Chapter 1 Marketing Is All Around Us † Chapter 2 The Marketing...

In this unit you will find

• Chapter 1Marketing Is All Around Us

• Chapter 2The Marketing Plan

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This ad is promoting a well-known breakfast cereal. What is the main theme? How does the picture work with the words?

A N A LY Z E T H E A D

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In this unit

Marketing Core Functions Pricing Promotion Selling

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2

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ANALYSISSWOT

Economic

Socio-Cultural

Technological

Competitive

STRATEGYPromotion

Place

Price

Product

BUDGETCost of Sales

Cost of Promotion

Income and Expenses

CONTROLEvaluation

Performance Measures

Performance Analysis

IMPLEMENTATION Organization

Management

Staffing

Marketing Internship NASCAR wants to hold races in the New York City area and attract teenagers as fans.As you read, use this checklist to prepare for the unit project:✓ Find out which companies sponsor NASCAR.✓ Think about possible sponsors who make teen products.✓ Think about the characteristics of NASCAR’s target

market and the new teen market.

THE MARKETING PLAN A marketing

plan is a document

with these five sections

that detail a company’s

marketing activities.

The highlighted

elements shown

below are discussed in

the unit.

Print ads use powerful visual components and interest-ing, catchy writing to draw in the reader.

PRINT AD LANGUAGE

Log on to glencoe.com and go the Marketing Essentials Online Learning Center (OLC). Find the WebQuest for

Unit 1. Begin the activity by collecting magazines and news-papers. Search for ads that have effective advertising slogans.

http://www.glencoe.com


2 UNIT 1 — THE WORLD OF MARKETING

Marketing Is AllAround Us

C H A P T E R

Chapter ObjectivesAfter reading this chapter, you should be able to:

• Defi ne marketing

• List the seven marketing core functions

• Understand the marketing concept

• Analyze the benefi ts of marketing

• Apply the concept of utility

• Describe the concept of market

• Differentiate consumer and industrial markets

• Describe market share

• Defi ne target market

• List the four components of the marketing mix

Market Talk In the United States, it is rare to

be far from an ad of some sort. A passing hiker

in a national park might be wearing a T-shirt

with a corporate logo. A sign on the side of a

country road could announce fresh eggs for

sale. In a mall or a major city, the marketing is

much more intense. Everywhere you look, you

see signs, brands, and ads.

Quick Think Promotion is only one aspect of

marketing. How would you defi ne marketing and

all the activities that fall under its umbrella?

EXPLORE THE PHOTO


1

Karlheinz Oster/zefa/Corbis

Chapter 1 — Marketing Is All Around Us 3glencoe.com Chapter 1 — Marketing Is All Around Us 3

DECA Events These acronyms represent DECA com-petitive events that involve concepts in this chapter:

Performance Indicators The performance indicators represent key skills and knowledge. Relating them to the concepts in this chapter is your key to success in DECA competitive events. Keep this in mind as you read, and write notes when you fi nd material that helps you master a key skill. In these DECA events, you should follow these performance indicators:• Distinguish between economic goods and services.• Determine the forms of economic utility created by

business activities.• Explain the concept of marketing strategies.• Explain the concept of market and market

identifi cation.• Select target market.The events with an asterisk (*) also include:• Describe the nature of target marketing in a specifi c

industry.Some events include these performance indicators:ADC Select target market.EMDM Identify online target markets.FMAL Describe factors affecting consumer choice

for a food marketing business.HLM Describe the nature of target marketing in

the hospitality industry.SEM Identify sport/event target-market

segments.TSE Describe the nature of target marketing in

technical marketing.

AAM BSM HMDM SEM*

ASM EMDM* QSRM SMDM

ADC* FMAL* RFSM TMDM

BMDM HLM* RMS TSE*

ROLE PLAY Check your understanding of DECA performance indicators with the DECA activity in this chapter’s review. For more information and DECA Prep practice, go to the Marketing Essentials Online Learning Center (OLC) through glencoe.com.



Selling


The Scope of MarketingYou already know a lot about marketing because it is all

around you. You have been a consumer for many years, and you have made decisions about products you liked and did not like. As you study marketing, you will analyze what businesses do to influence consumers’ buying decisions. That knowledge will help you begin to think like a marketer.

Marketing is a broad term that includes many activities and requires many skills. Marketing is the process of planning,

THE MAIN IDEATo be a successful marketer, you need to understand the marketing skills, marketing core functions, and basic tools of marketing.

GRAPHIC ORGANIZERDraw an umbrella to organize the marketing core functions.

Go to the OLC through glencoe.com for printable graphic organizers, Academic Vocabulary definitions, and more.

READING GUIDE

Connect Have you ever been influenced by marketing? Explain and give examples.

SECTION 1.1

BEFORE YOU READ

Marketing and the Marketing Concept

OBJECT IVES• Define marketing

• List the seven marketing core functions

• Understand the marketing concept

KEY TERMS• marketing

• goods

• services

• marketing concept

ACADEMIC VOCABULARYYou will find these words in your reading and on your tests. Make sure you know their meanings.• create

• conduct ACADEMIC STANDARDSEnglish Language ArtsNCTE 4 Use written language to communicate effectively.

