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MGTA01H3 (583)
Chapter 5

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Management (MGT)
Chris Bovaird

 Marketing: planning and executing the development, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy both buyers' and sellers' objectives o Our needs and wants are the forces that drive marketing  Marketing concept: the idea that the whole firm is directed toward servicing present and potential customers at a profit o 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 is costs -benefits include not only the functions of the product, but also the emotional satisfactions associated with owning, experiencing, or possessing it. Costs could include sales price, the expenditure of the buyer's time, and the emotional costs of making a purchase decision value=benefits/costs --satisfied buyer is when benefits>costs  Marketing strategies focus on increasing value for customers  Utility: ability of a product to satisfy a human want or need --marketing strives to provide four kinds of utility: time utility—availability, place utility— convenience, ownership utility—transferring ownership from store to customer, and form utility—turning raw materials into finished goods  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 --firms that sell products to other manufacturers are engaged in industrial marketing  Services: intangible products, such as time, expertise, or an activity that can be purchased --service marketing o Marketers also promote ideas (can be through the use of ads; ex. ads that stress the importance of driving only when sober)  Marketing managers: managers responsible for planning and implementing all the marketing- mix activities that result in the transfer of goods or services to customers  Marketing plan: a detailed strategy for gearing the marketing mix to meet consumer needs and wants o In planning and implementing strategies, marketing managers develop the four basic components (often called the "Four Ps") of the marketing mix— the combination of (the "Four Ps") product, price, place, and promotion strategies used in marketing a product  Product o Marketing begins with a product—a good, service, or idea that satisfies buyers' need or wants --conceiving and developing new products is a challenge for marketers, who must always consider the factor of change—changing technology, changing consumers wants and needs, and changing economic conditions o Mass-customization allows marketers to provide products that satisfy very specific needs of consumers o Product differentiation: the creation of a product or product image that differs enough from existing products to attract consumers  Price o Price refers not only to the actual amount of money that consumers must pay for a product or service, but also to the total value of things that consumers are willing to give up (opportunity cost shit)  Price: that part of the marketing mix concerned with choosing the appropriate price for a product to meet the firms profit objectives and buyers' purchasing objectives --from the seller's perspective, determining the best price is often a balancing act. On the one hand, prices must support a variety of costs. On the other hand, prices can't be so high that consumers turn to competitors product. Successful pricing means finding a profitable middle ground between these two, however both low and high-price strategies can be effective as well --low prices, for example, generally lead to larger sales volumes --high prices usually limit market size but increase profits per unit. High prices may also attract customers by implying that a product is of high quality  Place o In the marketing mix, place refers to distribution—that part of the marketing mix concerned with getting products from the producer to the buyer, including physical transportation and choice of sales outlets o Decisions about warehousing, inventory control, transportation options, and channels through which firms distribute products are all distribution decisions  Promotion o The most highly visible component of the marketing mix is promotion—techniques for communicating information about products --the most important promotional tools include advertising, personal selling, sales promotions, and public relations o The seller's 4 Ps are a mirror image of the buyer's 4 Cs: customer solution (product), customer cost (price), customer convenience (place), and customer communication (promotion) o Due to consumers' various needs and wants has led marketing managers to think in terms of target marketing  Target markets: any group of people who have similar wants and needs and may be expected to show interest in the same product(s) o Target marketing clearly requires market segmentation—dividing a market into categories according to traits customers have in common --note that segmentation is a strategy for analyzing consumers, not products o In marketing, the process of fixing, adapting, and communicating the nature of the product itself is called positioning o In identifying market segments, researchers look at geographic, demographic, psychographic, and product-use variables o 1. In some cases where people live affects their buying decisions (rainy area results in higher purchase of umbrellas than non-rainy areas)  Geographic variables: geographical units, from countries to neighborhoods, that may be considered in a segmentation strategy --these patterns affect marketing decisions about what products to offer, at what price to sell them, how to promote them, and how to distribute them  2. Demographic variables: characteristics of populations that may be considered in developing a segmentation strategy - describe populations by identifying characteristics such as age, income, gender, ethnic background, marital status, race, religion, and social class o Depending on the marketer's purpose, a segment can be a single classification (aged 20-34) or a combination of categories (aged 20-34, married with children, earning $25,000-$35,000)  3. Psychographic variables: psychological traits that a group has in common, including motives, lifestyle, attitudes, activities, interests, and opinions --psychographics are particularly important to marketers because, unlike demographics and geographics, they can sometimes be changed by marketing-efforts  4. Product-use variables: consumer characteristics based on the use of a product, benefits expected from it, reason for purchasing it, and loyalty to it --consumers who always buy one brand are classified as hard-core loyalists, whereas switchers buy various brands o Whatever basis is used for segmenting a market, care must be taken to position the product correctly. A product's position refers to the important attributes that consumers use to assess the product. For example, a low-priced car like a Ford Focus tends to be positioned on the basis of economy, while a Porsche is posit
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