Marketing

What is marketing?

It is the process of determining customer needs and wants and then developing goods and services that meet or exceed these expectations.

The Marketing Concept

There are three parts to the marketing concept:A customer orientationA service orientationA profit orientation

Customer Relationship Management (CRM) is the process of learning as much as possible about customers and doing everything you can to satisfy them- or even exceed their expectations- with goods and services over time.

The Marketing mix

The ingredients that go into a marketing program.

Product -designing a want satisfying product

Price -setting a price for the product Place -placing the product where

people will buy it Promotion -promoting of the product

Applying the Marketing ProcessApplying the marketing process is a more

complete version of the marketing mix. Find Conduct research Identify a target marketProduct Design a product to meet the need based on

research and then conduct product testing Determine a brand name and design a package

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Price Set a pricePlace Select a distribution systemPromotion Design a promotional program Build a relationship with customers

Designing your Product to Meet NeedsNo matter what the product is, you need to take

certain steps to make sure it meets your potential consumer’s needs.

Classify it on the service continuum -classes a good by its tangibility or intangibility.

Test marketing -test your product among potential users while extracting their feedback.

Brand name -combination of designs, shapes, sounds, or colors to distinguish your product from those of competitors.

Setting an Appopriate Price

Price -the money or other consideration exchanged for the ownership or use of a good or service.

Getting your product to the right place:

Method of distribution

Critical to market success

Developing an Effective Promotional StrategyPromotion -All of the techniques sellers use to

motivate customers to buy their products.

Promotional strategies may include: Building relationships with the customers. Allowing them to have their money

refunded if they were not satisfied. Using rating cards and systems to acquire

customer opinions. Constant adaptation to a changing market.

Providing Marketers with Information

Marketing Research is the analysis of markets to determine opportunities and challenges and to find the information to make good decisions.

Marketers also research global trends and ecological impacts to further their predictions.

The Marketing Process

Contains 4 steps Defining the question and

determining the present situation Collecting data Analyzing the research data Choosing the best solution and

implementing it

Secondary Data

Information that has already been compiled by others and published in journals and books or made available online.

Primary Data

Data that you gather yourself (not from secondary sources such as books and magazines).

Product Development and the Total Product Offer Value is the quality at a fair

price. Customers look at the

benefits and then subtract the cost, to see if the benefits exceed the cost.

Total Product Offer is what the consumer evaluates when deciding whether to buy something.

Potential Components of a Total Product Offer

Price Brand Name Convenience Package Store Surroundings Service Internet Access Buyer’s Past Experience Guarantee Speed of Delivery Image Created by

Advertising Reputation of Producer

Product Lines and the Product Mix Product line is when a company sells

products that are physically similar or of a similar market.

Product mix is the combination of different product lines by a manufacturer.

Ex: Procter & Gamble's product line include shampoos and toothpastes.

Their product mix would include Cheer, Tide, Gain, Solo, and Ivory Snow.

Product Differentiation The creation of real or percieved product

differences. Companies use a mix of pricing,

advertising, and packaging (value enhancers) to make their product more appealing.

Product differences are actually small or non-existent.

Ex: Aquafina bottled water VS. tap waterMr. Clean VS. Generic brand cleaner

Packaging Changes the Product Makes the product more attractive to retailers.

(ex. Universal Product Codes) Changes the product by changing it's visibilty, usefulness, or attractiveness.

It communicates information about the contents and benefits of the product.

Gives indication of price, value, and use. Services can be packaged. (ex. Virgin Airlines

includes door to door limousine services and inflight massages in its total package.)

Branding and Brand Equity For a buyer, a brand name assures quality,

reduces search time, and adds prestige to purchases.

For the seller, brand names facilitate new product introductions, help promotional efforts, add to repeat purchases, and differentiate products so that prices can be set higher.

A trademark is a brand that has been given exclusive legal protection for both the brand name and the pictorial design. (ex. The Nike swoosh is widely recognized.)

Generating Brand Equity and Loyalty A major goal in a company is to leverage their

brand equity. Brand equity is the combination of factors- such

as awareness, loyalty, percieved quality, images, and emotions- that people associate with a given brand name.

Brand loyalty is the degree to which customers are satisfied, enjoy the brand, and are commited to further purchase.

Adds value to the firm. Brand awareness refers to how quickly or easily

a brand comes to mind when a product category is mentioned.

Competitive Pricing

Competitive pricing is when a company will price their products at a certain price in order to compete with their competitors.

Pricing Objectives

There are several objectives involved in pricing an item.

Some examples are: to achieving a profit to entice customer to shop at your store to get a larger market share to create an image

Break-Even AnalysisThe break-even analysis is an important part of

competitive pricing. It will tell you what you profit will be based on what you sell.

Break-Even Analysis equation BEP=___________Total fixed costs__________

Price per 1 unit – variable costs of 1 unit

Total fixed costs- cost to a company that never changes—ex. Rent, power

Variable costs- costs that change based on how many units are sold—ex. Supplies

Non-Price CompetitionIn the market today it is hard to have an advantage

based on price alone. Many marketers today of promote the advantages of their product in order to sell it.

Some strategies of non-price competition include: Value added- Adding some extra benefit to the

product ex. Free home delivery Consumer education- Teaching the consumer how

to use a certain product. Consumer relationships- People will be more likely

to pay for better service.