Social StudiesNCSS 2 Time, Continuity, and Change: Study the ways human beings view themselves over time.

Connect Relate the

definition of marketing

to the marketing core

functions and to the

marketing concept.


Chapter 1 — Marketing Is All Around Us 5glencoe.com

pricing, promoting, selling, and distributing ideas, goods, or services to create exchanges that satisfy customers. Note that marketing is aprocess. This means it is ongoing, and itchanges. As a marketer, you need to keepup with trends and consumer attitudes. Theproducts, ideas, or services you develop and the way you price, promote, and distributethem should reflect these trends and attitudes. All marketing careers support this effort.

Ideas, Goods, and ServicesMarketing promotes ideas, goods, and

services. Politicians, for example, use market-ing techniques to promote their plavhtform, or ideas. Goods are tangible items that have monetary value and satisfy your needs and wants such as cars, toys, furniture, televisions, clothing, and candy. Intangible items that have mone tary value and satisfy your needs

and wants are services. Intangible means you cannot physically touch them. Services involve a task, such as cooking a hamburger or cutting hair. Banks, dry cleaners, amusement parks, movie theaters, and accounting offices all provide economic services.

Every time someone sells or buys some-thing, an exchange takes place in the mar-ketplace. The marketplace is the commercial environment where such trades happen. It is the world of shops, Internet stores, financial institutions, catalogs, and much more.

Skills and KnowledgeMarketing is one career cluster in business

administration. The practice of marketing depends on many key areas of skill and knowl-edge. These areas are listed in the illlustration on page 1 that introduces the unit. Many of the topics that you will study in Marketing Essentials are based on these areas of skill and knowledge: 1. Business Law Understand business’s

responsibility to know, abide by, and enforce laws and regulations that affect business operations and transactions

2. Communications Understand the concepts, strategies, and systems used to obtain and convey ideas and information

3. Customer Relations Understand the various techniques and strategies used to foster positive, ongoing relationships with customers

4. Economics Understand the economic principles and concepts fundamental to business operations

5. Emotional Intelligence Understand techniques, strategies, and systems used to foster self-understanding and enhance relationships with others

6. Entrepreneurship Understand the concepts, processes, and skills associated with identifying new ideas, opportunities, and methods and with creating or starting a new project or venture

7. Financial Analysis Understand tools, strategies, and systems used to maintain, monitor, control, and plan the use of financial resources

• MARKETING IDEAS The definition of marketing includes marketing ideas, such as eating healthful foods.

What other ideas have you seen marketed?



8. Human Resource Management Un-derstand the tools techniques, and sys-tems that businesses use to plan, staff, lead, and organize its human resources

9. Information Management Under-stand tools, strategies, and systems needed to access, process, maintain, evaluate, and disseminate information to assist business decision-making

10. Marketing Understand the tools, tech-niques, and systems that businesses use to create exchanges and satisfy organiza-tional objectives

11. Operations Understand the processes and systems implemented to moni-tor, plan, and control the day-to-day activities required for continued business functioning

12. Professional Development Under-stand concepts, tools, and strategies used to explore, obtain, and develop in a busi-ness career

13. Strategic Management Understand tools, techniques, and systems that affect a business’s ability to plan, control, and organize an organization/department

Seven Marketing Core FunctionsThe marketing core includes seven func-

tions: channel management, marketing in-formation management, market planning, pricing, product/service management, pro-motion, and selling. The illustration on page 1 also includes these functions. The marketing core functions define all the aspects that are part of the practice of marketing.

Channel ManagementChannel Management, or Distribution, is

the process of deciding how to get goods into customer’s hands. Physically moving and stor-ing goods is part of distribution planning. The main methods of transportation are by truck, rail, ship, or air. Some large retail chains store products in central warehouses for later distri-bution. Distribution also involves the systems that track products so that they can be located at any time.

Market PlanningMarket planning involves understanding

the concepts and strategies used to develop and target specific marketing strategies to a select audience. This function requires an in-depth knowledge of activities that involve determining information needs, designing data-collection processes, conducting the collection of data, analyzing data, present-ing data, and using that data for creating a marketing plan.

Marketing Information ManagementGood business and marketing decisions

rely on good information about customers, trends, and competing products. Gathering this information, storing it, and analyzing it are all part of marketing information man-agement. This research is done on a continual basis and through special marketing research studies and surveys. This is what marketers do to find out about customers, their habits and attitudes, where they live, and trends in the marketplace. Companies conduct re-search so they can be successful at marketing and selling their products.

PricingPricing decisions dictate how much to

charge for goods and services in order to make a profit. Pricing decisions are based on costs and on what competitors charge for the same product or service. To determine a price, marketers must also determine how much customers are willing to pay.

Product/Service ManagementProduct/service management is obtain-

ing, developing, maintaining, and improving a product or a product mix in response to market opportunities. Market ing research guides product/service management toward what the consumer needs and wants.

