The Importance of Marketing

1. The Importance of Marketing Chapter 9 Market and Market Identification

2. Market and Market Identification • Products and services cannot appeal to everyone • Businesses look for people who might have an interest or a need for their product • Businesses look for people who can pay for their product • People who share similar needs and wants and who have the ability to pay for certain items are called a MARKET

3. Consumer vs Industrial Markets • Consumer Market • Consumers who purchase goods and services for personal use • Consumers are generally interested in products that will: • Save money • Make life easier • Improve appearance • Create status in the community • Provide satisfaction related to some other personal motivation

4. Consumer vs Industrial Market • Industrial Market (Business to business market) • Includes all businesses that buy products for use in their operations • Goals and objectives of business relate to improving profits • Companies want to: • Improve productivity • Increase sales • Decrease expenses • In some other way make work more efficient

5. Market Planning • Marketing Objectives • Relate to sales, market share, growth, and profit • Short term = 1 year • Long range = 3 to 5 years • Provide a blueprint for developing your individual marketing strategies and your overall marketing plan • Help measure success

6. Target Market and Market Segmentation • Market Segmentation • Segmenting, or breaking down markets into smaller groups that have similar needs • Classifying customers by needs and wants • Target Market • Group identified for a specific marketing program • Focuses marketing plan • Identifying this group correctly is the key to success • There may be more than one target market for a product

7. Target Market • Customer Profile • Lists information about the target market such as: • Age • Income level • Ethnic background • Occupation • Lifestyle • Attitudes • Geographic residence • Helps companies make intelligent marketing decisions

8. Market Share • Percentage of the total sales volume generated by all companies that compete in a given market • Knowing one’s market share helps marketers analyze competition and status in a given market • Market shares change all the time as new competitors enter the market and as the size increases or decreases in volume

9. Marketing Mix • The tools available to a business to gain the reaction it is seeking from its target market(s) in relation to its marketing objectives • 7 P’s: • Price --People • Product --Process • Promotion --Physical Environment • Place

10. Price • Pricing Strategies • Cost-based • Consider business costs and profit objectives • Demand-based • Find out what customers are willing to pay for your product and price accordingly • Only works if demand is inelastic • Customers have to believe your product is better or different than the competitors • Competition-based • What do your competitors charge • Is it advantageous to price above, below, or inline with your competition

11. Price • Pricing Policies • Flexible-price policy • Allows for haggling or bargaining • One-price policy • All customers treated equally

12. Price • Pricing Techniques • Psychological pricing • Perception of a product is based on price • Prestige pricing—higher than average pricing—suggests exclusiveness • Odd/even pricing—odd prices suggest bargain, even prices suggest higher quality • Price lining—price items according to category—basic, mid-range, top-of-the-line • Promotional pricing—offers lower prices for a limited period to generate sales “for a limited time only”

13. Price • Pricing Techniques • Discount Pricing • Offers reductions from the regular price to customers • Cash discounts—receive a discount if paid in cash or within a certain time period • Quantity discounts—cheaper if more are ordered • Trade discounts—given to distribution-channel members who provide marketing services to the manufacturer • Promotional discounts—used when manufacturers want to pay wholesalers or retailers for carrying out promotional activities for the manufacturer • Cash, price discount, promotional materials • Seasonal discounts—used for products that have a high seasonal demand

14. Product • Methods used to improve/differential the product and increase sales or target sales more effectively to gain a competitive advantage • Features/Benefits • style, color, quality, options • Warranties, service contracts, delivery, installation, instructions • Convenience, wellbeing, entertainment • Branding/Packaging/Labeling • Identifying your product • Standing out from competitors

15. Product • Product Selection • What will you sell? • Are you manufacturing or reselling? • Product Positioning • How do consumers see your product? • Quality • Availability • Pricing • Uses • Product Mix • All the products a company makes or sells • What image do you want to project • Do you want to sell one type of product or multiple types of products

16. Promotion • Strategies to make the consumer aware of the existence of a product or service • Not just advertising! • Includes: • A positive image, beliefs, ideas, and impressions that people have about your business • Letting customers know you are open for business • Bringing in customers or having them contact your business • Interest customers in your product rather than competing products

17. Promotion • Activities • Advertising • Newspapers • Magazines • Direct mail • Outdoor displays • Directories • Public transportation • Print media • Television • Radio • internet

18. Promotion • Publicity • Placement of newsworthy items about your company or product • News releases • Feature articles • Captioned photos • Press conferences • Interviews • Public relations • Activities designed to create goodwill toward a business • Donations • Environmental cleanups

19. Promotion • Sales Promotion • Displays • Premiums • Rebates • Sweepstakes and contests • Samples

20. Place • The means by which products and services get from producer to consumer and where they can be accessed by the consumer • The more places to buy the product and the easier it is made to buy it, the better for the business

21. Place • Channels of Distribution • The path a product takes from producer (or manufacturer) to final user (consumer) • Direct Channel • Moves a product from producer to consumer with no one in between • Indirect Channel • Employs intermediaries (wholesalers and retailers, distributors and agents)

22. Place • Intensity of Distribution • How broadly will you distribute your product? • Intensive Distribution • Involves placement of a product in all suitable sales outlets • Selective Distribution • Limits the number of sales outlets in an area • Exclusive Distribution • Limits the number of outlets to one per area

23. Place • Transportation • The physical movement of goods • Truck • Train • Airplane • Ship • Pipeline • Internet • How fast will goods reach the customer? • Shipping costs • Packaging

24. Place • Location, Layout, and Availability • Increase customer access • Encourage sales • Entrances • Hours of operation • Make it easy for people to do business with you!!!

25. People • People represent the business • The image they present is important • First contact is usually human—what is the lasting image they provide to the customer? • Extent of training and knowledge of the product/service concerned • How relevant is the mission statement • Do staff represent the desired culture of the business?

26. Process • How do people consume services? • What processes do they have to go through to acquire services? • Where do they find the availability of the service?

27. Physical Environment • The ambience, mood, or physical presentation of the environment • Smart/shabby? • Trendy/retro/modern/old fashioned? • Light/dark/bright/subdued? • Romantic/chic/loud? • Clean/dirty/unkempt/neat? • Music? • Smell?

28. The Marketing Mix • Blend of the mix depends on: • Marketing objectives • Type of product • Target market • Market structure • Rival’s behavior • Global issues—culture/religion • Marketing position • Product portfolio • Product lifecycle