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Evolution of Marketing Production Era - Up to early 1900s
Selling Era - 1920s-1950s
Marketing Concept Era - 1950s -
1980s Customer
Service
Profit
Customer Relationship Era - 1990s+
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I. WHAT IS MARKETING?
Learning goal 1
Definemarket ing
and explain how the marketing
concept applies in both for-profit and nonprofit
organizations.
The Evolution of the Field of Marketing
The Production Era
The Selling Era
The Marketing Concept Era
The Customer Relationship Era
Nonprofit Organizations and Marketing
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Describe the marketing research process, and explain
how marketers use environmental scanning to learn
about the changing marketing environment.
The Marketing Research Process
The Marketing Environment
Global Factors
Technological Factors
Sociocultural Factors
Competitive FactorsEconomic Factors
Two Different Markets: Consumer and
Business-to-Business (B2B)
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Marketing Process1. Find Opportunity
2. Conduct Research
3. Identify Target
Market
4. Design Product
5. Product Testing
6. Brand Name, Design
& Price
7. Develop Distribution
System
8. Design Promotional
Program
9. Build RelationshipWith Customer
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III. THE CONSUMER MARKET
Learning goal 4
Explain how marketers meet the needs of the consumer
market through market segmentation, relationshipmarketing, and the study of consumer behavior.
Segmenting the Consumer Market
Reaching Smaller Market Segments
Moving toward Relationship MarketingForming Communities of Buyers
The Consumer Decision-Making Process
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IV. THE BUSINESS-TO-BUSINESS MARKET
Learning goal 5
List ways in which the business-to-business marketdiffers from the consumer market.
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WHAT IS MARKETING?
Learning goal 1
Define market ingand explain how the marketing
concept drives both for-profit and nonprofit
organizations.
MARKETING
is the process of planning and executing theconception, pricing, promotion, and distribution of
goods and services to facilitate exchanges that
satisfy individual and organizational objectives.
Selling and advertising are only part of marketing.Marketing activities depend on what needs to be done to
fill customers needs.
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THE EVOLUTION OF THE FIELD OF MARKETING
THE PRODUCTION ERA
Until the early 1900s, the general philosophy was toproduce as much as you can because there is a
limitless market.
The goals of business
CENTERED ON PRODUCTION.
The greatest marketing need was for distribution and
storage.
THE SELLING ERABy the 1920s, the business philosophy turned to an
EMPHASIS ON SELLING AND ADVERTISING to sell
existing products.
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THE MARKETING ERA
The BABY BOOM after WWII created a tremendous
demand for goods and services.
If they wanted to get their business, businesses had to
be
RESPONSIVE TO CONSUMERS.
The MARKETING CONCEPT emerged in the 1950s.
13-9
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The Marketing EnvironmentEconomic
Social
Technology
Global
CustomerCompetitive
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The MARKETING CONCEPT
is a three-part business philosophy:
A CUSTOMER ORIENTATION: Find out what consumers
want and provide it.
A SERVICE ORIENTATION: Make sure everyone in theorganization has the same objectiveCUSTOMER
SATISFACTION.
A PROFIT ORIENTATION: Focus on those goods and
services that will earn the most profit.
During the 1980s, business began to apply the marketing
concept more aggressively.
13-11
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THE CUSTOMER RELATIONSHIP ERA
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
is the process of learning as much as possible about
customers and doing everything you can to satisfythemor even exceed their expectationswith goods
and services over time.
The goal is to enhance customer satisfaction andstimulate long-term customer loyalty.
NONPROFIT ORGANIZATIONS AND MARKETING
Marketing is a crucial part of almost all organizations,profit and nonprofit.
Charities, churches, politicians, states, and many other
organizations all use marketing.
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THE MARKETING MIX
Learning goal 2
List and describe the four Ps of marketing.
Pleasing customers has become a priority.
The FOUR FACTORS OF MARKETING are:
Product
Price
Place
Promotion
CONTROLLABLE PARTS of the marketing process
involve:Designing a want-satisfying PRODUCT
Setting a PRICE for the product
Placing the product in a PLACE where people will buy it
PROMOTING the product 13-13
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Elements in the Marketing MixProduct
MarketingProgram
Place
Promotion
Buy at
Computers
R Us
Price
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These four factors have become known as the
MARKETING MIX
the ingredients that go into a marketing program:
product, price, place, and promotion.APPLYING THE MARKETING PROCESS
To present an overview of the marketing process, the text
takes a hypothetical vegetarian restaurant through
THE MARKETING PROCESS.