PromotionPromotion is the effort to inform, per-

suade, or remind potential customers about a business’s products or services. Television and radio commercials are forms of promotion.


Key Terms and Concepts 1. Name two ideas that can be marketed. 2. Where do exchanges take place? 3. What is the main difference between consumers and industrial users?

This type of promotion is called advertising. Promotion is also used to improve a com-pany’s public image. A company can show that it is socially responsible by recycling materials or cleaning up the environment. Promotion concepts and strategies are used to achieve success in the marketplace.

SellingSelling provides customers with the goods

and services they want. This includes selling in the retail market to you, the customer, and selling in the business-to-business market to wholesalers, retailers, or manufacturers.

Selling techniques and activities include determining client needs and wants and responding through planned, personalized communication. The selling process influencespurchasing decisions and enhances future business opportunities.

The Marketing ConceptThe marketing concept is the idea that

a business should strive to satisfy customers’ needs and wants while generating a profit for the firm. The focus is on the customer. For an organization to be successful, all seven market-ing core functions need to support this idea.

The personnel responsible for those func tions must understand the marketing concept and reach for the same goal in order to send a consistent message to the customer. The message is that the customer satisfaction is most important. Everyone in an organization needs to recognize that repeat customers keep a company in business.

Customer Relationship Management (CRM)In today’s marketplace, customer relation-

ship is most important. Customer relation-ship management (CRM) is an aspect of marketing that combines customer infor-mation (through database and computer technology) with customer service and mar-keting communications.

Check your answers at the Marketing Essentials OLC through glencoe.com.

Academic SkillsMath

4. A customer purchases two tables at $149.99 each and would like them to be delivered. Your company charges customers $50 for delivery and the state imposes a 5 percent sales tax on furniture, but not on the delivery charge. What is the total amount due from the customer?

Social Studies/Economics

5. List at least three ways the Internet has changed marketing functions.

Problem Solving Think about which operations to use. 1. Use addition to calculate the sum for

both tables, which is the subtotal. 2. To find the sales tax amount,

multiply the subtotal by the tax percentage.

3. Add up the sales tax, subtotal, and delivery charge to find the total amount due.

For help, go to the Math Appendix located at the back of this book.



Benefits of Marketing

UtilityAdded Value

FormPlace


READING GUIDE

THE MAIN IDEAMarketing supports competition and offers benefits to consumers.

GRAPHIC ORGANIZERDraw the figure below. As you read this section, write in the benefits of marketing and list five utilities on the extended lines.

OBJECT IVES• Analyze the benefits of

marketing

• Apply the concept of utility

KEY TERMS• utility

ACADEMIC VOCABULARYYou will find these words in your reading and on your tests. Make sure you know their meanings.• impact

• benefit

Use Prior Knowledge When did you last shop at a mall? Did you witness any promotion effort? Did you compare prices? What role did this play in your decision to buy?

SECTION 1.2

BEFORE YOU READ

The Importance of Marketing

ACADEMIC STANDARDSEnglish Language ArtsNCTE 1 Read texts to acquire new information.

Mathematics NCTM Number and Operations Compute fluently and make reasonable estimates.

Connect List your

own experiences and

observations about how

marketing benefits you

personally.

Economic Benefits of MarketingThrough the study of marketing you will realize how impor-

tant marketing is and how much it affects your life and the lives of other consumers. Its impact is more dramatic when you con-sider how it affects our economy and standard of living.

Marketing plays an important role in an economy because itprovides the means for competition to take place. In a com-petitive marketplace, businesses try to create new or improved



Chapter 1 — Marketing Is All Around Us 9

Lower PricesMarketing activities increase demand, and

this helps to lower prices. When demand is high, manufacturers can produce products in larger quantities. This reduces the unit cost of each product. This is because the fixed costs (such as the rent on a building) remain the same whether the company produces 10 units or 10,000 units. When a company produces a larger quantity of a product, it spends less per unit on fixed costs. The company can charge a lower price per unit, sell more units, and make more money. Here is an example using a fixed cost of $20,000.

Quantity Fixed Cost Produced Per Unit 10,000 $2.00

($20,000 � 10,000)

200,000 .10 ($20,000 � 200,000)

In addition, when products become popular, more competitors enter the mar-ketplace. To remain competitive, marketers find ways to lower their prices. Look at the DVD market for some examples of this phe-nomenon. DVD players were introduced in 1997. Since then, there has been an explo-sion in the sales and rentals of DVDs and DVD players. Combination DVD/CD/MP3 players were very costly products when they were introduced, but now they can be pur-chased for about $100.

Added Value and UtilityThe functions of marketing add value to a

product. This added value in economic terms is called utility. Utilities are the attributes of a product or service that make it capable of satisfying consumers’ wants and needs.

There are five economic utilities involved with all products: form, place, time, posses-sion, and information. Although form utility is not directly related to marketing, much of what goes into creating new products, such as marketing research and product design, makes it an integral part of the marketing process.

products at lower prices than their competi-tors. Those efforts force them to be efficient and responsive to consumers. In addition, businesses look for ways to add value to a consumer’s shopping experience. Let’s look at the economic benefits of marketing to the economy and to consumers.

