Chapter 5.docx

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MGTA04
Chapter 5: Understanding Marketing: Markets Segmentation and Market Research
Marketing: planning and executing the development, pricing, promotion, and distribution of ideas,
goods, and service to create exchanges that satisfy both buyers’ and sellers’ objectives 4
- Don’t sell what they have (product focus), sell what customers wants (customer focus)
- Focus on customers is called “the marketing concept”
Marketing concept: the idea that the whole firm is directed toward serving present and potential
customers at a point
Marketing Mix: developing, pricing, promotion, and placing products
Value: relative comparison of a product’s benefits versus its costs
Value = Benefits/ Costs
Benefits include not only the functions of the product, but also the emotional satisfactions associated
with owning, experiencing, or possessing it.
Marketing strategies focus on increasing value for customers. Marketing resources are deployed to add
value to products to satisfy customers’ needs and wants.
Utility: ability of a product to satisfy a human want or need
4 Kinds of Utility:
Time utility: make products available when consumers want them
Place utility: makes products available where customers can conveniently purchase them
Ownership utility: provide convenience of transferring ownership from store to customer
Form utility: by making products available in the first place (by turning raw materials into
finished goods)
Consumer goods: products purchased by individuals for their personal use
Industrial goods: products purchased by companies to use directly or indirectly to produce other
products
Services: intangible products, such as time, expertise, or an activity that can be purchased
Strategy: The Marketing Mix
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
Marketing mix: the combination of product, price, place, and promotion strategies used in marketing in
a product
Product
a good, service, or idea that satisfies buyers’ needs and demands
changing existing products to keep pace with emerging markets and competitors
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MGTA04
mass-customization allows marketers to provide products that satisfy very specific needs of
consumers
product differentiation: the creation of a product or product image that differs enough from
existing products to attract consumers
Price
choosing the appropriate price for a product to meet the firm’s profit objectives and buyers’
purchasing objectives
price must support a variety of costs operating, administrative, research, and marketing costs
prices can’t be so high that consumers turn to competitors products
finding a profitable middle ground between these two requirements
low price lead to large sales volumes
high prices attract customers by implying that a product is of high quality
Place (Distribution)
getting products from the producer to the buyer, including physical transportation and choice of
sales outlets
make decisions about channels through which they distribute products
Promotion
techniques for communicating information about products
advertising, personal selling, sales promotions, public relations
Buyer’s 4Cs: Customers solution (product), customer cost (price), customer convenience (place), and
customer communication (promotion)
Products choices determine basic design of the product offered to consumers
Price choices determine how much consumers pay for the product
Promotion choices determine the visibility and image of the product to consumers
Place choices determine where and when the product is available to consumers
= customer satisfaction and business profitability
Target markets: any group of people who have similar wants and needs and may be expected to show
interest in the same products
- No business has unlimited time, unlimited resources, and can’t sell to everybody
Market segmentation: dividing a marketing into categories according to traits customers have in
common
- Demography: external traits (age, gender, race, income)
- Psychography: internal traits (beliefs, values, motivations)
- Geography: where people live
Positioning: the process of fixing, adapting, and communicating the nature of the product itself
Market segments: geographic, demographic, psychographic, and product-use variables
Geographic values: geographical units that may be considered in a segmentation strategy
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