Chapter 13

I. WHAT IS MARKETING?

LEARNING GOAL 1. Define marketing and summarize the steps involved in the marketing process.

A. MARKETING is the process of determining customer wants and needs and then providing customers with goods and services that meet or exceed their expectations.

B. FIND A NEED AND FILL IT-A more simple description of the marketing process.

1. In the past, it was believed that businesses made products first and marketing was then responsible for selling and distributing those products.

2. Today, marketing must determine what consumers want and then to provide goods and services that fill those needs.

C. NONPROFIT ORGANIZATIONS USE MARKETING ALSO.

1. Marketing is a crucial part of almost all organizations, profit and nonprofit.

2. Charities, churches, politicians, states, and many other organizations all use marketing.

II. UNDERSTANDING THE MARKETING PROCESS.

A. To present an overview of the marketing process, the text takes a hypothetical product (a cereal called FIBERRIFIC) through THE MARKETING PROCESS.

B. The process begins with identifying a need for fast, nutritious, good tasting breakfast food through MARKET RESEARCH.

C. DESIGNING A PRODUCT TO MEET NEEDS.

1. The next step is to develop a product to fill that need.

2. A PRODUCT is any physical good, service, or idea that satisfies a want or need.

3. CONCEPT TESTING involves developing an accurate description of your product and asking people whether or not the concept (the idea of the cereal) appeals to them.

4. PROTOTYPES are samples of the product that you take to consumer to test their reactions.

5. TEST MARKETING is the process of testing products among potential users.

6. OUTSOURCING is the allocation of production and other functions to outside firms.

7. Once the product is made, you have to DESIGN A PACKAGE, think up a BRAND NAME for the product, and set a PRICE.

D. GETTING THE PRODUCT TO CUSTOMERS.

1. Once the product is manufactured, you have to choose how to get it to the consumer.

2. You may want to sell your product through organizations that specialize in distributing food products-MARKETING MIDDLEMEN.

E. ESTABLISHING A RELATIONSHIP WITH CUSTOMERS.

1. PROMOTION consists of all the techniques sellers use to motivate people to buy products or services.

2. RELATIONSHIP BUILDING WITH CUSTOMERS includes responding to any suggestions they may make to improve the product or the marketing of the product.

3. Marketing is an ONGOING PROCESS.

III. TOTAL QUALITY AND THE MARKETING CONCEPT.

LEARNING GOAL 2. Describe marketing's changing role in society and the merging of the marketing concept with total quality management.

A. THE MARKETING CONCEPT.

1. The baby boom after WWII created a tremendous market.

a. Businesses scrambled to capture their share.

b. Businesses knew they needed to respond to consumers need.

2. The MARKETING CONCEPT emphasizes

a. A CONSUMER ORIENTATION.

b. A SERVICE ORIENTATION-the training of employees from all departments in customer service.

c. A PROFIT ORIENTATION.

3. During the 1980s businesses began to more aggressively to apply the marketing concept.

4. In the 1990s, they extended the concept by adopting the concepts of total quality management (TQM).

B. FROM A CUSTOMER ORIENTATION TO DE LIGHTING CUSTOMERS AND OTHER STAKEHOLDERS.

1. Marketing's goal in the past was to provide customer satisfaction.

2. Today the goal of total quality firms is to please or DELIGHT CUSTOMERS by providing goods and services that exactly meet their requirements.

3. TQM is an extension of the marketing concept.

4. Most organizations haven't yet reached the goal of delighting customers.

5. Firms must also please and delight their INTERNAL CUSTOMERS-employees.

C. FROM TRAINING ALL EMPLOYEES TO UNITING ORGANIZATIONS.

1. In quality-oriented firms, CROSS-FUNCTIONAL TEAMS break down barriers between departments and practice continuous improvement.

2. Determining whether or not the various organizations are providing world-class service and quality is done through competitive benchmarking.

3. COMPETITIVE BENCHMARKING means that companies compare their processes and procedures against the best companies in the industry.

D. MAINTAINING A PROFIT ORIENTATION.

1. Marketing must make sure that everyone in the organization understands that the purpose behind delighting customers IS TO ASSURE A PROFIT for the firm.