New and Improved ProductsMarketing generates competition, which in

turn fosters new and improved products. Busi-nesses always look for ways to satisfy custom-ers’ wants and needs and to keep customers interested. This creates a larger variety of goods and services. For example, personal computers have gotten smaller, lighter, more powerful, and less expensive. As more people use com-puters, this market continues to grow.

• NEW PRODUCTS One of the major economic benefits of marketing is the proliferation of new and improved products.

List three new and improved products you have seen marketed lately.

Summarize What is the benefi t of competition?

glencoe.com10 UNIT 1 — THE WORLD OF MARKETING

Form UtilityForm utility involves changing raw mate-

rials or putting parts together to make them more useful. In other words, it deals with mak-ing or producing things. The manufacturing of products involves taking things of little valueby themselves and putting them together to create more value. If you consider the value of a zipper, a spool of thread, and several yards of cloth, each would have some value, but not as much as when you put all three together by making a jacket.

Form utility involves making products that consumers need and want. Special features or ingredients in a product add value and increase its form utility. For example, electronic con-trols on the steering wheel of an automobile add value to the final product.

Place UtilityPlace utility involves having a product

where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient locations to sell products.

Some businesses use a direct approach by selling their products through catalogs, and other businesses rely on retailers to sell their products. The Internet offers even more options to businesses that want to sell their products directly to their customers without the use of any intermediaries.

Time UtilityTime utility is having a product avail-

able at a certain time of year or a convenient time of day. For example, supermarkets and other food stores offer convenient shopping hours or they are open 24-hours a day. Retail-ers often have extended shopping hours dur-ing the busiest shopping season of the year, from Thanksgiving till Christmas. Marketers increase the value of products by having them available when consumers want them.

Possession UtilityHow do you come into possession of the

items you want? You generally buy them for

Supermarket Personal Shopper

Albertsons introduced its Shop ‘n’ Scan technology by testing it—first in a handful of stores in Chicago, then expanding the test to more than 100 stores in the Dallas area. The tests started in October 2002. By October 2004 the company was planning to roll out the system in other cities.

The system enables customers to use hand-held scanners to scan and bag their purchasesas they shop at several Jewel-Osco stores.

Focus on the ShopperThe technology has some other customer-

friendly features. A portable computer keeps a running total of the prices of the items in the cart. Customers can also use an express pay station to ring up their purchases.

Company GoalsThese customer-focused developments are

in keeping with the overall policies and objec-tives of the company:

• Focusing on customers• Building efficiency• Capitalizing on technology

The company has had success with Shop ‘n’ Scan. According to the Wall Street Journal, shoppers using the technology bought, on aver age, twice as many groceries as shop-pers using regular carts.

How does this technology add value (utility) to a customer’s shopping experience?

Go to the Marketing Essentials OLC through glencoe.com to find a project on technology as added value.



Number and Operations:Percents A percent is a ratio compar-ing a number to 100. To convert per-cents to decimals, move the decimal point two places to the left.1. To solve the problem, convert the

percent to a decimal number.2. Multiply that decimal number by

the invoice amount to find the discount amount.

CHAPTER 1 — MARKETING IS ALL AROUND US 11glencoe.com

a price. The exchange of a product for moneyis possession utility. Retailers may accept alternatives to cash, such as personal checks, debit or credit cards, in exchange for their merchandise. They may even offer install-ment or layaway plans (delayed possession in return for gradual payment). Every one of these options adds value to the product beingpurchased. In fact, without these options, some customers would not be able to buy the items they want. In business-to-business situ-ations, companies also grant their customers credit. They may give them a certain period (for example, 30 days) to pay a bill. This adds value to the products they sell.

Possession utility is involved every time legal ownership of a product changes hands. Possession utility increases as purchase options increase. The Internet also provides consum-ers with options to pay by providing secure sites where credit cards are accepted.

Information UtilityInformation utility involves communica-

tion with the consumer. Salespeople provide information to customers by explaining the features and benefits of products. Dis-plays communicate information, too. Pack-aging and labeling inform consumers about qualities and uses of a product. The label on a frozen food entrée will tell you the ingredients, nutritional information, direc-tions for preparation, and any safety pre-cautions needed.

Advertising informs consumers about products, tells where to buy products, and sometimes tells how much products cost.

Many manufacturers provide own-ers’ manuals that explain how to use their products. Businesses also have Web sites where they provide detailed information about their companies and their products for customers.


Key Terms and Concepts 1. How does marketing help to lower prices? 2. In what way is marketing related to form utility? 3. Which utility is added by drive-through windows at fast-food

restaurants?

Academic SkillsMath

4. In a business-to-business transaction, the seller offers the buyer a 2 percent discount for paying a bill early. Assuming the buyer took advantage of this offer, how much would be discounted on a $10,000 invoice?

Science

5. Marketing has fostered new and improved products, such as LCD computer and TV screens, which are flatter and lighter than their predecessors. Do research to find out about LCDs (liquid crystal displays). What are they and how do they work?




