Business in the Global Economy

Unit 3 marketingUnit 3.01Marketing Basics Marketing

Marketing Strategy

Target Market

Marketing Mix

Marketing Orientation

Final Consumers

Business Consumers

Consumer Decision-Making Process

Buying Motives

Key termsThe activity, set of institutions, and process for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at largeAmerican Marketing Association

Marketing is used to

Identify the customer

Satisfy the customer

Keep the customer

MarketingMarketing functions

Product & Service ManagementDesigning, developing, maintaining, improving, and acquiring products and services that meet consumer needsi.e. creating new products

DistributionDetermining the best ways for customers to locate, obtain, and use the products and services of an organizationi.e. shipping, handling, and storing of productsMarketing functionsSellingCommunicating directly with potential customers to determine and satisfy their needsi.e. face to face or telemarketing

Marketing-Information ManagementObtaining, managing, and using market information to improve business decision-making and the performance of marketing activitiesi.e. market research, database management

PricingSetting and communicating the value of products and servicesi.e. low enough that customers willing to pay, high enough for a business to make a profitMarketing functionsFinancial AnalysisBudgeting for marketing activities, obtaining the necessary funds needed for operations, and providing financial assistance to customers so they can purchase the business products and servicesi.e. credit card payment systemsVisa

Marketing functions

PromotionCommunicating information about products and services to potential customersi.e. advertisingMost visible form of marketingWorldwide, over $545.4 Billion spent on advertisingTelevision (commercials)Print (magazine ads)RadioDigital Media

Marketing function

Advertising AgeCHAPTER 311/18/2015ITB8PromotionIn 2014, US spent $180 Billion on advertisingEquates to $565 per personBiggest US spenders in 2014:Proctor & Gamble$4.6 BillionAT&T$3.3 BillionGeneral Motors$3.1 BillionComcast$3.0 BillionVerizon$2.5 Billion

Marketing function

SLIDE 10

PromotionProcter & GambleTide detergent, Crest toothpaste, Cover Girl make up, etc. Why advertise so much?Consumer productsHighly competitiveLargest expenses?TV advertising Magazine advertisingExpensive celebrity endorsements Easily reach target market

Marketing function

PromotionAmount spent on advertising varies Marketing function

Advertising AgeCHAPTER 311/18/2015ITB12A Dealer for the People$18,000 monthly advertising budgetMarketing function

Advertising AgeCHAPTER 311/18/2015ITB13PromotionThe most expensive commercials of all timeCARLTON DRAUGHT: $1.5 million (2005)FERRARI/SHELL: $4.5 million (2007)HONDA: $6.2 million (2003)PEPSI: $8.1 million (2002)CHRYSLER: $12 million (2011)AVIVA: $13.4 million (2008)GUINNESS: $16 million (2007)CHANEL: $33 million (2004)

Marketing functionA companys plan that identifies how it will use marketing to achieve its goals

Need to come up with a good one ~ Marketing activities often cost 50% or more of the selling price of a product or serviceAdvertising-to-Sales Ratio (A/S Ratio)Measurement of the effectiveness of an advertising campaignCalculated by dividing total advertising expenses by sales revenueHigh A/S Ratio high advertising expenses resulted in low sales revenueLow A/S Ratio the advertising campaign generated sales

Marketing strategyA specific group of consumers who have similar wants and needs

Four ways to identify target marketsGeographics: The location, size of the area, density, and climate zone of your customers.Demographics: The age, gender, income, family composition and size, occupation, and education of your customers.Psychographics: The general personality, behavior, life-style, rate of use, repetition of need, benefits sought, and loyalty characteristics of your customers.Behaviors: The needs they seek to fulfill, the level of knowledge, information sources, attitude, use or response to a product of your customers.

Target marketWhy target specific groups?Streamline advertisingFocus on income levelUnderstand buying behaviors

Where would you find these advertisements?Target market

The blending of four marketing elements product, placement (distribution), price, and promotion

Known as the 4Ps

Marketing Orientation considers the needs of customerswhen developing a marketing mixMarketing mix

If a product appeals to a group of customers with unsatisfied needs, it has a real chance to succeed

If customers do not see a need or believe they have other choices that are better or less costly, the product will most likely not succeed

10 Famous Product FailuresSony Betamax (VCR cheaper)Coca Cola New Coke (nothing wrong with old Coke)McDonalds Arch Deluxe Burger (McDs = fine dining)DeLorean DMC 12 (founder arrested for drug trafficking)Understand customers2 Types of CustomersFinal ConsumersAKA Business-to-Consumers (B2C)Persons who buy products and services mostly for their own useCan be done in-store or on-lineE-CommerceCommercial transactions conducted electronically on the internetPlayed a large role in the rapid development of thecommercial Internet in the 1990s Sold almost $1.5 Trillion in ecommerce worldwide in 2014

Understanding customers

2 Types of CustomersBusiness ConsumersAKA Business-to-Business (B2B)When one business makes a commercial transaction with anotherSourcing a business purchases materials from another business that are needed to make their own productExample: a food manufacturer purchasing ingredients (salt, flour, sugar, etc.)Services a business needs the services of another company to conduct their own businessExample hiring an accounting firm to audit their financesResale a business purchases goods or services with the intention of selling them rather than consuming or using them directlyExample a retail store stocking their shelves with products to sell consumersUnderstanding customersThe specific sequence of steps consumers follow to make a purchase

Consumer decision making1.Recognize a need

2.Gather information

3.Select and evaluate alternatives

4.Make a purchase decision

5.Determine the effectiveness of the decisionReasons consumers decide what products and services to purchase

Emotional Buying MotivesWhen a buyer decides to purchase a product without thinking over the matter logically and carefully Without much reasoningRational Buying MotivesWhen a buyer decides to buy a certain thing after careful considerationAfter thinking over the matter consciously and logically

Buying motives

Emotional Buying MotivesPride or PrestigeMost common and strongest emotional buying motiveConsumers feel that the possession of the product increases their social prestige or statusEmulation or ImitationThe desire to imitate otherWhy celebrity endorsements work so wellAffectionGoods are purchased out of love for othersWant to do something nice for a loved oneComfort or desire for comfortNot a need, but a want that brings comfortAir conditioning, washing machine, cushion beds, etc.Buying motivesEmotional Buying MotivesSex AppealBuyers purchase goods that will make them attractive to othersCosmetics, nice clothes, etc.AmbitionSales decisions based on a goalDrive a BMW by the time youre 30, own a 3000 sq foot houseDistinctiveness or IndividualityPeople motivated to buy things that make them different from everyone elseRecreation or PleasureVacation, boat, new carHunger and ThirstDisplay signs or free samples at storeFreshly baked cookie smell

Buying motivesRational Buying MotivesSafety or SecurityAlarm systems on the home, safes, medicine, etc.Economy/Lower PricePurchase less expensive items to save moneyCouponing, generic brands, fuel efficient carsSuitability/Utility/VersatilityMultiple use itemsDurabilityLong lasting/high quality itemsConveniencePurchase items that are easier, more convenient to useAutomatic vs. manual car

Buying motives