2. Using that profit, the organization can then satisfy other stakeholders of the firm.

IV. RELATIONSHIP MARKETING.

LEARNING GOAL 3. Describe how relationship marketing differs from traditional marketing.

A. Balancing the wants and needs of all the firm's stakeholders is a huge challenge for marketing.

1. RELATIONSHIP MARKETING is establishing and maintaining mutually beneficial exchange relationships with internal and external customers and all the other stakeholders of the organization.

2. Many companies have responded to the environmental movement by introducing GREEN PRODUCTS, those whose production, use, and disposal doesn't damage the environment.

B. THE MOVEMENT AWAY FROM MASS MARKETING.

1. MASS MARKETING means developing products and promotions that are designed to please large groups of people.

a. The mass marketer tries to sell products to as many people as possible.

b. That means using mass media, such as TV, radio, and newspapers.

c. One-way messages in mass media give way to a personal dialogue among participants.

2. Relationship marketing is more concerned with retaining old customers than creating new ones.

3. RELATIONSHIP MARKETING moves away from mass production toward CUSTOM-MADE GOODS.

4. The latest in TECHNOLOGY enables sellers to work with buyers to determine their individual wants and needs and to develop goods and services specifically designed for those individuals.

C. FROM RELATIONSHIP MARKETING TO FORMING COMMUNITIES OF BUYERS.

1. A database can be established so that every contact with consumers results in more information about them.

2. Over time, the seller knows more and more about consumers and can custom-design products to meet their specific needs.

3. Many companies have established Web sites where customers can provide their input and talk to other customers.

4. An important next step in relationship marketing is to establish a community of customers.

V. MARKETING MANAGEMENT AND THE MARKETING MIX.

LEARNING GOAL 4. List the four Ps of marketing.

A. Marketing managers are responsible for getting everyone in the firm to establish and maintain mutually beneficial relationships with all stakeholders.

1. A MUTUALLY BENEFICIAL EXCHANGE means that both parties to the exchange believe they have received good value for their efforts.

2. Managing the marketing process involves FOUR FACTORS:

a. Designing a want-satisfying PRODUCT.

b. Setting a PRICE for the product.

c. Distributing the product to a PLACE where people will buy it.

d. PROMOTING the product.

B. These four factors have become known as the FOUR Ps OF MARKETING or the MARKETING MIX.

C. The environment of marketing is rapidly changing, so marketers must make changes faster.

D. MARKETING MANAGEMENT is the process of planning and executing the conception, pricing, promotion, and distribution [place] of ideas, goods, and services [products] to create mutually beneficial exchanges.

VI. DETERMINING WHAT CUSTOMERS WANT.

LEARNING GOAL 5. Apply the four parts of the marketing research process to a business problem.

A. MARKETING RESEARCH is the analysis of markets to determine opportunities and challenges.

1. One goal is to determine exactly what consumers want and need.

2. Because consumer wants and needs are constantly changing, marketing must maintain close relationships with customers.

3. Businesses need information to compete effectively, and marketing research is the activity that gathers that information.

B. THE MARKETING RESEARCH PROCESS.

1. STEP 1. DEFINE THE PROBLEM AND DETERMINE THE PRESENT SITUATION.

2. STEP 2: COLLECT DATA.

a. Research can be quite expensive, so SOME TRADE-OFF must be made between information needs and the cost.

b. SECONDARY DATA are sources of information that have been published previously (journals, trade associations, etc.).

c. Usually secondary research doesn't provide all the necessary information, so marketers must do their own studies.

d. PRIMARY DATA are facts and figures not previously published that you gather for a specific purpose.

(i) Telephone surveys, mail surveys, and personal interviews are the most common methods of gathering survey information.

(ii) A FOCUS GROUP consists of a small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization or its product.

3. STEP 3: ANALYZE THE RESEARCH DATA.

4. STEP 4: CHOOSE THE BEST SOLUTIONS.

a. Researchers present alternative strategies and make recommendations as to which strategy may be best.

b. Consumers are becoming more demanding for ethical behavior from companies.

