Lecture 22

The American Marketing Association defines marketing 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.

Marketing plays an important role in society by helping people satisfy their needs and
wants and by helping organizations decide what to produce. Value compares a product’s
benefits with its costs. Consumers seek products that offer value. Utility is the value to
the customer that is added by the marketer. There are four types of utility: time, place,
ownership, and form utility.

The external environment consists of the outsides forces that influence marketing strategy
and decision making. The political/legal environment includes laws and regulations, both
domestic and foreign, that may define or constrain business activities. The social/cultural
environment is the context within which people’s values, beliefs, and ideas affect
marketing decisions. The technological environment includes the technological
developments that affect existing and new products. The economic environment consists
of the conditions, such as inflation, recession, and interest rates, that influence both
consumer and organizational spending patterns.

Market segmentation is the process of dividing markets into categories of customers.

Businesses have learned that marketing is more successful when it is aimed toward
specific target markets groups of consumers with similar wants and needs. Markets may
be segmented by geographic, demographic, psychographic, or product use variables.

Market research is the study of what buyers need and of the best ways to meet those
needs. This process entails studying the firm’s customers, evaluating possible changes in
the marketing mix, and helping marketing managers make better decisions about
marketing programs. The marketing research process involves the selection of a research
method, the collection of data, the analysis of data, and the preparation of a report that
may include recommendations for action. The four most common research methods are
observation, surveys, focus groups, and experimentation.

A number of personal and psychological considerations, along with various social and
cultural influences, affect consumer behavior. When making buying decisions, consumers
first determine or respond to a problem or need and then collect as much information as
they think necessary before making a purchase. Post-purchase evaluations are also
important to marketers because they influence future buying patterns.

The industrial market includes firms that buy goods falling into one of two categories:
Goods to be converted into other products and goods that are used up during production.
Farmers and manufacturers are members of the industrial market, Members of the reseller
market (mostly wholesalers) are intermediaries who buy and resell finished goods.
Besides governments and agencies at all levels, the government and institutional market
includes such non-government organizations as hospitals, museums, and charities.
There are four main differences between consumer and organizational buying behavior.
First, the nature of demand is different; in organizational markets it is often derived
(resulting from related consumer demand) or inelastic (largely unaffected by price
changes). Second, organizational buyers are typically professionals, specialists, or
experts. Third, organizational buyers develop product specifications, evaluate alternatives
more thoroughly, and make more systematic post-purchase evaluations. Finally, they
often develop enduring buyer-seller relationships.

1. What Is Marketing?

Although you may be just beginning your classroom study of marketing, organizations
like Microsoft and Coca-Cola have been trying to sell you things for many years. You
have probably become accustomed to many marketing techniques—contests,
advertisements, fascinating displays placed in strategic locations, price markdowns and
giveaways. What you are about to learn is that marketing requires a lot of planning and
implementation to develop a new product, set its price, get it to consumers, and convince
them to buy it.

Marketing

As defined by the American Marketing Association:

“It is planning and executing the conception, pricing, promotion, and distribution
of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives.”

However, in laymen’s terms:

“Marketing is quite simply finding a need and filling it.”

a. Marketing: Providing Value and Satisfaction:

Marketing plays an important role in society by helping people satisfy
their needs and wants and by helping organizations decide what to
produce.
i. Value compares a product’s benefits with its costs.
ii. Utility is the value to the customer that is added by the marketer.
In other words, utility is the ability of a product to satisfy a human
want or need. There are four types of utility:

1) Time utility is making the product available when

the customer wants it.
2) Place utility is making the product available where
consumers want it.
3) Ownership utility is the customer value created
when someone takes ownership of a product.
 Marketers create possession utility by facilitating
the transaction.
4) Form utility refers to the characteristics of the
product such as its shape, size, color, function, and
style.

b. Marketing of Goods, Services, and Ideas:

The influence of marketing permeates everyday life, applying to goods,
services, and ideas. Marketing applies to tangible and intangible goods
and include:
1) Consumer Goods—products purchased by
consumers for personal use.
2) Industrial Goods—products purchased by
companies to produce other products.
3) Services—intangible products, such as time,
expertise, or an activity, that can be purchased.
4) Ideas—intangibles such as, MADD, Mothers
against Drunk Driving.

i. Relationship Marketing emphasizes lasting relationships with

customers and suppliers. Purchase incentives and customer loyalty
programs are just some of the ways in which firms try to promote
these relationships.