The process involves:
Recognizing a need
researching the marketIdentifying the TARGET MARKET
The text u ses the example of a start-up vegetar ian
restaurant, Very Vegetarian.
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DESIGNING A PRODUCT TO MEET NEEDS
First, develop a product to fill the identified need.
A PRODUCT
is any physical good, service, or idea that satisfies awant or need plus anything that would enhance the
product in the eye of consumers, such as the brand.
The next step is CONCEPT TESTING
developing an accurate description of your productand asking people whether or not the concept (the idea
of the cereal) appeals to them.
TEST MARKETING
is the process of testing products among potentialusers.
Next, decide which brand names should be offered to
attract customers.
13-16
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Product Design Concept Test
Test Market Package Design/Brand Name
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A BRAND NAME
is a word, letter, or group of words or letters that differentiates
one sellers goods and services from those of competitors.
These steps create
THE FIRST PPRODUCT.
SETTING AN APPROPRIATE PRICE(the second P)The price depends on a number of factors, such as the price of
competing restaurants.
You also have to consider the costs of producing, distributing,
and promoting the product.
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GETTING THE PRODUCT TO THE RIGHT PLACE
(the third P)
Once the product is manufactured, you have to decide how toget it to the consumer.
You may want to sell your product through
INTERMEDIARIES, (MARKETING MIDDLEMEN,)organizations that specialize in distributing goods from
producer to customer.
DEVELOPING AN EFFECTIVE
PROMOTIONAL STRATEGY (the fourth P)
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PROMOTION
consists of all the techniques sellers use to
motivate people to buy products or services.
RELATIONSHIP BUILDING
WITH CUSTOMERS
includes responding to any suggestions they
may make to improve the product or the
marketing of the product.
13-20
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Marketing is an ONGOING PROCESS; companies
must continually adapt to changes in the market.
Listening to customers is the key to marketing.
PROVIDING MARKETERS WITH INFORMATION
Learning goal 3
Describe the marketing research process, and
explain how marketers use environmental scanning
to learn about the changing marketing environment.
*
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MARKETING RESEARCH
is the analysis of markets to determine opportunities and
challenges, and to find the information needed to make good
decisions.
One goal is to determine exactly what consumers want and
need, now and in the future.
Businesses need information to compete effectively, and
MARKETING RESEARCH
is the activity that gathers that information.
In addition to customers, marketers should pay attention to the
views of employees, shareholders, consumer advocates, andother stakeholders.
*
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THE MARKETING RESEARCH PROCESS
STEP 1.
Defining the problem and determining the present situation
STEP 2.
Collecting dataResearch can be quite expensive, so SOME TRADE-OFF must
be made between information needed and the cost.
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Less expensive is SECONDARY DATA,
information that has already been published
previously by others and published in journals and
books or made available online.Often, secondary data dont provide all the
necessary information, so marketers must do their own
research.
The result of new studies is PRIMARY DATA , data that
you gather yourself (not from secondary sources such
as books and magazines.)
Despite its name, secondary data should be gathered first
as it is the least expensive.
Telephone surveys, online surveys, mail surveys, and
personal interviews are the most common methods of
gathering survey information.
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13-25
Sources for MarketingResearch InformationSecondary Data
GovernmentPublications
CommercialPublications
Magazines
Newspapers
Internal/GeneralSources
Primary Data
Surveys
Focus groups
Interviews Observation
Online surveys
Questionnaires Customer comments
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A FOCUS GROUP
is of a small group of people who meet under the
direction of a discussion leader to communicate their
opinions about an organization, its product, or othergiven issues.
Marketers can now gather both secondary and primary
data online.
STEP 3.
Analyzing the research data
The data collected must be turned into useful
information.
Careful, honest interpretation of the data can reveal
specific marketing challenges.
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STEP 4.
Choosing the best solution and implement it
Researchers determine ALTERNATIVE STRATEGIES
and make recommendations as to which strategy maybe best.
The actions taken should be FOLLOWED UP to see if
results were as expected.
Consumers are demanding more ethical behavior fromcompanies.
THE MARKETING ENVIRONMENT
ENVIRONMENTAL SCANNINGis the process ofidentifying the factors that can affect marketing
success
13-27
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Market Research Process Define the Question
Collect Data
Analyze the data
Choose the best solution and
implement
*
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GLOBAL FACTORS
The most important global change today is the growth of the Internet.
Globalization has also put pressure on companies that deliver
products.
TECHNOLOGICAL FACTORS
include the Internet, the growth of consumer databases, flexible
manufacturing, and mass customization.
SOCIOCULTURAL FACTORS
include population growth and changing demographics, such as
the aging population and the preferences of various ethnic
groups.
