Marketing Function Introduction to Business What is Marketing

Marketing Function Introduction to Business

What is Marketing? Marketing is a set of activities related to creating, communicating, delivering, and exchanging offerings that have value for others. In business, the function of marketing is to bring value to customers, whom the business seeks to identify, satisfy, and retain.

The Exchange Process The act of obtaining a desired object from someone by offering something of value in return. • customer (buyer): a person or organization with a want or need who is willing to give money or other personal resource to address this need • product: a physical good, a service, experience or idea designed to fill the customer’s want or need • provider (seller): the company or organization offering a need-satisfying thing • transaction: the terms around which both parties agree to trade value-for-value

The Role of the Customer All marketing centers on creating, delivering, and communicating value to the customer. A value proposition is a clear and succinct statement to the customer of the value being offered by a company’s products or services.

Company Orientations The Marketing Concept Success depends on doing better than competitors at understanding, creating, delivering, and communicating value to their target customers The Product Concept Success depends on creating the best, most innovative product for the lowest price The Sales Concept Success depends on a good sales team with the right tools and incentives. The Production Concept Success depends on low production costs, highly efficient processes, and mass distribution.

What is Value? Value is the measure of the benefit gained from a product or service relative to the full cost of the item. Value is more than price. In the process of the marketing exchange, value must be created. Value = benefit - cost

Value Proposition A value proposition is a clear and succinct statement to the customer of the value being offered by a company’s products or services. It should set the offering apart or differentiate it from other offerings.

Relationship Stage Typical Marketing Activities Meeting and Getting Acquainted • Find desirable target customers, including those likely to deliver a high customer lifetime value • Understand what these customers want • Build awareness and demand for what you offer • Capture new business Providing a Satisfying Experience Sustain a Committed Relationship Measure and improve customer satisfaction Track how customers’ needs and wants evolve Develop customer confidence, trust, and goodwill Demonstrate and communicate competitive advantage • Monitor and counter competitive forces • • • Convert contacts into loyal repeat customers, rather than one-time customers • Anticipate and respond to evolving needs • Deepen relationships, expand reach of and reliance on what you offer

What is Customer Lifetime Value? Customer lifetime value predicts how much profit the company will make from the customer during his or her lifetime relationship with the company.

What Influences a Purchase?

Stages of the Buying Process

Segmentation and Targeting One of the first steps in effective marketing is identifying and reaching the right customers through segmentation and targeting. Market segmentation is the process of splitting buyers into distinct, measurable groups that share similar wants and needs. Ex. geographic, demographic, psychographic, and behavioral criteria. Target segments are the people you are trying to serve.

Defining a Target Market 1. Identify the business need you address 2. Segment your total market 3. Profile your target customer segment(s) 4. Research and validate your market opportunity

Market Information Marketing research is the process of identifying marketing opportunities and solving marketing problems using customer insights. A marketing information system is a combination of people, technologies, and processes for managing marketing information, overseeing market research activities, and using customer insights to guide marketing decisions and broader management and strategy decisions.

Questions for Market Research • Who is the customer? • What problems is the customer trying to solve with a given purchase? • What does the customer desire in the way of satisfaction? • How does the customer get information about available choices? • Where does the customer choose to purchase? • Why does the customer buy or not buy? • When does the customer make a purchase? • How does the customer go about seeking satisfaction in the market?

The Marketing Mix There are multiple factors that can influence a customer’s decision about what to buy—a mix of factors. The marketing mix, also known as the four Ps: • Product: the goods and services offered • Promotion: communication and information • Place: distribution or delivery • Price: ensuring fair value in the transaction A major part of marketing is getting the marketing mix right for the target customer.

Evolving Definitions of the Marketing Mix Four Ps Four Cs Definition Product Consumer solution A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs to attract them. Cost Price is only a part of the total cost to satisfy a want or a need. For example, the total cost might be the cost of time in acquiring a good or a service, along with the cost of conscience in consuming it. It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer’s cost to change or implement the new product or service and the customer’s cost for not selecting a competitor’s product or service. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer. Price Promotion Place Convenience Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to provide convenience of buying. With the rise of Internet and hybrid models of purchasing, “place” is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, and finding

Product

Promotion

Place

Price

Example of Marketing Mix: Shampoo Product Discount Upscale Premium Cleansing product, pleasant smell, low-cost packaging Cleansing product, pleasant smell, attractive packaging Cleansing product, pleasant smell created by named ingredients, premium packaging Differentiating features and ingredients highlighted (e. g. , safe for colored hair), as well as an emphasis on the science behind the formula. Recommended by stylist in the salon. Promotion Few, if any, broad communications National commercials show famous female “customers” with clean, bouncy hair Place Distributed in grocery stores and drugstores Distributed only in licensed salons Lowest price on the shelf Highest price in the grocery store (8 times the prices of discount) 3 to 5 times the price of Upscale Price

Creating the Marketing Strategy

Practice Question Many people think that marketing is mostly about promotions or communications. What more is there to marketing?

Quick Review • What is the role of customers in marketing? • What is the role of segmentation and targeting in marketing? • What is the marketing mix?