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Chapter 5

chapter 5 note


Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird
Chapter
5

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Chapter 5 Understanding Marketing Processes and Consumer
Behaviour Notes
What is Marketing?
x 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
x marketing conceptthe idea that the whole firm is directed toward serving present and potential customers at a profit
x various departments of firm—marketing, production, finance, and human resources—must operate as a system, well coordinated
and unified in the pursuit of a common goal—customer satisfaction
Providing Value and Satisfaction
Value and Benefits
x value—relative comparison of a product’s benefits versus its costs
x benefits include not only functions of product, but emotional satisfactions associated with owning, experiencing, or possessing it
x satisfied buyer perceives benefits derived from the purchase to be greater than its costs
x thus the simple but important ratio for value: value = benefits / costs
Value and Utility
x utility—ability of a product to satisfy a human want or need
x marketing strives to provide four kinds of utility: time utility (make products available when consumers want them), place utility
(make products available were customers can conveniently purchase them), ownership utility (conveniently transferring
ownership from store to customer), form utility
Goods, Services, and Ideas
x consumer goods—products purchased by individuals for their personal use
x firms that sell products to consumers for personal consumption are engaged in consumer marketing
x industrial goods—products purchased by companies to use directly or indirectly to produce other goods
x firms that sell products to other manufacturers are engaged in industrial marketing
x services—intangible products, such as time, expertise, or an activity that can be purchased
x firms that sell services to other consumers are engaged in service marketing
Relationship Marketing
x relationship marketing—a type of marketing that emphasizes lasting relationships with customers and suppliers
x stronger relationships—stronger economic and social ties—can result in greater long-term satisfaction and customer loyalty
The Marketing Environment
x external environment—outside factors that influence marketing programs by posing opportunities or threats
Political and Legal Environment
x political activities, both foreign and domestic, have profound effects on business
x marketing managers try to maintain favourable political/legal environments in several ways
x such activities sometimes result in favourable laws and regulations and may even open new international business opportunities
Social and Cultural Environment
x people are working at home, women are entering workforce, number of single-parent families is increasing, food preferences and
physical activities reflect growing concern for healthful lifestyles, growing recognition of cultural diversity continues
x these and other issues reflect values, beliefs, and ideas that form Canadian society today, which have direct effects on businesses
x changing social values force companies to develop and promote new products for individual consumers and industrial consumers
Technological Environment
x new technologies affect marketing in several ways—obviously, they create new goods and services
x new products make some existing products obsolete, and many of them change our values and lifestyles
x in turn, they often stimulate new goods and services not directly related to the new technology itself
Economic Environment
x economic conditions determine spending patterns by consumers, businesses, and governments
x thus they influence every marketer’s plans for product offerings, pricing, and promotional strategies
x among the more significant economic variables, marketers are concerned with inflation, interest rates, recession, recovery
x traditionally, analysis of economic conditions focussed on national economy and government’s policies for controlling or
moderating it; however, increasingly as nations form more and more economic connections, “global economy is becoming more
prominent in the thinking of marketers everywhere
Competitive Environment
x marketers must convince buyers that they should purchase their products rather than those of some other seller
x by studying the competition, marketers determine how best to position their own products for 3 specific types of competition:
o substitute product—a product that is dissimilar from those of competitors but that can fulfil the same need
o brand competition—competitive marketing that appeals to consumer perceptions of similar products
o international competition—competitive marketing of domestic against foreign products
Strategy: The Marketing Mix
x marketing managers—managers responsible for planning and implementing all the marketing-mix activities that result in the
transfer of goods or services to customers
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