* * *

Evolution of Marketing
Production Era - Up to early 1900s Selling Era - 1920s-1950s Marketing Concept Era - 1950s 1980s
Customer Service Profit

Customer Relationship Era - 1990s+

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I. WHAT IS MARKETING? Learning goal 1 Define marketing and explain how the marketing concept applies in both for-profit and nonprofit organizations. The Evolution of the Field of Marketing The Production Era The Selling Era The Marketing Concept Era The Customer Relationship Era

Nonprofit Organizations and Marketing

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Describe the marketing research process, and explain how marketers use environmental scanning to learn about the changing marketing environment. The Marketing Research Process
The Marketing Environment Global Factors Technological Factors Sociocultural Factors Competitive Factors Economic Factors Two Different Markets: Consumer and Business-to-Business (B2B)
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Marketing Process
1. Find Opportunity 2. Conduct Research 3. Identify Target Market 4. Design Product 5. Product Testing 6. Brand Name, Design & Price 7. Develop Distribution System 8. Design Promotional Program 9. Build Relationship With Customer

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III.THE CONSUMER MARKET Learning goal 4 Explain how marketers meet the needs of the consumer market through market segmentation, relationship marketing, and the study of consumer behavior. Segmenting the Consumer Market Reaching Smaller Market Segments Moving toward Relationship Marketing Forming Communities of Buyers The Consumer Decision-Making Process

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IV.

THE BUSINESS-TO-BUSINESS MARKET Learning goal 5

List ways in which the business-to-business market differs from the consumer market.

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WHAT IS MARKETING? Learning goal 1 Define marketing and explain how the marketing concept drives both for-profit and nonprofit organizations. MARKETING is the process of planning and executing the conception, pricing, promotion, and distribution of goods and services to facilitate exchanges that satisfy individual and organizational objectives. Selling and advertising are only part of marketing. Marketing activities depend on what needs to be done to fill customers needs.
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THE EVOLUTION OF THE FIELD OF MARKETING THE PRODUCTION ERA Until the early 1900s, the general philosophy was to produce as much as you can because there is a limitless market. The goals of business CENTERED ON PRODUCTION.

The greatest marketing need was for distribution and storage. THE SELLING ERA By the 1920s, the business philosophy turned to an EMPHASIS ON SELLING AND ADVERTISING to sell existing products.
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THE MARKETING ERA The BABY BOOM after WWII created a tremendous demand for goods and services. If they wanted to get their business, businesses had to be RESPONSIVE TO CONSUMERS. The MARKETING CONCEPT emerged in the 1950s.

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The Marketing Environment

Economic
Competitive Technology

Customer
Social Global
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The MARKETING CONCEPT is a three-part business philosophy:

A CUSTOMER ORIENTATION: Find out what consumers want and provide it. A SERVICE ORIENTATION: Make sure everyone in the organization has the same objectiveCUSTOMER SATISFACTION. A PROFIT ORIENTATION: Focus on those goods and services that will earn the most profit. During the 1980s, business began to apply the marketing concept more aggressively.
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THE CUSTOMER RELATIONSHIP ERA CUSTOMER RELATIONSHIP MANAGEMENT (CRM) is the process of learning as much as possible about customers and doing everything you can to satisfy themor even exceed their expectationswith goods and services over time. The goal is to enhance customer satisfaction and stimulate long-term customer loyalty. NONPROFIT ORGANIZATIONS AND MARKETING Marketing is a crucial part of almost all organizations, profit and nonprofit. Charities, churches, politicians, states, and many other organizations all use marketing.
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THE MARKETING MIX Learning goal 2 List and describe the four Ps of marketing. Pleasing customers has become a priority. The FOUR FACTORS OF MARKETING are: Product Price Place Promotion CONTROLLABLE PARTS of the marketing process involve: Designing a want-satisfying PRODUCT Setting a PRICE for the product Placing the product in a PLACE where people will buy it PROMOTING the product 13-13

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Elements in the Marketing Mix