MarketShare

Product

Market MarketingMix


Connect Jot down

examples of ads you

have seen or heard

and how they relate to

your reading.

Market and Market IdentificationThe terminology found in this section is the foundation for

future work and study in marketing. Remember these terms so you can use them correctly when discussing marketing principles and practices. These terms are used throughout this textbook. So let’s begin your journey into becoming a marketer.

READING GUIDE

THE MAIN IDEAThe term market refers to all the people who might buy a product. The marketing mix is a set of four tools used to influence buying decisions.

GRAPHIC ORGANIZERDraw these two diagrams. In the first diagram, write four terms about the concept of market. In the second diagram, write the four Ps of the marketing mix.

OBJECT IVES• Describe the concept of

market

• Differentiate consumer and industrial markets

• Describe market share

• Define target market

• List the four components of the marketing mix

KEY TERMS• market

• consumer market

• industrial market

• market share

• target market

• customer profile

• marketing mix

ACADEMIC VOCABULARYYou will find these words in your reading and on your tests. Make sure you know their meanings.• similar

• element

Predict How do you think marketers decide where to advertise their products?

SECTION 1.3

BEFORE YOU READ

Fundamentals of Marketing

ACADEMIC STANDARDSEnglish Language ArtsNCTE 3 Apply a wide range of strategies to comprehend, interpret, evaluate, and appreciate texts.

ScienceNSTA Content Standard C Students should develop an understanding of the behavior of organisms.




The consumer market consists of con-sumers who purchase goods and services for personal use. Consumers’ needs and wants generally fall into a few categories that address their lifestyles. For the most part, consumers are interested in products that will save them money, make their lives easier, improve their appearance, create status in the community, or provide satisfaction.

The industrial market or business-to-business (B-to-B) market includes all busi-nesses that buy products for use in their operations. The goals and objectives of business firms are somewhat different from those in the consumer market. Most relate to improving profits. Companies want to improve productivity, increase sales, decrease expenses, or make their work more efficient.

Companies that produce products for sale in the consumer market consider the reseller of their products to be part of the industrial market. Therefore, they require two distinct marketing plans to reach each market.

Marketers know that their product or ser-vice cannot appeal to everyone. To do their job, they look for people who might have an interest in or a need for their product. They also look at people who have the ability to pay for their product. These people often share other similar needs and wants. All people who share similar needs and wants and who have the ability to purchase a given product are called a market.

You could be part of the market for video games, but not be part of the market for an expensive car. Even though you may want an expensive car, you may not have the means to buy one. If you liked video games and had the resources to buy or rent them, you would be part of the video game market.

Consumer Versus Industrial Markets

There are different types of markets. A market can be described as a consumer mar-ket or an industrial market.

• ADVERTISING in the INDUSTRIAL MARKET This ad highlights advantages to businesses who sell

specific products to customers.

How do the objectives for purchases in the industrial market differ from those in the consumer market?

Sony20%

Kodak19.8%

Canon16%

Olympus12%

Fuji Film7.2%

Others25%


Market Share A market is further described by the total

sales in a product category. Examples of categories are video games, fax machines, cameras, ice cream, or soft drinks. For exam-ple, everyone who bought digital still cam-eras in February 2004 from photo specialty, electronic/appliance stores, computer/office superstores, mass merchandisers, the Inter-net, and through mail order were part of the $211,464,600 digital still camera market at that time.

A company’s market share is its percent-age of the total sales volume generated by all companies that compete in a given market. Knowing one’s market share helps marketers analyze their competition and their status in a given market. (See Figure 1.1.) Market shares change all the time as new competitors enter the market and as the size of the market increases or decreases in volume.

Target Market and Market Segmentation

Businesses know they cannot convince everybody to buy their product or service. They look for ways to offer their product or service to the people who are most likely to be interested. This involves segmenting, or break-ing down the market into smaller groups that have similar needs. Market segmentation is the process of classifying customers by needs and wants.

You already know that a market can be segmented into a consumer and an industrial market. Within those markets, further seg-mentation is possible. You will learn about market segmentation in Chapter 2. The goal of market segmentation is to identify the group of people most likely to become custom-ers. The group that is identified for a specific marketing program is the target market. Target markets are very important because

Go to the Marketing Essentials OLC through glencoe.com to find a project on market share.

Market Share1.1

• Who Leads in the Camera Market? A company’s percentage

of total sales in a given market is

its market share.

How do you think businesses use the concept of market share in their marketing programs?




magazines such as Family Circle or Parentingmight be used, and the ad message might stress health benefits.

To develop a clear picture of their target market, businesses create a customer profile. A customer profile lists information about the target market, such as age, income level, ethnic background, occupation, attitudes, lifestyle, and geographic residence. Chapter 2 focuses on this aspect of marketing. Marketers spend a lot of money and time on research to collect data so that they understand the characteris-tics of their target market’s customer profile. This information helps them make intelligent marketing decisions.