5. The last steps in a research effort involve FOLLOWING UP on the actions taken to see if the results were as expected.

C. USING RESEARCH TO UNDERSTAND CONSUMERS.

1. The secret to understanding consumers is simply to listen to them.

a. There are many techniques for doing that, including focus groups.

b. Effective marketing research calls for getting close to customers to find out what they want and need.

2. In international markets, the need for marketing research is even greater.

a. The goal in international business is the same as in the U.S.: to find a need and fill it.

b. To do that, marketers must adapt to all the customs and beliefs of the people they are dealing with.

3. One way to do marketing research is to set up a Web site where customers can interact with the company and with each other.

D. THE CONSUMER DECISION-MAKING PROCESS.

1. Studying consumer behavior centers around studying the CONSUMER PURCHASE DECISION PROCESS:

a. PROBLEM RECOGNITION.

b. INFORMATION SEARCH.

c. EVALUATE ALTERNATIVES.

d. MAKE PURCHASE DECISION.

e. POST-PURCHASE EVALUATION.

2. Marketing researchers investigate consumer thought processes and behavior at each stage.

3. CONSUMER BEHAVIOR IS INFLUENCED BY:

a. CULTURE is the set of values, attitudes, and ways of doing things that are transmitted from one generation to another.

b. LEARNING involves changes in an individual's behavior resulting from previous experiences.

c. REFERENCE GROUP is the group that an individual uses as a reference point in forming beliefs, attitudes, or behavior.

d. SUBCULTURE is the set of values, attitudes, and ways of doing things that result from belonging to a certain group with which one identifies.

4. COGNITIVE DISSONANCE means that after the purchase, consumers may have doubts about whether they got the best product at the best price.

VII. RECOGNIZING DIFFERENT MARKETS: CONSUMER AND BUSINESS-TO-BUSINESS.

LEARNING GOAL 6. Differentiate between consumer and industrial markets.

A. THERE ARE TWO MAJOR MARKETS:

1. The CONSUMER MARKET consists of all the individuals who want goods and services for personal consumption or use.

2. The BUSINESS-TO-BUSINESS MARKET consists of all the individuals and organizations that want goods and services to produce other goods and services.

3. The buyer's reason for buying and the end use of the product determine whether it is considered a consumer product or an industrial product.

B. THE CONSUMER MARKET.

1. Marketers must learn to select different consumer groups to develop products and services specially tailored to their needs.

2. The process of dividing the total market into several groups (segments) that have similar characteristics is called MARKET SEGMENTATION.

3. TARGET MARKETING is the process by which an organization decides which groups (market segments) it can serve profitably.

C. REACHING SMALLER MARKET SEGMENTS.

1. New manufacturing techniques make it possible to develop specialized products for small market groups.

2. NICHE MARKETING is the process of finding small, but profitable market segments and designing custom-made products for those groups.

3. ONE-TO-ONE MARKETING means developing a unique mix of goods and services for each individual customer.

4. This is easier to do in industrial markets, but mass customization is making it possible to do so in consumer markets.

D. BUSINESS-TO-BUSINESS MARKETING.

1. The marketing of goods and services to manufacturers, institutions, commercial operations, and the government is called BUSINESS-TO-BUSINESS MARKETING.

2. Several factors make BUSINESS-TO-BUSINESS MARKETING DIFFERENT

a. There are relatively FEW INDUSTRIAL CUSTOMERS compared to consumers.

b. Though few in number, industrial customers are VERY LARGE.

c. Industrial markets tend to be CONCENTRATED in certain areas of the country.

d. Industrial buyers are generally MORE RATIONAL in their purchase decisions.

e. Industrial sales tend to be DIRECT.

3. Relationship marketing has always been important in the business-to-business market.

4. In business-to-business marketing it is more important to establish and maintain friendly and committed relationships than to simply make the sale.

E. CAREER PROSPECTS IN MARKETING.

1. Marketing careers include jobs in retailing, wholesaling, marketing research, and product management, selling, advertising, sales promotion.

2. Other areas include public relations, transportation, storage, international distribution, and other areas.