Chapter 13, 14, 16 - Understanding Customer, Product & Price, Promoting your Offer

What is marketing?

the activity and processes for creating, communicating, delivering, and exchanging offerings that have value for customers

What was marketing in the past?

Focused entirely on helping the seller sell. Now, marketing is about helping the buyer buy. 

Whats the future of marketing?

Doing everything you can to help the buyer buy 

Easier a market makes the purchase decision process,

the more that marketer will sell.

The Evolution of Marketing (4 Eras) 

1. The Production Era 

• General philosophy of bsuiness was “Produce as much as you can because there is a limitless market for it. 

• The production philosophy was both logical and profitable: given the limited production capability and vast demand for products in those days 

• In the early 1900’s business owners were mostly farmers, carpenters, and trade workers 

 

2. The Selling Era 

• 1920’s businesses had developed mass-production techniques such as assembly line 

• Production capacity often exceeded the immediate market demand 

• Most companies emphasized selling and advertising in an effort to persuade consumers to buy existing products (Few offered service after the sale) 

 

3. The Marketing Concept Era 

• After the World War II ended in 1945, soldiers beginning new careers and starting families sparked a tremendous demand for goods and services 

• Business saw they needed to be responsive to consumers if they wanted to get their business, 1950’s started the marketing concept 

4.The Customer Relationship Era 

• Early 1990’s and 2000’s, managers extended the marketing concept by adopting the practice of customer relationship management. 

• Customer Relationship Management = process of learning as much as possible about present customers and doing everything you can over time to satisfy them. 

The Marketing Concept had 3 Parts: 

1. Customer Orientation: Find what customers want and provide it for them. Meet customers' needs rather than on promotion or sales. 

2. Service Orientation: Make sure everyone has the same objective: customer satisfaction. ORGANIZATIONAL EFFORT. 

3. Profit Orientation: Focus on those goods and services that will earn the most profit and enable the organization to survive and expand to serve more consumer wants and needs 

The Emerging Mobile/ On-Demand Marketing Era 

• Consumers demanding relevant information the moment they want it 

• Search technologies have made product information persuasive 

• Consumers share, compare, and rate experiences through social media with phones 

Development such as inexpensive micro transmitter embedded in products will allow what?

allow consumers to search by image, voice, or gestures.

For example: if ur friend has a product you like, u can just tap it with ur phone and instantly get product reviews, prices, and so on. 

If you can’t decide what colour to buy, u can just post a photo to social media and followers can vote for their fav. 

As digital technology continues to grow, consumer demands are likely to rise in 4 areas: 

1. Now. Consumers want to interact anywhere, anytime. 

2. Can I? They want to do new things with different kinds of information in ways that create value for them. 

3. For me. Consumers expect all data stored about them to be used to personalize what they experience. 

4. Simple. Consumers expect all interactions to be easy. 

Nonprofit Organizations and Marketing 

• Charities use marketing to raise funds for combating world hunger. 

• The American Red Cross uses promotion to encourage people to donate blood when local or national supplies run low 

• Greenpeace uses marketing to promote ecologically safe technologies 

• Environmental groups use marketing to try to cut carbon emissions 

The Marketing Mix 

Marketing Managers do: 4 Ps 

1. Product: designing a want satisfying product 

2. Price: setting a price for the product 

3. Place: putting the product in place where people will buy it 

4. Promotion: promoting the product.  

Why are the 4 Ps called marketing mix?

because businesses blend them together in a well-designed marketing program 

The 4 Ps are a convenient way to remember the basics of marketing but?

they don’t include everything that goes into the marketing process for all products. 

Product

any physical good, service, or idea that satisfies a want and need

Test Marketing

process of testing products among potential users.

For example, u can test market your free dishes and learn how best to prepare them 

Brand Name

a word, letter, or group of words or letters that differentiates one seller’s goods and services from those of competitors.

Setting an Appropriate Price (3)

• The price could be close to what other restaurants charge 

• Charge less to bring new customers 

• May offer high-quality products for customer that are willing to pay a little more 

Getting the Product to the Right Place (3)

• Have food deliver to  

• May want to sell products in supermarkets (like deally pr) 

• May have people come in to sit down at restaurants 

Whats the last 4 P of marketing?

Promotion

Promotion

consists of all the techniques sellers use to inform people about and motivate them to buy their products or services. 