Approaches to Pricing

Cost-Based Pricing Cost based pricing-choosing a price based on the fixed

and production costs allowing some room for profit

Demand-Based Pricing Demand based pricing-pricing determined by the

demand of the product

Competition-Based Pricing Price leadership- few dominant companies set the

standard for what other companies will price their products at. An example of this would be oil prices

The Importance of Channels of Distribution Channel of Distribution - A set of marketing

intermediaries, such as agents, brokers, wholesalers and retailers, that join together to transport and store goods in their path(or channel) from producers to consumers.

Agents/Brokers are marketing intermediaries that bring buyers and sellers together to work out a deal for the exchange of goods. They never take ownership to the goods they deal with.

A Wholesaler is a business intermediary that sells to other organizations, such as retailers, manufacturers, and institutions.

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A Retailer is an organization that sells to consumers, people like you and me, who buy for their own use.

Various organizations must work together to ensure the smooth flow of goods and services to the customer, and also that the consumer receives the maximum benefit from the intermediaries.

Why Marketing Needs Intermediaries: Creating Exchange Efficiency

They are needed to perform tasks such as transporting, storing, selling and advertising faster and cheaper than most manufacturers are capable.

Ex: You could deliver packages in person to people anywhere in the world, but usually you don’t. Because it’s usually cheaper and faster to have them delivered by Canada Post or a private firm such as Purolator.

Selling or buying a home, you wouldn’t usually sell your home by yourself but rather with the assistance of a real-estate agent.

Retailing

To us, the most important marketing intermediary is the retailer.

They deal directly with the consumer, they are the ones who make goods and services available in our cities and neighborhoods.

Retail organizations also employ 1.7 million Canadians.

Retail Distribution Strategy

Intensive Distribution - Puts products into as many outlets as possible (candy, popular magazine, cigarettes etc.)

Selective Distribution - sends products to only a preferred group of retailers in an area.

Exclusive Distribution - sends products to only one retail outlet in a given geographic area.

Non-Store Retailing Electronic Retailing is when a product is sold over the

internet. This can be a difficult way to sell goods, because you have to make sure that you have a sufficient inventory and deliver goods on time.

Telemarketing is the sale of products by telephone. Many telemarketer’s send a catalogue to customers and let them order by calling a toll-free number. But many people prefer to do the same thing but online.

Vending Machines have the benefit of location and can be placed pretty much anywhere, spreading the producers product everywhere.

Direct Selling involves selling in homes and in workplaces (Ex. Avon).

Choosing the Right Distribution Mode

The primary concern for supply-chain managers is to select the right transportation mode that will minimize costs and ensure a certain level of service.

Generally speaking the faster the mode of transportation the higher the cost.

Below is a table comparing transportation modes:

M o d e C o s t S p e e d O n- T im e D e p e n d a b il

it y

F le x ib ilit y H a n d lin g P ro d u c ts

F re q u e n c y o f

S h ip m e n ts

R e a c h

R a ilro a d M e d iu m S lo w M e d iu m H ig h L o w H ig h

T ru c k s H ig h F a s t H ig h M e d iu m H ig h M o s t

P ip e lin e L o w M e d iu m H ig h e s t L o w e s t H ig h e s t L o w e s t

S h ip s L o w e s t S lo w e s t L o w e s t H ig h e s t L o w e s t L o w

A irp la n e H ig h e s t F a s te s t L o w L o w M e d iu m M e d iu m

Promotion and the Promotion Mix Promotion mix is the combination of

promotional tools an organization uses.

Such tools include: Advertising Personal Selling Public Relations Sales Promotion

AdvertisingMedium Advantages D isadvantages

Newspapers Good coverage of local markets; ads can be placed quickly; high consumer acceptance; ads can be clipped and saved.

Ads compete with other features in paper; poor colour; ads get thrown away w ith paper (short lifespan).

Television Uses sight, sound, and motion; reaches all audiences; high attention with no competition from other material.

H igh cost; short exposure time; takes time to prepare ads; digital video recorders skip over ads.

Radio Low cost; can target specific audiences; very flexible; good for local marketing.

People may not listen to ad; depends on one sense (hearing); short exposure time; audience can’t keep ad;

Magazines Can target specific audiences; good use of colour; long life of ad; ads can be clipped and saved.

Inflexible; ads often must be placed weeks before publication; cost is relatively high.

Personal Selling: Providing Personal Attention

Personal Selling is the face-to-face presentation and promotion of goods and services.

It is costly to provide customers with personal attention.

Companies need to train salespeople to be especially effective, efficient, and helpful

The Business-to-Consumer (B2C) Sales Process

Approach Ask Questions Makes

Presentation Close Sale Follow Up

Public Relations: Building RelationshipsPublic Relations (PR) is the management function that evaluates public attitudes, changes policies and procedures in response to the public's requests, and executes a program of action and information to earn public understanding and acceptance.Publicity is any information about an idividual, product, or organization that's distributed to the public through the media and that's not paid for or controlled by the seller.

Sales Promotion: Getting a Good Deal Sales Promotion is the promotional

tool that stimulates consumer purchasing and dealer interest by means of short-term activities.

Sampling is a promotional tool in which a company lets consumers have a small sample of a product for no charge.