An easy and fun way to understand cus-tomer profiles is to look at magazines. If you thumb through a magazine’s articles and advertisements, you will know who reads the publication. According to Seventeen magazine’s Web site, the magazine targets teen girls and

all marketing strategies are directed to them. When a business does not identify a target market, its marketing plan has no focus. Identifying the target market correctly is an important key to success.

Consumers Versus CustomersA product may have more than one

target market. For example, manufacturers of children’s cereal know that they need to target children and parents differently. They have two target markets: one is the children (consumers) who will be asking for the cereal and eating it. The other is the parents (customers) who need to approve of it and will be buying it. To reach the chil-dren, marketers might advertise on Saturday morning television programs specifically designed for children. The advertising mes-sage might be how much fun it is to eat this cereal. To reach parents, print advertising in

• MARKET SEGMENTATION A

professional photographer shops for a

top-performance camera to use as a work

tool while an amateur would look for a

basic, easy-to-use model. How would marketing efforts differ for these two types of cameras and customers?

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use and control in order to influence potential customers. Marketers control decisions about each of the four Ps and base their decisions on the people they want to win over and make into customers. Because of the importance of customers, some would add a fifth P to the list: people. Marketers must first clearly define each target market before they can develop marketing strategies.

The four elements of the marketing mix are interconnected. Actions in one area affect decisions in another. Each strategy involves making decisions about the best way to reach, satisfy, and keep customers and the best way to achieve the company’s goals.

Let’s look at what each marketing mix component involves. Follow Figure 1.2 to see each of the four Ps illustrated and explained for Tropicana’s Light ‘n Healthy® brand orange juice.

Product Product decisions begin with choosing

what products to make and sell. Much research goes into product design. A product’s features, brand name, packaging, service, and warranty are all part of the development. Companies also need to decide what to do with prod-ucts they currently sell. In some cases, those products require updating or improvements to be competitive. By developing new uses and identifying new target markets, a com-pany can extend the life of a product. In the orange juice example illustrated in Figure 1.2, Tropicana chose health conscious men and women as the target market for a new juice. It produced a lower-calorie, lower-carbohydrate orange juice and it selected a name—Light ‘n Healthy—that would appeal to its target market.

PlaceThe means of getting the product into

the consumer’s hands is the place factor of the marketing mix. Knowing where one’s customers shop helps marketers make the place decision. Place strategies determine

young women who are interested in beauty, fashion, and entertainment. It is larger than any competitor in the 12- to 17-year-old marketand 97.9 percent of its readers have accessed the Internet regularly.

Marketing MixThe marketing mix includes four basic

marketing strategies called the four Ps: prod-uct, place, price, and promotion. These are tools marketing professionals or businesses

Do you think targeting children with

food products and toys is ethical?

Should advertising to children be

restricted? Why or why not?

Go to the Marketing Essentials OLC through glencoe.com to find a project on ethical marketing techniques.

Targeting ChildrenYou may have observed young children mesmerized by television commercials or seen children crying when a parent re-fuses to buy a product that a child had seen advertised on television.

Messages to ChildrenBusinesses that target young children generally create images that their prod-ucts are fun and enjoyable.

Messages to ParentsSome of these same companies target parents and send a different message about their products—stressing qualities that parents deem important, such as education, safety, or health.



PRODUCT


1.2 Marketing Mix for a New Juice

Go to Marketing Essentials OLC through glencoe.com to find a project on the marketing mix.

To be competitive,

Tropicana priced its

Light ‘n Healthy brand in

line with other premium

orange juices.

PRICE

Product

decisions

include naming

the product and

deciding how to

match the target

market’s needs.

Tropicana’s

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has a third less

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than regular orange juice.

Since most

people shop in

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orange juice, the

place decision was

an easy one.

PL ACE

PROMOTION

• Light ‘n Healthy’s Four Ps Tropicana’s marketing department develops strategies for each brand of orange juice

in its product line. The four Ps of the marketing mix focus on the customer profile for a specific target market. The

Light ‘n Healthy brand targets men and women who are health conscious and want to stay physically fit.

Would you have made different choices about the four Ps to introduce this product? If so, what would you have done differently?

Tropicana decided to

run humorous ads in

Health magazine and on

television that showed

oranges exercising.

This

reinforced

the image it wanted

for its Light ‘n Healthy

brand.

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how and where a product will be dis-tributed. For global companies, it may mean making decisions about which products will be sold in which countries and which retail outlets or other means of selling the product will best reach the customer. Can the product be sold directly to the consumer, or are intermediaries necessary? Other place decisions include deciding which

transportation methods and what stock levels are most effective.

In the Tropicana orange juice example, the place decision was to sell 64-fluid-ounce containers of the Light ‘n Healthy brand in food stores that have refrigerated cases. These products are in supermarkets, convenience stores, and mass merchandise retailers, such as Smart & Final, Wal-Mart, or Costco.

Pay as You Go Wireless Phones The Roxy i830 phone from Boost is created for active and fashionable young women. The Roxy brand represents freedom, fun, and individual expression, all of which are reflected in the design and custom features of the Roxy phone.

