Learning Targets• Discuss the importance of marketing and its role in the economy• Describe the factors that are part of the nature of marketing
Supply and Demand• Producers and consumers need information to help them make decisions• Independent decision making = basis of free enterprise system• Marketing activities help to match production and consumption
What is Marketing?• Set of activities that gets products from producers to consumers• Definition: an organizational function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships• Key tool in matching Supply and Demand
Marketing as Primary BusinessRETAILERS WHOLESALERS• Businesses that sell directly • Buy products from businesses to final consumers and sell them to other• Ex: Target, Walgreens businesses • Ex: lumberyardBusinesses that support: •Advertising Agencies – provide promotional services •Finance Companies– offer loans and other financial services •Transportation Companies– handle and move products
Marketing Activities Continued…• Buying: – finding suppliers that can provide the right products, quality & quantity at fair price• Selling: – Providing personalized & persuasive info to customers to match needs & wants• Transporting: – Moving products from where they were manufactured to where consumers can buy them• Storing: – Warehousing, shelves, storage room
Marketing Activities Continued…• Financing: – Obtaining credit when buying, extending credit when selling• Researching: – Studying buyer interests/needs, testing products, gathering facts needed to make good marketing decisions• Risk Taking: – assuming risk (ex. fires, theft, damages etc.)• Grading & Valuing: – Grouping goods according to size, quality, characteristics and pricing appropriately
Cost of Marketing• Sometimes higher than cost of making product• Often 50% markup to account for marketing activities• Necessary to attract and retain customers
Role of Marketing• Early 1900s Product - Oriented – Little choice, inefficient manufacturing – Focus: was ‘how’ and ‘what’ to produce?• 20th Century Sales – Oriented – More efficient manufacturing, lots of similar products – Focus: advertising and selling, widespread distribution• Today Customer – Oriented – Needs of customer drives design, production, and distribution of product called the “Marketing Concept” – Profit is important, but long-term success depends on satisfying customers so they continue to buy
Learning Targets• Describe the role of market determination• Define the basic marketing concepts and the four elements of the marketing mix: product, price, place, and promotion
Market Determination• Type of buyers a business wishes to attract – Gender – Age – Ethnic background – Education – Income – Occupation – Family status – Location• Market research : study of a company’s current and prospective customers
Market Determination• Where to serve? – Local, state, national, international?• TARGET MARKET – Groups of customers with very similar needs – Easier for firms to produce a product that satisfies everyone in the group – Ex. Imagine developing a bicycle to satisfy everyone’s needs – What might be Target Markets? • Road, mountain, BMX, commuter, 3 vs. 20 speed, cruiser, recumbent, etc
The Marketing Mix• Marketing managers must focus decisions around 4 Elements of Marketing 1. Product 2. Price 3. Place 4. Promotion
Possible Decisions1. Will you make the product in one size and color or in several?2. Will you price the product high, medium, low?3. Will you sell in stores or online?4. Will you use newspapers, radio, television, or internet advertising?
PRODUCT• All attributes (tangible and intangible) customers receive in exchange for purchase price• Strategy includes: – Number of items to produce – Physical features – Quality – Number of models and features – Packaging features – Brand name – Guarantees and services – Image to be communicated to customers about the above
• Must be high enough to coverPRICE production and marketing costs • Higher quality can charge higher price • Sold for cash or credit? • Consider competitor pricing • Will you offer coupons, discounts, promotional bonuses to attract customers? • What price to charge companies that buy and resell product?
• Providing information to consumers that will assistPROMOTION them in making a decision to purchaseMajor Methods:Advertising & Personal Selling•How and When? -Magazines? Direct Mail? Product Demos? Trade Shows?•What type of Info?•How much to spend on ads, displays, and otherpromotions?•What promotions are competitors using?
Online Net Bookmark• http://www.amazon.com• Amazon.com pioneered a new form of marketing by developing an online store that goes beyond selling to a whole marketing system. Evaluate the Amazon.com site. Determine how Amazon.com develops relationships with its customers. Compare and contrast how Amazon.com performs the eight marketing activities discussed versus traditional stores. How likely are you to use an online store such as Amazon.com?