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Chapter 8: Marketing The Role and Impact of Marketing

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Title: Chapter 8: Marketing The Role and Impact of Marketing


1
Chapter 8 MarketingThe Role and Impact of
Marketing
  • Marketing is all activities involved in getting
    goods and services from the businesses that
    produce them to the consumer.
  • Marketing does not include the production of
    goods and services.
  • Marketing has two fundamental roles to sell what
    a business makes and to manage the brand.
    Marketing activities include
  • Branding
  • Businesses can spend millions creating an image
    for products and services with a brand name, logo
    or trademark, and a slogan.
  • distribution
  • advertising
  • promotion
  • research
  • development
  • sales

2
Chapter 8 MarketingThe Role and Impactof
Marketing
  • Brand Name
  • A brand name is a word or group of words a
    business uses to distinguish its products from
    that of the competition. Brand names should be
    distinctive, stand out, and memorable.
  • A brand name is how a product and company are
    identified and it is important to organizational
    success.
  • When people talk with others about brand
    preference this is free publicity for the
    company.
  • Logo or Trademark
  • A logo is a symbol that is associated with the
    company or product. It can take the following
    forms monogram, visual symbol, or abstract
    symbol.
  • A trademark is a word, symbol, design, or a
    combination of all three that a business uses to
    distinguish its goods or services from others.
  • A logo or trademark helps a product compete for
    consumer awareness.
  • Monogram a stylized rendering of a companys
    initials or a combination of initials and
    numbers.
  • Examples include IBM (International Business
    Machines) who wanted to consumers to associate
    them with computers not adding machines, and KFC
    (Kentucky Fried Chicken) who did not want
    consumers seeing the work Fried, etc.
  • Visual symbol These are line drawings of people,
    animals, or things such as Apple Computers apple
    and Kelloggs Frosted Flakes Tony the Tiger.
  • Abstract symbol These are shapes that carry a
    visual message but are not representative of
    actual things. The Nike swoosh is an example
    and one of the worlds most well recognized
    logos.

3
Chapter 8 MarketingThe Role and Impactof
Marketing
  • Slogan - A slogan is a short or catchy
    advertising phrase associated with a company or
    product.
  • Slogans are taglines for both print and broadcast
    advertisements.
  • Examples include MasterCards Priceless,
    Canadian Blood Services Its in You to Give,
    and Sprites Obey Your Thirst.
  • Brand Identification - Everything associated with
    a product, such as the slogan, name, and logo,
    must be used consistently to ensure that the
    brand is always identifiable to the consumer.
  • The writing, the colours used, the design of the
    package should always be used in association with
    the product, this way it is always clear to the
    consumer that they are getting the product they
    desire.
  • The Product Life Cycle
  • Marketing efforts pay off in the form of consumer
    reaction to the brand. Successful marketing
    efforts increase brand equity or the value of the
    brand in the marketplace. The changes in
    popularity or sales volume of a product over time
    can be graphed on the product life cycle or style
    curve.
  • Successful marketing efforts created brand
    awareness customers can name you brand as part
    of a specific category. Brand loyalty is when
    customers prefer your brand and support it.
  • Brand insistence is when customers will not
    accept a substitute for a particular brand.
  • Brands that have reached brand insistence have
    enormous equity.

4
Chapter 8 MarketingThe Role and Impact of
Marketing
  • Product Introduction Is the launch of a product
    into the marketplace. It may be done locally,
    all the way to internationally. Businesses need
    to inform potential customers about the products
    features, availability, package design, and brand
    identification. Early adopters are individuals
    who like to be one of the first to try a new
    product. Marketers often focus their early
    efforts on these trendsetters who can be sports
    icons, celebrities, or even students.
  • Growth As the new product sales increase
    competitors enter, this can decrease
    profitability due to decreased market share. They
    often compete by adding features, improving
    quality, or sell at a lower price. The product
    line becomes very visible and is promoted on
    commercials, billboards, print ads, etc.
  • Some competitors start to drop out of the
    competitive race at this stage.
  • Maturity Growth is flat it does not increase or
    decrease, and brand equity is at its highest.
  • Businesses keep advertising the product to keep
    it in the consumers eye.
  • Products, also know as cash cows, at this stage
    usually make large profits and this income can be
    used to develop and fund new products for the
    company. Examples include Tide and Kelloggs Corn
    Flakes.
  • Decline When sales decrease because customers
    leave to by other brands, and they are not
    replaced, a product can enter the decline stage.
  • Sometimes a change in price or advertising can
    slow down or stop the decline.
  • The Decision Point The business may make an
    effort to regain original sales figures and brand
    equity or they may discontinue the product
    altogether. If they try to save the product a
    variety of options are available
  • Repositioning making the product popular with a
    new consumer group
  • Reformulate (new scent), repackage (new container
    and spout), and re-introduce (new and improved)
    the product.
  • Repricing to gain popularity. New promotion.
  • Obsolete technology utilized in the product will
    make such that no amount of marketing efforts
    will restore product position.

