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BUS 100: Chapter 5 (Marketing)
Transcript of BUS 100: Chapter 5 (Marketing)
a group of activities designed to expedite transactions by creating, distributing, pricing and promoting goods, services and ideas. It is an EXCHANGE relationship.
Marketing is NOT:
manipulating consumers or JUST advertising.
The Scope of Marketing
This refers to the ability of goods and services to satisfy the wants of customers.
Trying to create utility by satisfying customer wants is never ending.
Consumer Market Segmentation
Marketing and Society
Two key factors have had a dramatic impact on marketing in the last couple of decades:
A surge in the social responsibility movement
The growth of the internet
Everything can be marketed, even people. Here are some examples:
This category involves drawing people to a particular place, such as:
Cities and states
Museums, parks, etc.
This includes marketing, or sponsoring, events such as:
A whole range of organizations market ideas meant to change how people think or act, such as:
Buckle your seatbelt
Some of these can be combined. For instance, a blood drive might be a combination of event and idea marketing.
The Evolution of Marketing
The Production Era
In the early 1900's, concern for the customer was practically a joke.
Historically, consumers didn't have many (or any) choices and products were purchased as soon as they were made available to consumers.
The priority of business was to produce products as efficiently as possible.
The Selling Era
By the 1920's, production capacity had increased dramatically.
For the first time, supply exceeded demand, which led to the need to sell.
The selling focus grew in the 1930's and 1940's as the Depression and WWII made consumers even more reluctant to part with their limited money.
The Marketing Era
Things changed dramatically in the 1950's as military production shifted to consumer production, which flooded the market, giving consumers many choices.
Marriages and birthrates soared during this time.
To compete, marketers attempted to rpovide goods that met customer needs better than competitors.
The marketing concept materialized.
The Marketing Concept
This refers to the philosophy that makes customer satisfaction (now and in the future) the central focus of the entire organization.
Companies that embrace the marketing concept strive to delight customers, integrating this goal into all business activities.
The Relationship Era
We have now evolved to a point in which the marketing concept has gathered momentum, leading to the relationship era.
This zeros in on long-term customer relationships.
Acquiring a new customer can cost five times more than keeping an existing customer.
Customer Relationship Management
(CRM) is the centerpiece of successful modern marketing.
It is the ongoing process of acquiring, maintaining an growing profitable customer relationships by delivering unmatched value.
Excelling with CRM requires the collection, management and application of data.
Sometimes, the scope of a business's relationships with customers is limited. This can be due to either a lack of data, or the type of industry.
Colgate-Palmolive can't forget a close personal bond with every person who buys a bar of soap.
However, they can invite them to call their toll-free line with questions or comments, provide an e-newsletter or special offers, and actively collect data from customers who do interact with them.
If you have a high-ticket product and a smaller customer base, you're much more likely to pursue a full partnership with each of your key clients.
What are some examples?
You know you've delivered value when your customers believe that your product has a better relationship between the cost and benefits than any other competitor.
By this definition, low cost does not always mean high value.
What are some products that are more expensive than their competitors, but still popular because of their quality?
Perceived vs. Actual Value
The operative idea here is perceived. Simply creating value isn't enough; you must also help customers believe that your product is uniquely qualified to meet their needs.
Achieving customer satisfaction can be tricky. Some marketers fall into these traps:
Overpromising and not delivering
Underpromising and setting low expectations. Customers then won't be willing to try your product
Finding the right balance can be tricky!
This is the payoff for delivering value and generating satisfaction.
Loyal customers will buy from you again and again, and will sometimes even pay more for your product.
They forgive mistakes, provide valuable feedback, and refer their friends.
What brands or companies are you loyal to?
This helps identify your target audience and determine how you will reach them.
A good marketing plan is thorough, well-researched, and updated annually.
One of the big questions addressed in a marketing plan is the determination of market segmentation.
This refers to the group of people who are most likely to buy your product.
This is where you should concentrate your marketing efforts.
This allows for the most efficient use of marketing resources.
Who do you think is included in the target market for Harley Davidson motorcycles? Axe deodorant? MAC cosmetics?
B2C vs. B2B
Business-to-consumer (B2C) marketers direct their efforts to people who are buying products for personal consumption.
Business-to-business (B2B) marketers direct their efforts to customers who are buying products to use to produce other products.
Business Market Segmentation
A good, service, or idea that has tangible and intangible attributes that provide satisfaction and benefits to consumers.
Making products available to consumers in the quantities and locations desired. Also known as "distribution".
A value placed on a product or service that is exchanged between a buyer and seller.
A persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals and organizations to accept goods, services and ideas.
The Marketing Environment
While marketers influence the elements of the marketing mix, they must anticipate (through environmental scanning) and respond to the elements of the external environment, which they typically cannot control.
This affects marketers the most on a day-to-day basis.
Understanding the competitive environment often begins with an analysis of market share.
Businesses must constantly monitor how competitors (both direct and indirect) handle each element of their marketing mix.
This area includes laws, regulations and the political climate.
Most U.S. laws and regulations are clear, but others are evolving.
Political climate includes changing levels of governmental support for various business categories.
This environment affects some industries (ex: communications) more than others.
The only certainty in the economic environment is change.
The timing of economic expansions and contractions are virtually impossible to predict.
The goal of a marketer, then, is to identify and respond to changes as soon as possible and try to identify new opportunities.
This element covers a variety of factors, including lifestyle, customs, language, attitudes, interests and population shifts.
Trends can change rapidly, with dramatic impact on marketing decisions.
Anticipating trends is important for marketers.
Changes in technology can be very visible to consumers (ex: new iPhone)
However, technology affects marketers in ways that are less directly visible.
For example, technology allows mass customization of Levi's at a reasonable price
The Global Marketing Environment
As the internet has grown, the world market has become accessible to virtually every business.
This boosts the importance of understanding each element of the marketing environment.
It is also important to tailor the marketing mix to global markets.
Consumer behavior refers specifically to how people act when they are buying products for their own personal consumption.
The decisions might seem spontaneous, but they often result from a complex set of influences (discussed in the next section).
Marketers add their own influence through the marketing mix.
Cognitive dissonance occurs when one regrets a major purchase. Some marketers try to prevent this (sending a mailer after the purchase to tout the benefits of the item).
This refers to how people act when they are buying products to use to produce other products (example: chemicals or computer servers.)
Business buyers typically have purchasing training and apply rational criteria to their decision-making process.
Primary research comes directly from consumers.
Secondary research comes indirectly from other sources.
Decision processes and actions of people who purchase and use products.
Person selects, organizes and interprets information received from his or her senses.
The inner drive that directs a person's behavior toward goals.
Brings about changes in a person's behavior based on info and experience.
Knowledge and positive or negative feelings about something.
Organization of an individual's distinguishing character traits, attitudes or habits.
Here are five psychological variables of buying behavior.
convenience, price, prestige...
Example: You SEE a television commercial or HEAR a radio spot.
Example: If positive, will return.
If negative, will not.
Example: Negative attitude toward Wal-mart's culture.
Example: A "typical"
This refers to the strategy of a company promoting the ecological benefits of their products.
Technology has created opportunities for marketers. One such opportunity is mass customization, which is the creation of products tailored for individual consumers on a mass basis.