Product
Marketing Program
Buy at Computers R Us

Place

Price

Promotion
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These four factors have become known as the MARKETING MIX the ingredients that go into a marketing program: product, price, place, and promotion. APPLYING THE MARKETING PROCESS To present an overview of the marketing process, the text takes a hypothetical vegetarian restaurant through THE MARKETING PROCESS. The process involves: Recognizing a need researching the market Identifying the TARGET MARKET The text uses the example of a start-up vegetarian restaurant, Very Vegetarian.
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DESIGNING A PRODUCT TO MEET NEEDS First, develop a product to fill the identified need. A PRODUCT is any physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eye of consumers, such as the brand. The next step is CONCEPT TESTING developing an accurate description of your product and asking people whether or not the concept (the idea of the cereal) appeals to them. TEST MARKETING is the process of testing products among potential users. Next, decide which brand names should be offered to attract customers.
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Product Design
Concept Test
Test Market Package Design/Brand Name

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A BRAND NAME is a word, letter, or group of words or letters that differentiates one sellers goods and services from those of competitors. These steps create THE FIRST PPRODUCT. SETTING AN APPROPRIATE PRICE (the second P) The price depends on a number of factors, such as the price of competing restaurants. You also have to consider the costs of producing, distributing, and promoting the product.

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GETTING THE PRODUCT TO THE RIGHT PLACE (the third P) Once the product is manufactured, you have to decide how to get it to the consumer.

You may want to sell your product through INTERMEDIARIES, (MARKETING MIDDLEMEN,) organizations that specialize in distributing goods from producer to customer.
DEVELOPING AN EFFECTIVE PROMOTIONAL STRATEGY (the fourth P)

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* PROMOTION * consists of all the techniques sellers use to * motivate people to buy products or services. RELATIONSHIP BUILDING WITH CUSTOMERS includes responding to any suggestions they may make to improve the product or the marketing of the product.

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Marketing is an ONGOING PROCESS; companies must continually adapt to changes in the market. Listening to customers is the key to marketing. PROVIDING MARKETERS WITH INFORMATION Learning goal 3 Describe the marketing research process, and explain how marketers use environmental scanning to learn about the changing marketing environment.

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MARKETING RESEARCH is the analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions. One goal is to determine exactly what consumers want and need, now and in the future. Businesses need information to compete effectively, and MARKETING RESEARCH is the activity that gathers that information. In addition to customers, marketers should pay attention to the views of employees, shareholders, consumer advocates, and other stakeholders.

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THE MARKETING RESEARCH PROCESS

STEP 1. Defining the problem and determining the present situation

STEP 2. Collecting data Research can be quite expensive, so SOME TRADE-OFF must be made between information needed and the cost.

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Less expensive is SECONDARY DATA, information that has already been published previously by others and published in journals and books or made available online. Often, secondary data dont provide all the necessary information, so marketers must do their own research. The result of new studies is PRIMARY DATA, data that you gather yourself (not from secondary sources such as books and magazines.) Despite its name, secondary data should be gathered first as it is the least expensive. Telephone surveys, online surveys, mail surveys, and personal interviews are the most common methods of gathering survey information.
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Sources for Marketing Research Information

Secondary Data Government Publications Commercial Publications Magazines Newspapers Internal/General Sources

Primary Data Surveys Focus groups Interviews Observation Online surveys Questionnaires Customer comments

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A FOCUS GROUP is of a small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, its product, or other given issues. Marketers can now gather both secondary and primary data online.

STEP 3. Analyzing the research data The data collected must be turned into useful information. Careful, honest interpretation of the data can reveal specific marketing challenges.
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STEP 4. Choosing the best solution and implement it Researchers determine ALTERNATIVE STRATEGIES and make recommendations as to which strategy may be best. The actions taken should be FOLLOWED UP to see if results were as expected. Consumers are demanding more ethical behavior from companies. THE MARKETING ENVIRONMENT ENVIRONMENTAL SCANNING is the process of identifying the factors that can affect marketing success

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Market Research Process

Define the Question
Collect Data

Analyze the data

Choose the best solution and implement

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* GLOBAL FACTORS * The most important global change today is the growth of the Internet. Globalization has also put pressure on companies that deliver * products.
TECHNOLOGICAL FACTORS include the Internet, the growth of consumer databases, flexible manufacturing, and mass customization. SOCIOCULTURAL FACTORS include population growth and changing demographics, such as the aging population and the preferences of various ethnic groups.