5
Chapter 8 MarketingThe Role and Impact of
Marketing
  • Non-traditional Product Life Cycles
  • Fads - A fad is a product that is extremely
    popular with a select market for a short time,
    usually less than a year.
  • Trends are not fads, trends last longer and
    influences other areas.
  • Some well-known fads are hula hoops, yo-yos,
    Pogs, and Tamagotchis.
  • Businesses who plan well, and sell most of its
    stock and get out of the market just before the
    fad reaches its peak, can make an excellent
    profit.
  • Some companies market knock-offs of fads, often a
    cheaper version. If they do not sell off their
    inventories before the fad quickly dies off they
    can stand to lose money.
  • Niches - A niche is a section of the market in
    which a product dominates and into which few
    competitors enter. Niche marketers are often left
    alone because of barriers to entrythe factors
    that prevent competition from being profitable.
  • A niche product tends to have a short growth
    stage and leads to a solid, but not financially
    spectacular, maturity stage.
  • Niche marketers usually invent their products and
    hold exclusive patents or formulas.
  • By the time the competition can produce a
    competitive product the niche marketers have
    cornered that market.
  • Barriers to entry include the small market size,
    the cost of RD, advertising expenses, factory
    and equipment costs, design costs, lack of
    distribution channels, and the cost of raw
    materials.
  • Seasonal
  • Some products are popular during a specific time
    or season. Balancing product quantity with
    seasonal sales is called inventory management. To
    be left with little seasonal inventory,
    businesses calculate the amount of product to
    keep on hand.
  • Christmas and summer are seasonal time frames
    within which certain products are marketed.
  • Inventory management is the balancing of product
    quantity with sales.

6
Chapter 8 MarketingMarketing Concepts
  • Marketing can be divided into two major concepts
    the product concept and the market concept.
    Product concept involves the four Ps of marketing
    and market concept involves the two Cs of
    marketing.
  • The Four Ps of Marketing are the four elements of
    a good marketing campaign product, price, place,
    and promotion.
  • The Two Cs of Marketing are the two major
    external factors in marketing the competition
    and the consumer.
  • The Four Ps of Marketing
  • A good combination of all four elements, called
    the marketing mix, translates into an effective
    campaign.
  • Products and Services
  • The two reasons businesses develop product are
    because they can and they see a need. The
    development of good products and services
    considers quality, design, features, and benefits.
  • Product
  • Price
  • Place
  • Promotion

7
Chapter 8 MarketingMarketing Concepts
  • Quality
  • Improvements made to the quality of a product
    attracts more customers.
  • Consumers depend on the quality of many
    established brand names.
  • Consumers know that higher quality usually means
    that the product or service is more expensive.
  • Some products are successful because they can
    meet consumer needs, at a lower quality, and
    therefore a lower price.
  • Design
  • Every product and service has a design component.
    Consumers will often buy one product over another
    because of the way it looks.
  • We often think of design in relation to clothing,
    such as jeans that come in many different styles.
  • When a package is designed the function has to be
    considered.
  • Packaging protects the product from light, dirt,
    germs, air, water, tampering, and damage.
  • Packaging can aid ease of use, such as a spout or
    a resealable bag.
  • Product identification or recognition benefits
    from package shape and colour, such as the
    Coca-Cola bottle.
  • Label design is also an aspect of design and it
    can help a product stand out. Labels also give
    information such as size, weight, ingredients,
    and nutritional facts.
  • Services consider design features in their web
    pages and the physical design of their store.
  • Features
  • Product developers consider the features used,
    such as the materials, scent, size, or the taste,
    when constructing a new product. Service
    providers outline or detail what they do best.
    Some examples of product features are the smell
    of different perfumes, foam or feather
    pillows, and laundry detergent can be spring sent
    or sent-free.