13-29
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COMPETITIVE FACTORS
Brick-and-mortar companies must adjust to new competition from
the Internet.
They have to adapt to competitors, who can deliver products quickly
or provide excellent service.
ECONOMIC FACTORS
Marketers must pay close attention to the economic environment
in the U.S. and globally.
13-30
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TWO DIFFERENT MARKETS: CONSUMER AND
BUSINESS-TO-BUSINESS (B2B)
THERE ARE TWO MAJOR MARKETS:
The CONSUMER MARKETconsists of all the individualsor households that want goods and services for
personal consumption or use.
The BUSINESS-TO-BUSINESS (B2B) MARKETconsistsof all the individuals and organizations that want goods
and services to use in producing other goods and
services or to sell, rent, or supply goods to others
(traditionally called INDUSTRIAL GOODS.)
The buyers REASON FOR BUYING and the END USE
of the product determine whether it is considered a
consumer product or a B2B product.
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Business-to-Business (B2B)1. Number
2. Size
3. GeographicConcentration
4. Rational
5. Direct Sales
6. Personal Selling
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THE CONSUMER MARKET
Consumer groups differ greatly in age, education level,
income, and taste.
Marketers must first decide which group to serve andthen develop products and services specially tailored
to their needs (as Campbel l Soup Company does.)
MARKET SEGMENTATIONis the process of dividing the total market into groups
whose members have similar characteristics.
TARGET MARKETINGis marketing directly toward those groups (market
segments) an organization decides it can serve profitably.
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SEGMENTING THE CONSUMER MARKET
Learning goal 4
Explain how marketers meet the needs of the consumer
market through market segmentation, relationshipmarketing, and the study of consumer behavior.
GEOGRAPHIC SEGMENTATION
is dividing the market by geographic area.
DEMOGRAPHIC SEGMENTATIONis dividing the market by age, income, and education
level.
PSYCHOGRAPHIC SEGMENTATION
is dividing the market using the groups values,attitudes, and interests.
BENEFIT SEGMENTATION
is dividing the market by determining which benefits of
the product to talk about.13-34
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Market Segmentation Target Marketing
Geographic
Demographic Psychographic
Benefit
Volume
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VOLUME, OR USAGE, SEGMENTATIONis
dividing the market by usage (volume of use.)
The best segmentation strategy is to USE ALL THE
VARIABLES to come up with a consumer profile thats
sizable, reachable, and profitable.
REACHING SMALLER MARKET SEGMENTS
NICHE MARKETING
is the process of finding small but profitable market
segments and designing custom-made products for
them.
ONE-TO-ONE MARKETING
means developing a unique mix of goods and servicesfor each individual customer.
This is easier to do one-to-one marketing in B2B markets,
but is becoming possible in consumer markets as well.
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Different Markets Consumer
Niche
One-to-One
Business-to-
Business (B2B)
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MOVING TOWARD RELATIONSHIP MARKETING
MASS MARKETINGmeans developing products and
promotions to please large groups of people.
The mass marketer tries to sell products to as many
people as possible.
That means using mass media, such as TV, radio, and
newspapers.
RELATIONSHIP MARKETINGis a marketing strategy with
the goal of keeping individual customers over time by
offering them products that exactly meet their
requirements.
RELATIONSHIP MARKETING moves away from massproduction toward CUSTOM-MADE GOODS.
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Pricing Strategies Cost-Plus
Value-Based
Competitive
Going-Rate
Skimming
Discount
Loss-Leader
Psychological
Source: Perdue University, May 2005
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Influences onConsumer BehaviorCulture
Subculture
ReferenceGroup
Cognitive
Dissonance
CustomerLearning
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SOCIOCULTURAL INFLUENCES
such as reference groups and culture
Consumer behavior is also influenced by other factors:
LEARNINGinvolves changes in an individuals behavior resulting from
previous experiences and information.
A REFERENCE GROUP
is the group that an individual uses as a reference point information of his or her beliefs, attitudes, values, or behavior.
CULTURE
is the set of values, attitudes, and ways of doing things that
are transmitted from one generation to another in a given
society.
.
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SUBCULTURE
is the set of values, attitudes, and ways of doing things that
results from belonging to a certain group with which one
closely identifies.COGNITIVE DISSONANCE
is the type of psychological conflict that can occur after a
purchasesuch as doubts about whether they got the best
product at the best price.
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The latest in TECHNOLOGY enables sellers to work with
buyers to determine their individual wants and needs
and to develop goods and services specifically
designed for those individuals.
