary                           activities
      Visit the American Marketing Association’s
                                                         • Prepare simple
      (AMA) Web site and use its online dictionary
                                                           written reports
      to review its definition of marketing, as well
      as other key marketing terms covered in this
      chapter.
                                                         For more information and DECA Prep
                                                         practice, go to marketingessentials.glencoe
                                                         .com/1/DECA


marketingessentials.glencoe.com                                 Chapter 1 - Marketing Is All Around Us   23

				
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