/46-22_files/46-2200001im.jpg" width="695" height="1066" useMap="#Map">

Introduction to Business MGT 211

Lesson 22

MARKETING

The American Marketing Association defines marketing as 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.

Marketing plays an important role in society by helping people satisfy their needs and wants

and by helping organizations decide what to produce. Value compares a product's benefits

with its costs. Consumers seek products that offer value. Utility is the value to the customer

that is added by the marketer. There are four types of utility: time, place, ownership, and form

utility.

The external environment consists of the outsides forces that influence marketing strategy and

decision making. The political/legal environment includes laws and regulations, both domestic

and foreign, that may define or constrain business activities. The social/cultural environment is

the context within which people's values, beliefs, and ideas affect marketing decisions. The

technological environment includes the technological developments that affect existing and

new products. The economic environment consists of the conditions, such as inflation,

recession, and interest rates, that influence both consumer and organizational spending

patterns.

Market segmentation is the process of dividing markets into categories of customers.

Businesses have learned that marketing is more successful when it is aimed toward specific

target markets groups of consumers with similar wants and needs. Markets may be

segmented by geographic, demographic, psychographic, or product use variables.

Market research is the study of what buyers need and of the best ways to meet those needs.

This process entails studying the firm's customers, evaluating possible changes in the

marketing mix, and helping marketing managers make better decisions about marketing

programs. The marketing research process involves the selection of a research method, the

collection of data, the analysis of data, and the preparation of a report that may include

recommendations for action. The four most common research methods are observation,

surveys, focus groups, and experimentation.

A number of personal and psychological considerations, along with various social and cultural

influences, affect consumer behavior. When making buying decisions, consumers first

determine or respond to a problem or need and then collect as much information as they think

necessary before making a purchase. Post-purchase evaluations are also important to

marketers because they influence future buying patterns.

The industrial market includes firms that buy goods falling into one of two categories: Goods to

be converted into other products and goods that are used up during production. Farmers and

manufacturers are members of the industrial market, Members of the reseller market (mostly

wholesalers) are intermediaries who buy and resell finished goods. Besides governments and

agencies at all levels, the government and institutional market includes such non-government

organizations as hospitals, museums, and charities.

There are four main differences between consumer and organizational buying behavior. First,

the nature of demand is different; in organizational markets it is often derived (resulting from

related consumer demand) or inelastic (largely unaffected by price changes). Second,

organizational buyers are typically professionals, specialists, or experts. Third, organizational

buyers develop product specifications, evaluate alternatives more thoroughly, and make more

/46-22_files/46-2200002im.jpg" width="695" height="1066" useMap="#Map">

Introduction to Business MGT 211

systematic post-purchase evaluations. Finally, they often develop enduring buyer-seller

relationships.

1. What Is Marketing?

Although you may be just beginning your classroom study of marketing, organizations like

Microsoft and Coca-Cola have been trying to sell you things for many years. You have

probably become accustomed to many marketing techniques--contests, advertisements,

fascinating displays placed in strategic locations, price markdowns and giveaways. What

you are about to learn is that marketing requires a lot of planning and implementation to

develop a new product, set its price, get it to consumers, and convince them to buy it.

Marketing, as defined by the American Marketing Association, is planning and executing the

conception, pricing, promotion, and distribution of ideas, goods, and services to create

exchanges that satisfy individual and organizational objectives. However, in laymen's terms,

marketing is quite simply finding a need and filling it.

a. Marketing:

Providing

Value

and

Satisfaction

Marketing plays an important role in society by helping people satisfy their

needs and wants and by helping organizations decide what to produce.

Value compares a product's benefits with its costs.

ii.

Utility is the value to the customer that is added by the marketer. In

other words, utility is the ability of a product to satisfy a human want or

need. There are four types of utility:

Time Utility is making the product available when the customer

wants it.

Place Utility is making the product available where consumers

want it.

Ownership Utility is the customer value created when someone

takes ownership of a product. Marketers create possession utility

by facilitating the transaction.

Form Utility refers to the characteristics of the product such as

its shape, size, color, function, and style.

b. Marketing: Goods, Services, and Ideas

The influence of marketing permeates everyday life, applying to goods,

services, and ideas. Marketing applies to tangible and intangible goods and

include:

Consumer Goods--products purchased by consumers for personal

use.

Industrial Goods--products purchased by companies to produce other

products.

Services--intangible products, such as time, expertise, or an activity,

that can be purchased.

/46-22_files/46-2200003im.jpg" width="695" height="1066" useMap="#Map">

Introduction to Business MGT 211

Ideas--intangibles such as, MADD, Mothers Against Drunk Driving.

Relationship Marketing emphasizes lasting relationships with customers

and suppliers. Purchase incentives and customer loyalty programs are just

some of the ways in which firms try to promote these relationships.