One-way messages in mass media are replaced by a
personal dialogue among participants.
The text uses two examp les: serv ice f i rms such asair l ines, rental car com panies, and hotels; and the Hard
Rock Caf.
THE CONSUMER DECISION-MAKING PROCESSStudying consumer behavior centers on studying the
CONSUMER
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PURCHASE DECISION PROCESS:
Problem recognition
Information search
Evaluate alternatives
Make purchase decision
Postpurchase evaluation
Consumer behavior researchers also study the various
INFLUENCES THAT IMPACT CONSUMER BEHAVIOR.
MARKETING MIX VARIABLES (the four Ps)PSYCHOLOGICAL INFLUENCES such as perception and
attitudes
SITUATIONAL INFLUENCES such as the type of purchase
and physical surroundings 13-44
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Several factors make
BUSINESS-TO-BUSINESS MARKETING
DIFFERENT NUMBER:There are relatively FEW CUSTOMERS compared to the
consumer market.
SIZEThough few in number, industrial customers are relatively
VERY LARGE.
* GEOGRAPHICALLY CONCENTRATED
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GEOGRAPHICALLY CONCENTRATED:
B2B markets tend to be CONCENTRATED in certain areas of
the country.
RATIONAL
Business buyers are generally MORE RATIONAL in their
purchase decisions.
DIRECTB2B sales tend to be DIRECT.
PERSONAL SELLING
There is much more emphasis in personal selling than in theconsumer market.
YOUR PROSPECTS IN MARKETING
There is a wider variety of careers in marketing than in most
business areas.
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Marketing Strategies inNon-Profit Organizations Find a productive
board of trustees(Directors)
Make marketingthe focus; notshort-term sales
Know yourmission andreview missionstrategy regularly
Practice strategicplanning
Carefully segmenttarget market
Train & developvolunteers forlong-term
Be frugal- knowhow to managefinances
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Where They GotTheir Names Taco Bell Glen Bell
Days Inn Cecil Day Bose Corp Amar Bose
Ty Inc. Ty Warner
Bristol-Myers William Bristol& John Myers
Source: World Features Syndicate
Founder(s)
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13-49
Other Things To KeepIn Mind With Price Payment Period
Allowances
Regular
Seasonal
Bundling
Trade Discounts
Price Flexibility Credit Terms
Price Differences
Target Customers
Geographic Areas
Volume Discountsand Wholesale
Pricing
Cash and Early Pmt
Discount
Source: Perdue University, May 2005
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Place Decisions Direct Sales
Reseller Sales
Market Coverage
Intensive
Selective
Exclusive
Inventory Size
Logistics
Source: Perdue University, May 2005
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Advertising Mascots Meow Mix Cat 35 years
Tony the Tiger 54 years
Toucan Sam 45 years Geoffrey the Giraffe 35 years
Coca-Cola Polar Bears 13 years
MGM Lion 78 years
Source: World Feature Syndicate
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Marketing Data:Least Error Method1. Put someone in charge.
2. Give everyone a method of collecting
data.3. Identify the right data.
4. Centralize the data.
5. Use the Data.
Source: cmomagazine.com, September 2004
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13-53
Why Should YouMarket To Women? Women control 80% of all household
spending.
Women purchase 81% of all products and
services manufactured. 80% of all checks written are signed by
women.
85% of all automobile purchases areinfluenced by women.
In 2005, 4.7 Million women were self-employed.
Source: St. Louis Small Business Monthly, May 2004
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Consumer Decision MakingMarketing mix
Product
Price
Place
Promotion
Psychological
Perception
Attitudes
Learning
Motivation
Situational
Type of Purchase
Social surroundings
Physical surroundings
Previous experience
SocioculturalReference groups
Family
Social class
CultureSubculture
Decision-Making Process
Problem Recognition
Information SearchAlternative evaluation
Purchase decision
Postpurchase evaluation
(cognitive dissonance)
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Planning ForMore Business What do we do well-and not do well?
What are we really selling?
To whom do we sell?
How do we reach our target group?
How can we break through the clutter?
Source: Investors Business Daily, February 9, 2004
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Business-to-ConsumerE-Commerce as % of Sales
0.00% 0.50% 1.00% 1.50% 2.00% 2.50%
2005
2004
2003
2002
2001
2000
Source: U.S. Census, May 18, 2006; http://home.earthlink.net/~lindberg_b/GECGrwth.htm, accessed August 5, 2006
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Top Marketing Tactics ofSmall Businesses
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Web Sites Search Engine
Keywords
Community
Relations
Public
Relations/Media
Coverage
E-mail Marketing Direct Marketing