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COMPETITIVE FACTORS Brick-and-mortar companies must adjust to new competition from the Internet. They have to adapt to competitors, who can deliver products quickly or provide excellent service. ECONOMIC FACTORS Marketers must pay close attention to the economic environment in the U.S. and globally.

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TWO DIFFERENT MARKETS: CONSUMER AND BUSINESS-TO-BUSINESS (B2B) THERE ARE TWO MAJOR MARKETS: The CONSUMER MARKET consists of all the individuals or households that want goods and services for personal consumption or use. The BUSINESS-TO-BUSINESS (B2B) MARKET consists of all the individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others (traditionally called INDUSTRIAL GOODS.) The buyers REASON FOR BUYING and the END USE of the product determine whether it is considered a consumer product or a B2B product.
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Business-to-Business (B2B)
1. Number 2. Size 3. Geographic Concentration 4. Rational 5. Direct Sales 6. Personal Selling
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THE CONSUMER MARKET Consumer groups differ greatly in age, education level, income, and taste. Marketers must first decide which group to serve and then develop products and services specially tailored to their needs (as Campbell Soup Company does.) MARKET SEGMENTATION is the process of dividing the total market into groups whose members have similar characteristics. TARGET MARKETING is marketing directly toward those groups (market segments) an organization decides it can serve profitably.

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SEGMENTING THE CONSUMER MARKET Learning goal 4 Explain how marketers meet the needs of the consumer market through market segmentation, relationship marketing, and the study of consumer behavior. GEOGRAPHIC SEGMENTATION is dividing the market by geographic area. DEMOGRAPHIC SEGMENTATION is dividing the market by age, income, and education level. PSYCHOGRAPHIC SEGMENTATION is dividing the market using the groups values, attitudes, and interests. BENEFIT SEGMENTATION is dividing the market by determining which benefits of the product to talk about.
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Market Segmentation
Target Marketing
Geographic Demographic Psychographic Benefit Volume

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VOLUME, OR USAGE, SEGMENTATION is dividing the market by usage (volume of use.) The best segmentation strategy is to USE ALL THE VARIABLES to come up with a consumer profile thats sizable, reachable, and profitable. REACHING SMALLER MARKET SEGMENTS NICHE MARKETING is the process of finding small but profitable market segments and designing custom-made products for them. ONE-TO-ONE MARKETING means developing a unique mix of goods and services for each individual customer. This is easier to do one-to-one marketing in B2B markets, but is becoming possible in consumer markets as well.
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Different Markets
Consumer
Niche One-to-One

Business-toBusiness (B2B)

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MOVING TOWARD RELATIONSHIP MARKETING MASS MARKETING means developing products and promotions to please large groups of people. The mass marketer tries to sell products to as many people as possible. That means using mass media, such as TV, radio, and newspapers. RELATIONSHIP MARKETING is a marketing strategy with the goal of keeping individual customers over time by offering them products that exactly meet their requirements. RELATIONSHIP MARKETING moves away from mass production toward CUSTOM-MADE GOODS.

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Pricing Strategies
Cost-Plus
Value-Based

Skimming
Discount

Competitive
Going-Rate

Loss-Leader
Psychological

Source: Perdue University, May 2005

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Influences on Consumer Behavior

Culture
Learning Reference Group

Customer
Cognitive Subculture

Dissonance
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SOCIOCULTURAL INFLUENCES such as reference groups and culture Consumer behavior is also influenced by other factors: LEARNING involves changes in an individuals behavior resulting from previous experiences and information. A REFERENCE GROUP is the group that an individual uses as a reference point in formation of his or her beliefs, attitudes, values, or behavior. CULTURE is the set of values, attitudes, and ways of doing things that are transmitted from one generation to another in a given society. .

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SUBCULTURE is the set of values, attitudes, and ways of doing things that results from belonging to a certain group with which one closely identifies. COGNITIVE DISSONANCE is the type of psychological conflict that can occur after a purchasesuch as doubts about whether they got the best product at the best price.