The Right Ring Tones

The Roxy wireless phone features ring tones such as Funky Town, Girls Just Wanna Have Fun, and other tunes. The phone is preloaded with Java™ games, includ-ing Tetris® and Snood® from THQ and Blazing Boards™ by Cybiko. The Roxy i830 also features beach-themed displays. As with all Boost Mobile’s models, the Roxy wireless phone comes with Boost 2WAY™, the long-range walkie-talkie feature.

Price and Place

Advertisements for the Roxy phone focus on girls involved in sports. The suggested retail price is $199, which includes $25 in wireless service credits that are loaded on activation. The limited edition Roxy phone is available at select Quiksilver Boardrider Club stores, select Surf & Specialty stores that carry the Quiksilver and Roxy brands, as well as Best Buy, Good Guys, Wherehouse Music, and Nextel Retail Stores. Boost Mobile customers pay for the minutes only as they need them through the purchase of Re-Boost™ cards, which are available in $20, $30, and $50 denominations and may be purchased as needed at all authorized Boost Mobile retailers (such as Nextel and Target) and 7-Eleven stores.

Identify the target market and provide a customer profile for the Roxy brand wireless phone. Explain Boost Mobile’s marketing mix decision (four Ps) for the Roxy phone and its Mobile service.

Go to the Marketing Essentials OLC through glencoe.com to find a research project on companies’ strengths and weaknesses.

©B

oost Mobile. A

ll rights reserved. Reprinted by perm

ission.



Number and Operations:Fractions, Decimals, and Rounding Think of market share as a fraction of a whole market that converts to a percentage. 1. Write total sales, $4.4 billion, as a

number. 2. Divide Breyers’ sales by the total sales. 3. Then round to the tenth decimal place.



PricePrice is what is exchanged for the product.

Price strategies should reflect what customers are willing and able to pay. To that end, market-ers must consider the price they will charge their industrial customers, including resellers. Pricing decisions also take into account prices that the competition charges for comparable products.

Pricing StrategiesPrice strategies therefore include arriving

at the list price or manufacturer’s suggested retail price, as well as discounts, allow-ances, credit terms, and payment period for industrial customers.

On occasion, a company may use special promotional pricing that would adjust the suggested retail price. A manufacturer may decide to use a promotional price for a fixed

period of time, for example. This technique is frequently used to launch new products.

PromotionPromotion refers to activities related to

advertising, personal selling, sales promotion, and publicity.

Promotional StrategiesPromotional strategies deal with how

potential customers will be told about a company’s products, including the message, the media selected, special offers, and the timing of the promotional campaigns. Figure 1.2 highlights the Tropicana Light ‘n Healthy ad campaign. In that campaign, images were carefully created to match a key feature of the product. Ads for orange juice with added cal-cium or vitamins might have different graph-ics and might run in different magazines.


Key Terms and Concepts 1. What is the difference between consumer and industrial markets?2. What is the relationship among market segmentation, target markets,

and customer profiles?3. Name the four Ps of the marketing mix and explain the importance of a

target market for each of them.

Academic SkillsMath

4. If total sales in the ice cream category were $4.4 billion and Breyers’ sales were $650,417,792, what would be its market share? Round your answer to the tenth decimal place.

English Language Arts/Writing

5. Write a customer profile for a magazine of your choice. Support your description by describing sample articles and advertise-ments from the magazine.



FPO - Copy TK

20 UNIT 1 — THE WORLD OF MARKETING glencoe.com

CHARLES SPIVEYARTIST DEVELOPMENT MANAGER

What do you do at work?

Artist development is all about helping my client take the next step, depending on where he or she is in his or her music career. Some already have a couple albums under their belt, while others are looking to record a fi rst demo. Fundamentally, I am a people broker. If a client needs a new Web site, I connect her to the

best Web people I know. If a singer needs a new headshot, I hand him over to my best photographer. If a band needs 200 people at a show, I talk to every newspaper and radio person I know and get them to push the band.

What skills are most important to you?

People skills, without a doubt, are the most important aspects of my job. I know that PR means public relations but I think it means people relations. Know your clients, know your friends, and know your business partners. They’re all people and want to be treated like people, not profi t centers. My undergraduate education had nothing to do with music, PR, or management, but my MBA course load of marketing classes has certainly paid big dividends. The best lessons I’ve learned have come from other people in the business—people I admire and look up to.

What is your key to success?

It’s important to set high goals and be tenacious, but also have the ability to accept failure and see it as an opportunity to grow. Sure I want to succeed every time I pick up the phone to market my clients, but I have to be willing to accept the rejection that often comes in the music business; I just dust myself off and come back for more.

Courses English language arts, math, business, music, computer tech

Degrees High School, BA, or MBA

Entry-level opportunities exist for MBA graduates in virtually every fi eld you can imagine.

Go to the Marketing Essentials OLC through glencoe.com to fi nd a career-related activity.

Why might MBA-level marketing courses be helpful, even in a career that was not specifi cally the focus of those courses?

