What is Marketing?

Chapter 1

Definition of Marketing

Sum of all activities involved in the planning, pricing, promoting, distributing, and selling of goods and services to satisfy consumers’ needs and wants

Marketing Goods and Services

GOODS

(1) Industrial Goods:-Raw materials-Processed goods-Finished goods

(2) Consumer Goods:-intended for personal use by general public

SERVICES

•Services can be marketed to both industrial and consumers markets

What is the Marketing Concept?

The marketing concept is the idea that a business or organization must consider both its potential customers and its competitors in every important business decision.

Three Steps of the Marketing Concept

The marketing concept requires a business to take three major steps:

1. Identify an opportunity in a specific consumer or industrial market.

2. Ensure that the opportunity has not already been met in the competitive market.

3. Use appropriate marketing strategies to organize marketing plans and to sell its products or service successfully.

Supply and Demand

Marketing is not as important when the supply of a product is low because…

Low supply means higher demand, therefore the product sells itself and marketing is not necessary.

Supply and Demand (caveat emptor =

“let the buyer beware”)

The Industrial Revolution

Before After

Concentrated on distribution and sales, rather than advertising, packaging etc.

Steam, electricity, gas and oil provided power to factories, railroads and homes

Demand for products was greater than supply

Factories produced huge quantities of inexpensive goods

Farmers and craftspeople worked with their hands and produced limited output

Railroads moved the goods across the country

The Industrial Revolution After the two World Wars

(1945), most businesses marketing philosophy was “whatever we make, you’ll buy”

Growth from department stores (Simpson’s, Eaton’s, Hudson Bay company)

Supermarket (Loblaws, Dominion, Sobeys)

Mass Media (magazines, radio, billboards, television)

The Marketing Concept Today In the late 1900’s, production in North

America exceeded demand and customers stopped buying whatever the manufacturer made and became more selective.

Marketers alter their products, their distribution, their production facilities and marketing mix to meet the needs of the customer.

Domestic & Global Marketing Free trade and the World

Trade Organization have helped to reduce import taxes (called tariffs);

Most marketing can no longer be domestic;

Canadian companies sell aboard or buy from other nations.

Marketing and the Organization

Companies organize their marketing divisions by:– Region– Country– Brand– Method of Distribution– Combination

Regional Organizations

Can be within a city, a region, or a group of provinces (Atlantic, Western).

Strength is that it allows a company to respond quickly to regional differences;

International Organizations Sets up marketing and

distribution centers in foreign markets;

Foreign office analyzes buying habits and customs of local consumers and designs marketing campaigns that respond to those variables.

Brand Management This organizational structure

assigns one or more of the company’s major brands to a marketing manager who then develops a marketing plan specifically for that brand.– Kellogg’s (Corn Flakes,Rice

Krispies)– Procter and Gamble (Cheer,Crest,

Pringles)

Distribution Management Organizes marketing activities

around the way that the product or service will be delivered to the customer.– E.g. soft-drink companies divide

marketing into supermarket, vending machines, and hotels, with each creating separate marketing plans.

Non-Profit Organizations

A nonprofit organization is one that does not seek profit as its primary motive, but instead raises funds for a specific goal.

E.g. Canadian Breast Cancer Foundation

The Goal of a Not-for-Profit Organization

Not-for-profit organizations do not seek profit. They operate for the good of the community.

The funds are used to improve the services offered to its members.– Canadian Breast Cancer

Foundation exists to advance cancer research, education diagnosis and treatment.

Marketing Concept for Nonprofit Organizations Marketing is important for the

existence of nonprofit organizations.

When economic times are tough, the public is less likely to donate funds to nonprofit organizations, therefore they need effective marketing to increase awareness and support.

Consumer and Competitive Markets

Markets are composed of two parts:1. Consumer market: refers to all

those consumers who are or may

become interested in a product or

service and have the means to purchase it.

2. Competitive market: all products or services that compete with one another for the consumers’ money within a specific category (Eg. Cd’s, athletic shoes, hair salons)

Target Market

A target market is the group of consumers that marketers want to attract.– Aggregate market: the target

market is everybody– Differentiated markets:

markets are categorized in a specific way, e.g. consumers’ income, geographical location, age or gender.

The Marketing Mix

The marketing mix is divided into four categories:

Marketing Strategies

A strategy is the method selected to carry out a carefully devised plan of action in order to achieve a specific goal

The strategies can be categorized as

1. Brand strategies

2. Distribution strategies

1.Brand Strategies

This goal is to communicate the value of a product or service to the consumer

Brand strategies develop and communicate the benefits of the brand, minimize costs, and encourage the consumer to set up a positive value equation

Value Equation

Value equation adds together all of the benefits of a product, both real and imagined, and subtracts the costs involved in obtaining the product.

Value Equation = Total Benefits-Total Costs

– See example on page 26 in textbook

2. Distribution Strategies Distribution Strategies focus

on best way to deliver the product or service to target market

The 3 types of distribution strategies are:

1. Push Strategy: sells product to retailers, importers, or wholesalers, and not to end-use consumers

2. Pull Strategy: attempts to communicate

to consumers directly rather than relying on retailers

3. Combination: a use of both push and pull strategies