Nature of Marketing

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 Business
RETAILERS WHOLESALERS
• Businesses that sell directly • Buy products from businesses
to final consumers and sell them to other
• Ex: Target, Walgreens businesses
• Ex: lumberyard
Businesses that support:
•Advertising Agencies – provide promotional services
•Finance Companies– offer loans and other financial services
•Transportation Companies– handle and move products
 Marketing Activities
• Buying
• Selling
• Transporting
• Storing
• Financing
• Researching
• Risk Taking
• Grading and Valuing
 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
CHAPTER 20.2

ELEMENTS OF MARKETING
 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 Decisions
1. 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 cover
PRICE 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 assist
PROMOTION them in making a decision to
purchase
Major 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 other
promotions?
•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?