Promotion includes advertising =

personal selling, public relations; publicity; word of mouth (viral marketing)

various sales promotion efforts : such as coupons, rebates, samples, and cents-off deals 

Marketing Research

the analysis of markets to determine opportunities and challenges and find the information needed to make good decisions 

Marketing research helps: (2)

- identify products customers have purchased 

- changes have occurred to alter what they want now or in the future 

Marketers also conduct research on

business trends, global trends, the ecological impact of their decisions and more 

The Marketing Research Process (4)

1. Defining the question (the problem and opportunity) 

2. Collecting research data 

3. Analysing the research data 

4. Choosing the best solution and implementing it 

The following sections look at each of these steps 

1. Defining the Question and Determining the Present Situation 

• Discover the present situation 

• The problem or opportunities are 

• The alternatives are 

• What information they need and how to go about gathering and analyzing data 

2. Collecting Data 

• Usable information is vital to the marketing research process 

• Gather information already compiled, published in journals, books, and online materials 

3. Analysing the Research Data 

   • Marketers must turn the data they collect in the research process into useful information 

4. Choosing the Best Solution and Implementing It 

   • After collecting and analysing data, marketing researchers determine alternative strategies and make recommendations about which may be best and why 

   • This final step in a research effort also includes following up on actions taken to see whether the results were what were expected 

Secondary Data = information that has already been compiled by others

• Secondary data is what marketers should gather first to avoid incurring unnecessary expense 

• Doesn’t provide all the information managers need for important business decisions 

Primary Data = data that you gather yourself (not from secondary sources such as books and magazines) 

• One way to gather primary data is to conduct a survey 

• Surveys (online) and personal interviews are the most common forms of primary data collection 

Focus Group

small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, product, or issues 

Environmental Scanning

process of identifying factors that can affect marketing success.  

Environmental Scanning includes:

global, technological, sociocultural, competitive, and economic factors. 

Global Factors:

By going online businesses can reach world’s consumers easily. The globalization process puts more pressure on those whose responsibility it is to deliver products to these global customers.

Technological Factors:

Using consumer databases, blogs, social media

Sociocultural Factors:

must monitor social trends to maintain their relationship with customers 

Competitive Factors:

must pay attention to the competitive environment 

Economic Factors:

must pay attention to the economic environment. US experience slow growth, customers are eager to buy expensive. When economy slows, marketers adapt by offering products that are less expensive

Two Different Business Markets:

Consumer Market (B2C) and Business-to-Business (B2B)

Marketers consist of people who are?

with unsatisfied wants and needs who have both the resources and willingness to buy

Consumer Market

all that wants goods and services for personal consumption or use  

Business-to-Business Market

all that want goods and services to use in producing other goods and services to sell, rent, or supply to others (oil drilling bits, display cases, office desks, and business software) 

Market Segmentation

process of dividing total market into groups with similar characteristics 

Target Marketing

marketing directed towards those groups an organization decided it can serve profitably.

For example, shoe store may only sell women’s shoes, only children’s shoes, or only athletic shoes. 

Geographic Segmentation

dividing a market by cities, countries, states, and region 

Demographic Segmentation

Dividing the market by age, income, religion, race, occupation and education level 

Psychographic Segmentation

group’s personality, values, and lifestyle in a strategy (like their interest) 

Benefit Segmentation

dividing the market by determining which benefits of the product to talk about 

Volume (or usage) Segmentation

dividing the market by usage (volume of use) Example: are more students or more faculty members consume more of your product? 

Niche Marketing

identifying small market segments and designing products for them 

One-to-one marketing

developing unique mix of goods and services for each individual customer. Like travel agencies such as packages, airline reservations, rental cars, and restaurants 

Mass Marketing

developing products and promotions to please large group of people 

Mass Marketer tries to sell the same products to as many people as possible, which means?

that means using mass media such as TV radio and online ads 

What’s the con of mass marketing?

Managers get caught up with their products and competition that they become less responsive to the market 

Relationship Marketing =

their goal is to keep customers over time by offering products that meet their requirements. 

Problem Recognition =

first step in the consumer decision-making process 

Information Search=

2nd step in the consumer decision-making process

Evaluate alternatives and make Purchase Decision

after compiling all this information

Factors that affect consumer behavior: (4)

1. Learning creates changes in an individual’s behavior resulting from past experiences and information 

2. Culture is the set of values, attitudes, and ways of doing things transmitted from one generation to another in a given society 

3. Subculture is the set of values, attitudes, and ways of doing things that results from belonging to a certain ethnic group (ex: teenagers) 

4. Cognitive Dissonance is a type of psychological conflict that can occur after a purchase 

Business-to-Business: 

• Includes retailers, hospitals, schools, nonprofits, and the government 

• Is larger than consumer market because items are sold and resold several times in the B2B process 

• Different strategies cause business buyers have their own decision making process 

Different of B2B and Consumer Market

B2B = Business → Business

• Few customers

• Large customers

• Geographically concentrated

• More rational buying

• Quality, price & service matter

• More direct sales

• More personal selling

Consumer marketing = Business → Individual consumer

• Many customers

• Individual/household buyers

• More geographically spread out

• More emotional/personal buying

• More advertising

• More distribution through retailers

Chapter 14: Developing and Pricing Goods and Services 

Chapter 14: Developing and Pricing Goods and Services 

Value =

good quality at a fair price

When consumers calculate the value of a product, they look at the benefits and then subtract the cost (price) to see whether the benefits exceed the costs, including the cost of driving to the store. 

When consumers calculate the value of a product, they look at the benefits and then subtract the cost (price) to see whether the benefits exceed the costs, including the cost of driving to the store. 