20

Growth about as fast as average for the next ten years

Source: Occupational Outlook Handbook

Strong interpersonal skills, resourcefulness, creativity, contact management, and organization



Chapter 1 —- Marketing Is All Around Us 21

C H A P T E R 1 R E V I E W

Key Terms• marketing (p. 5)• goods and services (p. 5)• marketing concept (p. 7)• utility (p. 9)• market (p. 13)

• consumer and industrial markets (p. 13)

• market share (p. 14)• customer profi le (p. 15)• marketing mix (p. 16)

Academic Vocabulary• create (p. 5)• conduct (p. 6)• impact (p. 8)• benefi t (p. 9)• similar (p. 13)• element (p.16)

2. Defi ne the term marketing. (1.1)

3. Identify four skills common in marketing and

business administration. (1.1)

4. List the seven marketing core functions.

(1.1)

5. Explain the marketing concept. (1.1)

6. What is meant by utility? (1.2)

7. What is a market? (1.3)

8. In what ways can a market be identifi ed?

(1.3)

9. What is market share? (1.3)

10. Defi ne a target market. (1.3)

11. What are the four components of the

marketing mix? (1.3)

SECTION 1.1• 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 objectives.

• There are seven marketing core functions. The marketing concept is a focus on

customers’ needs and wants while generating a profi t.

SECTION 1.2• Three benefi ts of marketing are new and improved products, lower prices, and added

value (utility). Five economic utilities are form, place, time, possession, and information.

SECTION 1.3• A market is all the people who share similar needs and wants and who have the ability to

purchase given products.

• Market share is a fi rm’s percentage of total sales of all competitors in a given market.

• The four Ps of the marketing mix are product, place, price, and promotion. Marketing

decisions and strategies for the four Ps are based on the target market.

1. On a sheet of paper, use each of these key terms and academic vocabulary words in a written sentence.



12. Workplace Skills The Right Choice Assume you are a

salesperson in a computer store. A customer is hesitant about buying a mid-priced laptop computer you are showing. The customer’s objection is that it will sell for much less in a year. Do you think the customer is correct? What would you say?

13. Technology ApplicationsUnderstanding Market Functions With two or three classmates, use a word-processing program to write a short report about a new fruit beverage that you believe will be popular with teenagers. Assume your team develops this new product and wants to start selling it. Consider all seven marketing core functions in your report and explain how each applies to the marketing of your new product.

14. Math Practice Figure the Market Share Calculate Nikon’s

market share if total sales in the digital camera market are $211,464,600 and Nikon’s sales are $120,305,671? Round your answer to the tenth decimal place.

Number and Operations:

Computing Precentages To solve this problem, use the following formula:

Company’s Sales / Whole Market’s Sales = Company’s Market Share


15. Social Studies/History Advertising Timeline In the mid 1850s,

circus entrepreneur and promoter P.T. Barnum created some of the most effective ad campaigns of the day, using newspapers ads, handbills, and posters. American marketing and advertising has a colorful history. Research signifi cant events in advertising history from 1800 to the present. Create a timeline on a posterboard and display it in your classroom.

16. Marketing Concepts Select a product that you have recently purchased or a product that interests you. Research (on the Internet, in magazines and newspapers) what type of marketing has been done for this product. List all the examples you can fi nd. Do you think they were good marketing ideas? Why or why not?

17. Understand Target Markets and the Marketing MixSelect an existing product that interests you. Look at how it is advertised in print or on television and the Internet. Research your product’s price and where it is sold. Identify its target market and the four Ps of its marketing mix. Then change the target market for the product.

Activity Show how the four Ps must be revised. Prepare a written report and an oral presentation using presentation software.


glencoe.com

Role PlayThe Importance of MarketingSituation You are to assume the role of a

high school marketing student. Your sister

(judge) designs and makes purses that she

has been selling to friends and family. Your

sister (judge) is now considering opening a

business to sell her purses.

Activity You are to explain to your sister

(judge) about marketing and creating a

marketing plan. You should also explain

marketing in general. In your explanation, also

include the importance of a marketing plan

and the components of a marketing plan.

Relate how these can affect the success of a

business.

Evaluation You will be evaluated on how well

you meet the following performance indicators:

• Describe marketing functions and related

activities.

• Explain the nature of marketing plans.

• Select a target market.

• Set marketing

goals and

objectives.

• Develop a

marketing plan.

18. Check an Online Dictionary Visit the American Marketing Association’s

(AMA) Web site and use its online dictionary to review its most current defi nition of marketing, as well as other key marketing terms that are covered in this chapter.

1. Directions Choose the letter of the best answer. Write the letter for the answer on a separate piece of paper.

What percent of 39 is 13? A 3% B 30% C 33.33% D 300%

2. Directions Choose either T for True or F for False as the answer. Write the letter for the answer on a separate piece of paper.

The four Ps of marketing consist of product, price, planning, and promotion.

T

F

When you sit down to take a math test, jot down important equations or formulas on scrap paper. This way, you will not forget them during the test.

Test-Taking Tip

For more information and DECA Prep practice, go to the Marketing Essentials OLC through glencoe.com.

Chapter 1 —- Marketing Is All Around Us 23



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