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4 Apr 2011
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Chapter 5: Understanding Marketing Processes & Consumer Behaviour
WHAT IS MARKETING
-marketing: planning and executing the development, prices, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy both buyers’ and sellers’ objectives
-our needs and wants are the forces that drive marketing
-marketing concept: the idea that the whole firm is directed toward serving present and
potential customers at profit
-this concept means that a firm must get to know what customers really want
-various departments of the firm (marketing, production, finance, and human resources) must
operate as a system
-the system should be well coordinated and unified in reaching its common goalcustomer
satisfaction
Providing Value and Satisfaction
-consumers buy products that offer the best value when it comes to meeting their needs and
wants
Value and Benefits
-value: relative comparison of a products benefits versus its costs
-benefits of a higher value product are much greater than its cost
-benefits include the function of the product, emotional satisfactions, experiencing, and
possessing it
-cost includes sales price, expenditure of the buyers time, and emotional cost of making a
purchase decision
Value= Benefits / Cost
-marketing strategies focus on interesting value for customers
-adding value to products to satisfy customers needs and wants may mean:
1) developing an entirely new product that performs better (provides greater benefits)
2) having a store open extra hours during a busy season (provides benefits of shopping
convenience
3) price reductions (benefits of a lower cost)
4) informational promotion explaining how a product can be used in new ways
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Value and Utility
-utility: the ability of a product to satisfy a human or need
-marketing strives to provide four kinds of utility:
1) time utility: it makes products available when consumers want them (season wise)
2) place utility: it makes products available where customers can conveniently purchase them
(seasonal departments, example: Christmas department)
3) ownership utility: by conveniently transferring ownership from store to customer
4) form utility: by turning raw materials into finished goods; by making products available in the
first place
Goods, Services, and Ideas
-consumer goods: products purchased by individuals for their personal use
-firms that sell products to consumers for personal consumption are engaged in consumer
marketing
-industrial goods: products purchased by companies to use directly or indirectly to produce
other products
-examples: surgical instruments, earthmovers, unformed plastic
-firms that sell products to other manufactures are engaged in industrial marketing
-services: intangible products, such as time, expertise, or an activity that can be purchased
-marketers also promote ideas
-television ads and other ads remind us and stress the importance of things, such as the
importance of drinking sober
Relationship Marketing
-relationship marketing: a type of marketing that emphasizes lasting relationships with
customers and suppliers
-stronger relationships—including economic and social ties—can result in greater long term
satisfaction and customer loyalty
-banks offer economic incentives to encourage longer lasting relationships with customers
-customers who purchase more of a banks products are offered reduced-price services, and
discounts
The Marketing Environment
-marketing plans, decisions, and strategies are not determined by any business nor experienced
marketers
-they are strongly influenced by powerful outside forces
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-external environment: outside factors that influence marketing programs by posing
opportunities or threats
-five of these environmental factors are: political/legal, social/cultural, technological, economic,
and competitive environments
Political and Legal Environment
-political activities (foreign and domestic) have intense effects on business
-legislation on the use of cellphones in cars can determine the destinies of entire industries
-marketing managers try to maintain favourable political/legal environments in several ways
-in gaining public support, marketing uses advertising campaigns for public awareness on
important issues
-lobby and contribute to political candidates for support
-such activities result in favourable laws and regulations, causing the opening of new internal
business opportunities
Social and Cultural Environment
-issues reflect the values, beliefs, and ideas that form the fabric of Canadian society today
-we continue to insist on agreener” Canada, we have seen the fall of Freon in air conditioners
and increased reliance on recycling materials in the goods we consume
-changing social values force companies to develop and promote new products for both
individual consumers and industrial consumers
-example, Dot-com sites collect personal information but consumers want privacy
-therefore there has been a growing demand for better privacy protection
Technological Environment
-they create new goods and services such as satellite dishes
-new products make some existing products obsolete (example, compact discs are replacing
audiotapes
-they often stimulate new goods and services not directly related to the new technology itself
-cell phones are not only used for business communication, for also for recreation and leisure
-DNA fingerprinting is a product
-it involves marketing decisionssuch as pricing and promotion
Economic Environment
-determine spending patterns by consumers, businesses, and governments
-markets are mostly concerned with inflation, interest rates, recession, and recovery
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Document Summary

Chapter 5: understanding marketing processes & consumer behaviour. Marketing: planning and executing the development, prices, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy both buyers" and sellers" objectives. Our needs and wants are the forces that drive marketing. Marketing concept: the idea that the whole firm is directed toward serving present and potential customers at profit. This concept means that a firm must get to know what customers really want. Various departments of the firm (marketing, production, finance, and human resources) must operate as a system. The system should be well coordinated and unified in reaching its common goal customer satisfaction. Consumers buy products that offer the best value when it comes to meeting their needs and wants. Value: relative comparison of a product"s benefits versus its costs. Benefits of a higher value product are much greater than its cost. Benefits include the function of the product, emotional satisfactions, experiencing, and possessing it.

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