Distributed Product Development =

term used to describe handing off various parts of your innovation process 

Total Product Offer =

everything that consumers evaluate when deciding to buy something also called value package 

sometimes organization can use low prices to create an attractive total product offer.

sometimes organization can use low prices to create an attractive total product offer.

products with the best value packages, often offer consumers the chance to evaluate a product based on its differentiation from similar product 

products with the best value packages, often offer consumers the chance to evaluate a product based on its differentiation from similar product 

Product Line =

a group of products that are physically similar or are intended for a similar market (like coke, diet coke, diet coke with lemon, diet coke with cherry) 

Product Mix

the combination of product lines offered by a manufacturer (like 300 different types of toothpastes available in stores, service providers, bank, car loans, insurance) 

Product Differentiation

the creation of real or perceived product differences 

Product differences are quite small, so marketers must?

use a creative mix of branding, pricing, advertising, and packaging to create unique images (for example the branding is so good that customers order water by brand name)

4 categories of consumer goods and services 

1. Convenience Goods and Services: products the consumer want to purchase with a minimum effort-like gum, candy, milk, snacks, gas, and banking services 

2. Shopping Goods and Services: products the consumer buys only after comparing value, price, and style (target) 

3. Specialty Goods and Services: consumer products with unique characteristics and brand identity. (wanting a luxury item so bad) 

4. Unsought goods and services: products consumers are unaware of, haven’t thought of buying, or suddenly find they need to solve an unexpected problem. (insurance, burial services, emergency car towing services) 

Difference of Convenience Goods from Specialty Goods:

to promote convenience goods is to make them available and create proper image, specialty goods rely on reaching special market segments through advertising. 

Marketing Industrial Goods and Services (Topic)

A computer kept at home is a consumer good but in commercial setting, like accounting firm is the same computer is an industrial good. 

Industrial goods =

(sometimes called business goods or B2B goods) are products used in the production of other products. 

Describe 3 different types of industrial goods 

1. Heavy machines 

2. Capital items – factory building 

3. Accessory equipment – computers, office equipment, smaller machines) 

Packages must perform the following function: (7)

1. Attract the buyers attention 

2. Protect the goods inside (must be safe) 

3. Be easy to open and use 

4. Describe and give information about the contents 

5. Explain the benefits of the items inside 

6. Provide information on warranties, warnings, and other consumer matters 

7. Give some indication of price, values, and uses 

Whats the Universal Product Codes? (UPCs)

• on many packages help stores control inventory

• they combine a bar code and a preset number that gives retailer information about the products price, size, colour.

In short, changing it by visibility, usefulness, or attractiveness

Bunding =

grouping two or more products together and pricing them as a unit 

Brand

name, symbol, design

Trademark

brand that has exclusive legal protection for both its brand name and its design

Manufacturers brands

brand names of manufacturers that distribute products 

Dealer (private label) brands =

products that dont carry the manufacturers name but carry a distributor or retailers name brand 

Generic name =

is the name for a whole product category.

Example nylon and zipper use to be brand names but lost their brand status and became generic.

Generic Goods =

nonbranded products that usually sell at a sizable discount compared to national or private label brands (feature basic packaging and with little or no advertising) 

Knockoff brands =

illegal copies of national brand name goods. (like Chanel brand dupe) 

Brand Equity =

value of the brand name and associated symbol 

Brand Loyalty =

the degree to which customers are satisfied like the brand 

Brand Awareness =

refers how quickly a given brand name comes to mind when someone mentions a product 

What are the key components of brand equity?

Perceived quality is an important part of brand equity. Factors influencing the perception of quality include price, appearance, and reputation. 

Brand Association =

linking of a brand to other favourable image like collaborating with a popular celebrity, popular place, famous product user

Brand Management =

manager who has responsibility for one brand or one product line (product manager) 

Product Screening =

reduces the number of new product ideas a firm is working on at any one time so it can focus on the promising. Determine if the product has good profit and marketable

Product Analysis =

making cost estimate and sales forecasts 

Concept Testing =

takes a product idea to consumers to test their reaction 

Commercialization =

even if a product tests well, it may take quite awhile to achieve success in the market 

Commercialization includes: (2)

1. Promoting the product to distributors and retailers to get wide distribution 

2. Developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers 

Product Life Cycle

a model of what happens to sales and profits for a product class over time 

4 stages of Product Life Cycle:

introduction, growth, maturity, and decline 

Whats the most difficult of the 4 Ps for a manager to control?

Competitive Pricing

5 Popular Pricing Objectives include: 

1. Achieving a target return on investment or profit. One-way companies tried to increase profit is by reducing the amount of product (Example: cut amount of cereal in a box) 

2. Building traffic. Advertise products or below cost to attract people to the store. This is called loss leaders. 

3. Achieving greater market share 

4. Creating an image 

5. Furthering social objectives. Firm may want to price a product low so people with little money can afford it.