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The latest in TECHNOLOGY enables sellers to work with buyers to determine their individual wants and needs and to develop goods and services specifically designed for those individuals. One-way messages in mass media are replaced by a personal dialogue among participants. The text uses two examples: service firms such as airlines, rental car companies, and hotels; and the Hard Rock Caf. THE CONSUMER DECISION-MAKING PROCESS Studying consumer behavior centers on studying the CONSUMER
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PURCHASE DECISION PROCESS: Problem recognition Information search Evaluate alternatives Make purchase decision Postpurchase evaluation Consumer behavior researchers also study the various INFLUENCES THAT IMPACT CONSUMER BEHAVIOR. MARKETING MIX VARIABLES (the four Ps) PSYCHOLOGICAL INFLUENCES such as perception and attitudes SITUATIONAL INFLUENCES such as the type of purchase and physical surroundings
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Several factors make BUSINESS-TO-BUSINESS MARKETING DIFFERENT NUMBER: There are relatively FEW CUSTOMERS compared to the consumer market. SIZE Though few in number, industrial customers are relatively VERY LARGE.

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GEOGRAPHICALLY CONCENTRATED: B2B markets tend to be CONCENTRATED in certain areas of the country. RATIONAL Business buyers are generally MORE RATIONAL in their purchase decisions. DIRECT B2B sales tend to be DIRECT. PERSONAL SELLING There is much more emphasis in personal selling than in the consumer market. YOUR PROSPECTS IN MARKETING There is a wider variety of careers in marketing than in most 13-46 business areas.

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Marketing Strategies in Non-Profit Organizations

Find a productive board of trustees (Directors) Practice strategic planning Carefully segment target market Train & develop volunteers for long-term Be frugal- know how to manage finances
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Make marketing the focus; not short-term sales Know your mission and review mission strategy regularly

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Where They Got Their Names

Founder(s)

Taco Bell
Days Inn Bose Corp Ty Inc. Bristol-Myers

Glen Bell
Cecil Day Amar Bose Ty Warner William Bristol & John Myers
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Source: World Features Syndicate

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Other Things To Keep In Mind With Price

Payment Period Allowances
Regular Seasonal

Price Differences
Target Customers Geographic Areas

Bundling Trade Discounts Price Flexibility Credit Terms

Volume Discounts and Wholesale Pricing Cash and Early Pmt Discount

Source: Perdue University, May 2005

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Place Decisions
Direct Sales Reseller Sales Market Coverage
Intensive Selective Exclusive

Inventory Size Logistics

Source: Perdue University, May 2005

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Advertising Mascots
Meow Mix Cat 35 years Tony the Tiger 54 years Toucan Sam 45 years Geoffrey the Giraffe 35 years Coca-Cola Polar Bears 13 years MGM Lion 78 years

Source: World Feature Syndicate

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Marketing Data: Least Error Method

1. Put someone in charge. 2. Give everyone a method of collecting data. 3. Identify the right data. 4. Centralize the data. 5. Use the Data.

Source: cmomagazine.com, September 2004

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Why Should You Market To Women?

Women control 80% of all household spending. Women purchase 81% of all products and services manufactured. 80% of all checks written are signed by women.

85% of all automobile purchases are influenced by women. In 2005, 4.7 Million women were selfemployed.
Source: St. Louis Small Business Monthly, May 2004

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Consumer Decision Making

Marketing mix
Product

Sociocultural
Reference groups

Price
Place Promotion

Family
Social class Culture Subculture

Psychological
Perception Attitudes Learning Motivation

Decision-Making Process
Problem Recognition Information Search Alternative evaluation Purchase decision

Situational
Type of Purchase Social surroundings Physical surroundings Previous experience
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Postpurchase evaluation
(cognitive dissonance)

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Planning For More Business

What do we do well-and not do well? What are we really selling? To whom do we sell? How do we reach our target group? How can we break through the clutter?

Source: Investors Business Daily, February 9, 2004

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Business-to-Consumer E-Commerce as % of Sales

2000 2001 2002 2003 2004 2005 0.00% 0.50% 1.00% 1.50% 2.00% 2.50%

Source: U.S. Census, May 18, 2006; http://home.earthlink.net/~lindberg_b/GECGrwth.htm, accessed August 5, 2006

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Top Marketing Tactics of Small Businesses

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%
Web Sites Search Engine Keywords Community Relations Public Relations/Media Coverage E-mail Marketing Direct Marketing

Source: Investors Business Daily, June 1, 2004

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