Marketing Concepts Chapter 1
What is marketing?
The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
What does marketing involve?
The process of planning, pricing, promoting, selling and distributing, good or services to create exchanges that satisfy customers.
What is a good?
Tangible items that have monetary value. (Cars, television, clothing)
What is a service?
Intangible items that have monetary value that satisfy wants and needs. (Cooking)
What is the marketplace?
The commercial environment where exchanges occur.
What are the seven core marketing functions?
Channel Management, Marketing Information Management, Market Planning, Pricing, Product/Service Management, Promotion, and Selling.
What is Channel Management?
The process of deciding how to get goods into the customer’s hands. (Transporting goods by truck, rail, ship. Storing products in a warehouse.)
What is Marketing Information Management?
Gathering, storing, and analyzing information about customers, trends, and competing products. (Conducting research for a new product. Customer surveys.)
What is Market Planning?
Understanding the concepts and strategies used to develop and target specific people/audiences. (Using data to create a market plan. Analyzing/Presenting Data.)
What is Pricing?
Decisions dictating how much to charge for goods/services in order to make a profit. (Looking at what competitors are charging. Determining how much a customer is willing to pay.)
What is Product/Service Management?
Obtaining, developing, maintaining, and improving a product or a product mix in response to market opportunities. (Market research. New technology and trends.)
What is Promotion? (Function)
Effort to inform, persuade, or remind current and potential customers about product/service. (Television/Radio commercials. Showing moral standing/practices.)
What is Selling?
Providing customers with goods and service they want. (Selling in the retail market. Identifying wants/needs of customers.)
What is the Marketing Concept and who does it focus on?
The idea that a business should strive to satisfy customers’ needs and wants while generating a profit. It focuses on the customer.
What is the best way to satisfy customers’ needs?
To stay in touch and monitor their purchasing behavior.
How might an organization be successful?
By having all seven marketing core functions support the marketing concept.
What does CRM stand for?
Customer Relationship Management.
What does CRM do?
Combines customer information with customer service + marketing communications. (This combination allows companies to service their customers as efficiently as possible.)
What are the benefits of marketing?
New + Improved products, lower prices, and economic utility (Form, Place, Time, Possession, and Information.)
What does the impact of marketing affect?
The economy and the standard of living in countries around the world.
What does marketing provide the means for?
What happens in a competitive marketplace?
Businesses try to create new or improved products at lower prices than their competitors.
What fosters new and improved products?
How do businesses keep customers interested?
By looking for ways to satisfy their wants and needs.
How does marketing lower prices?
It increases demand for a the product. When demand is high, products can be produced in larger quantities which reduces the UNIT COST of each product.
What is a fixed cost?
A cost a business has to pay regardless. (Electricity, gas, water, rent, NOT WAGES.)
What happens when a product becomes popular?
More competitors enter the marketplace and marketers must lower prices to remain competitive.
What are the 5 economic utilities?
Form, Place, Time, Possession, and Information.
What is utility?
Attributes of a product or service that make it capable of satisfying consumers’ wants and needs by adding value.
What is Form Utility?
Changing raw materials into usable goods or putting parts together to make them more useful. (What is used to make it?)
What is Place Utility?
Having a product where consumers can buy it. (Where would you place it?)
What is Time Utility?
Having a product or service available at a certain time of year or convenient time of day. (When should it be sold?)
What is Possession Utility?
The exchange of a product for money. (How much should you charge?)
What is Information Utility?
Communication with the consumer. (How would you get information to the customer?)
What is a Market?
All people who share similar wants and needs and who have the ability to purchase a given product.
What is the consumer market?
Consumers who purchase goods and services for personal use.
What is the organizational market?
All businesses that but products for use in their operations. (Business-to-Business B2B)
What are reasons why businesses are interested in products?
Increase productivity, sales, and efficiency and decrease expenses.
How is a market described?
By the total sales in a product category.
What is Market Share?
Percentage of the total sales volume generated by all companies that compete in a given market.
How does Market Share change?
New competitors enter the market, size or market changes.
What is market segmentation?
Process of classifying customers by specific characteristics.
What is the goal of market segmentation?
To fine tune their approach to selling in the market. (Identify group of people most likely to but their product.)
What is a Target Market?
The group that is identified for a specific marketing program. (If a business does not identify a target market the marketing plan has no focus.)
What is the difference between Customers and Consumers?
Customers BUY the product and consumers USE the product.
What is a Customer Profile?
Created to develop a clear picture of a target market. It includes information such as age, income level, ethnic background, education, attitudes, and lifestyle.
What are the four parts of the Marketing Mix?
Product, Price, Place, and Promotion.
What does Product entail? (Mix)
Begins with choosing what products to make + sell. What to do with products they currently sell. Features, brand name, packaging, service, warranty.
What does Price entail? (Mix)
What is exchanged for the product. Should reflect what customers are willing to pay. Also considers prices competitors charge. Strategies include arriving at list price, discounts, allowances, etc.
What does Place entail? (Mix)
The means of getting product into customers hands, knowing where customers shop. Place strategies determine how + where a product will be distributed. Need to determine whether it can be sold directly, over internet, or through re-seller.
What does Promotion entail? (Mix)
Refers to activities related to advertising, personal selling, sales promotion + publicity (includes Social Media today). Deal with how marketers tell potential customers about a company’s products. Strategies include the message, media selected, special offers, timing.