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MGTA01H3 (583)
Chapter 5

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
CHAPTER 5 UNDERSTANDING MARKETING PROCESSES AND CONSUMER BEHAVIORWhat is MarketingMarketing planning and executing the development pricing promotion and distribution of ideas goods and services to create exchanges that satisfy both buyers and seller objectivesConsumers are the essential ingredients in the marketing processOur needs and wants are the forces that drive marketingMarketing Concept The idea that the whole firm is directed toward serving present and potential customers at a profitThis concept means that a firm must get to know what customers really want and follow closely the changes in tastes that occurProviding Value and SatisfactionValue and BenefitsValue relative comparison of a products benefit versus its costs benefit of high value products is greater than costBenefits include functions of the products and the emotional satisfactionsEvery product has costs including sales price the expenditure of the buyers time and the emotional costs of making a purchase decisionSatisfied buyer perceives the benefits to be greater than its costsMarketing resources are deployed to add value to products BenefitsValueCostsValue and UtilityProducts provide consumers with Utility Ability of a product to satisfy a human want or needTime utility availability of products when customers want them ornaments in time for ChristmasPlace utilityavailability of products where customers can conveniently purchase them department stores have different sections for different types of productsOwnership utility convenient transfer of ownership from store to customerForm utility availability of products themselves raw materials into finished goodsGoods Services IdeasConsumer goods products purchased by individuals for their personal use perfumeFirms that sell products to consumers for personal consumption are involved in consumer marketingIndustrial goods products purchased by companies to use directly or indirectly to produce other products raw materials earth move etcFirms that sell products to other marketers are involved in industrial marketingServices intangible products such as time expertise or an activity that can be purchased insuranceFirms that provide services are involved in service marketingMarketers also promote ideas television ads dont drink and driveStrategy The Marketing MixMarketing managers managers responsible for planning and implementing all the marketingmix activities that result in the transfer of goods or services to customers marketing requires managementMarketing plan a detailed strategy for gearing the marketing mix to meet consumer needs and wants Marketing begins when a company identifies a consumer need and develops a product to meet itMarketing Mix the combination of product pricing promotion and distribution strategies used in marketing a product Four PsProductProduct a good service or idea that satisfies buyers needs and demands Conceiving and developing new products is a constant challenge marketers must also consider the factors of change change in technology consumer wants and needs and economic conditionsMasscustomization allows marketers to provide products that satisfy very specific needs of consumersthe creation of a product or product image that differs enough Product differentiation from existing products to attract consumers Volvo has newer better safety featuresPrice Pricethat part of the marketing mix concerned with choosing the appropriate price for a product to meet the firms objectives and buyers purchasing objectives Price not only refers to actual amount of money but also to the total value of things that consumers are willing to give up in return for being able to have the benefits of the product of serviceLow priceshigher salesHigh priceslimited market size but increase profit per sale and imply that the product is of high qualityPlace distributionDistribution that part of the marketing mix concerned with getting products from the producer to the buyer including the physical transportation and choice of sale outlets firms decide on outlets warehouses channels of distributionPromotionPromotion Techniques for communicating information about Promotional tools include advertising personal selling sales promotion and public relationsProduct price place and promotion 4 Ps are the sellers perspective they are a mirror image of the buyers 4 Cs customer solution product customer cost price customer convenience place and customer communications promotionTarget Marketing and Market SegmentationTarget marketing any group of people who have similar wants and needs and may be expected to show interest in the same productsTarget marketing clearly requires Market segmentation dividing a market unto categories according to traits customers have in common Big and Tall sells to people who are taller and heavier than averageSegmentation is a strategy for analyzing consumers not productsIn marketing the process of fixing adapting and communicating the nature of the product itself is called positioningIdentifying Market SegmentsGeographic Variables Geographic variables geographical units that may be considered in a segmentation strategy people buy more umbrellas in BC than in Arizona Some products have universal acceptance 70 of Cokes income is foreign 22 for PepsiDemographic VariablesDemographic variables characteristics of populations that may be considered in developing a segmentation of strategy ex Age distribution of a countrys populationAnother important demographic variable is ethic diversityPsychographic VariablesPsychographic variables psychological traits that a group has in common includingmotives attitudes activities interests and opinionsThey can be changed by marketing efforts unlike geographic and demographic variables ProductUse VariablesProductuse variables consumer characteristics based on the use of a product benefits expected from it reasons for purchasing it and loyalty to it A products position refers to the important attributes that consumers use to assess the productMarket Segmentation a cautionPeople may share one category age but be totally different in another tastes Market ResearchMarket research the systematic study of what buyers need and how best to meet those needs Improves accuracy and effectiveness of market segmentationIts role is to increase the firms competitiveness by understanding the relationship among the firms customers its marketing variables and its marketing decisionsThey determine the kinds of information that are needed for decisions on marketing strategy goal setting and targetmarket selectionThe Research ProcessMarket research is usually used when a new or altered product is being considered5 steps to market researchaStudy of the current situation what is need What is being donebSelect a research method must consider effectiveness and costs of various methodscCollect dataSecondary data information already available to market researchers as a result of previous research by the firm or other agencies
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