Chapter 5: Understanding Marketing Processes and Consumer Behaviour
WHAT IS MARKETING?
Marketing is the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational goals. Consumers are the essential ingredient in
the marketing process. The marketing concept the idea that the whole firm is
directed towards serving present and potential customers at a profit a firm must get
to know what customers really want and follow closely the changes in tastes that
occur. The various departments of the firm must operate as a system, well
coordinated and unified in the pursuit of a common goal customer satisfaction.
Providing Value and Satisfaction
o Value and Benefit: Valuerelative comparison of a products benefits
versus its costs. The benefits of a high-value product are much greater
than its costs. Benefits include not only the functions of the product, but
also the emotional satisfaction associated with owning, experiencing, or
possessing it. The satisfied buyer perceives the benefits derived from
the purchase to be greater than its costs. Thus, the simple but important
ratio for value: value = benefits/ costs
Marketing strategies focus on increasing value for customers by
creating entirely new products that perform better than existing
products. It can also mean keeping a store open for extra hours
during a busy season.
o Value and Utility
Utility ability of a product to satisfy a human want or need.
Marketing strives to provide four kinds of utility.
Time utility: it makes products available when consumers
Place utility: it makes products available where customers
can conveniently purchase them.
Ownership utility: conveniently transferring ownership from
store to customer.
Form utility: turning raw material into finished products.
Goods, Services, and Ideas
o Read the pharmaceutical example
o All consumer goodsproducts that you, the consumer, buy for
personal use. Firms that sell products to consumers for personal
consumption are engaged in consumer marketing.
o Marketing is also important for 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
o Marketing is also relevant for servicesintangible products such as
time, expertise, or some activity that you can purchase. Service
marketing has become a major growth area in Canada (e.g. insurance
companies, airlines, investing counsellors).
o Marketers also promote ideas (e.g. ads). Relationship Marketing a type of marketing that emphasizes
lasting relationships with customers and suppliers.
Stronger relationship ---incl. stronger economic and social
ties can result in greater long-term satisfaction and
Read example on banks and H.O.G.
Marketing Environment: any marketing program must recognize the outside
factors that comprise a companys external environment.
o Political and Legal Environment: political activities have profound effects
on business (e.g. Legislation on the use of cellphones in cars and
pollution). Marketing managers therefore try to maintain favourable
political/legal environments in several ways (e.g. advertising). Such
activities sometimes result in favourable laws and regulations and may
even open new international business opportunities.
o Social and Cultural Environment: Read first paragraph. Changing social
values force companies to develop and promote new products for both
individual consumers and industrial customer (e.g. loss of privacy is
often a price for the convenience of intranet shopping.
o Technological Environment: They create new goods and services. They
also make some existing products obsolete and many of them change
our values and lifestyles. In turn, they stimulate new goods and services
not directly related to the new technology itself. Along with technical
developments, marketing decisions are made (e.g. promotion and