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Chapter 5

Management II Chapter 5

7 Pages

Management (MGT)
Course Code
Chris Bovaird

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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 want them. 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 industrial marketing. 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 customer loyally. 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 pricing).
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