8
Chapter 8 MarketingMarketing Concepts
  • Benefits
  • Consumers buy products and services for a
    particular purpose. Businesses need to make
    consumers aware of the advantages of a product to
    be motivated to buy it. Examples of
    benefits are a microwave that cooks food faster
    or a can opener that does not leave a sharp
    edge.
  • The Product/Service Mix
  • A retail store provides services and a service
    business sells a product. The resulting
    product/service mix can increase sales to
    existing customers and attract new ones.
  • A retail store could offer a delivery service, an
    installation service, or a gift-wrapping service.
  • A service business, such as a veterinarian could
    not only assist ill pets but could also sell pet
    food products
  • Price
  • Prices for products must be set with care to
    ensure their success. Today consumers are very
    price conscious and look for competitive prices
    at other stores or on the Internet. Businesses
    need to be price sensitive and look at their
    competitors prices for the same products.
  • If consumers think the price of a product is too
    high, it will not sell.
  • Consumers can easily find out product prices by
    searching on the Internet.
  • Marketers need to be aware of how price sensitive
    their product is how much sales will go up or
    down when the price goes up or down.

9
Chapter 8 MarketingMarketing Concepts
  • Place (Channels of Distribution)
  • Channels of distribution are the paths of
    ownership that
  • goods follow as they pass from the producer or
    manufacturer to the consumer. The 3 types
    of channels of distribution are direct, indirect,
    and specialty.
  • A product does not change as it moves through the
    distribution chain.
  • If the product is changed or altered that is the
    end of that channel and a new one begins.
  • Direct Channels - Direct channels of distribution
    connect the consumers to the producers of the
    goods or services. Also referred to as the
    maker-user relationship. - Simplest form of
    distribution.
  • - Direct channel distribution does not use
    intermediaries or businesses that take possession
    of the goods before the consumers do, they add
    costs to the product so that they realize a
    profit.
  • With direct channels consumers can readily inform
    the producers of their needs and they may feel
    more confident about the product because they
    deal directly with the company that produces it.
  • Indirect Channels - Indirect channels of
    distribution have one or more intermediaries who
    import products (importers), wholesale goods
    (wholesalers), or retail products (retailers).
  • Importers Importers are businesses that seek out
    foreign products to bring into their own country.
    Importers may negotiate distribution deals with
    foreign manufacturers, buy the goods, store the
    goods, and may sell the goods. To eliminate risk
    importers can arrange only delivery of foreign
    goods to Canadian businesses.
  • Wholesalers Wholesalers buy goods from producers
    or importers and resell the goods to retailers.
    The manufacturer may require that the retailer
    buy a minimum quantity of goods. Using a
    wholesalers may mean that the retailer pays a
    higher price but they get the quantity they need
    and the wholesaler may store the products close
    by.
  • Retailers Linked directly to consumers,
    retailers buy merchandise customers want, keep it
    in stock, and display it so that customers can
    examine it in an easy-to-reach location.

10
Chapter 8 MarketingMarketing Concepts
  • Specialty Channels
  • A specialty channel of distribution is an
    indirect way to
  • distribute products by using vending machines,
    telemarketing, catalogue sales, e-commerce, and
    door-to-door sales. No retail store is involved.
  • Vending Machines Vending machines, that can sell
    virtually anything, can be placed where consumers
    are.
  • Telemarketing Using the telephone to sell
    products and services is very popular. A sales
    pitch or scripted presentation that anticipates
    all possible consumer responses is delivered to
    people once the automated call distributors
    (ACDs), a computerized dialing system, calls
    them.
  • Catalogue Sales Catalogues from retailers
    provide information about merchandise that
    consumers can purchase by mail, phone, or at the
    store.
  • E-commerce The most important specialty channel,
    e-commerce is selling products and services
    online. For consumers it is convenient and
    competitive and for manufacturers and retailers
    it reduces distribution costs.
  • Promotion
  • Promotion is an attempt to sell a product. Sales
    promotion encourages consumers to buy products by
    using coupons,contests,premiums, samples,or
    special events.
  • Coupons offer consumers money off the price of a
    product but redemption rates, a method of
    determining effectiveness, are only about 5.
  • Contests increase brand recognition through an
    anyone can enter and win concept that is not
    gambling and cannot require a purchase to enter.
  • Customer loyalty cards are stamped with each
    purchase and, when full, entitles the customer to
    a discount or a free product.
  • Premiums are when the consumer makes a purchase
    and they get something for free.
  • Samples samples are small trail sizes of a
    product that are given to

    consumers, it is expensive but
    often results in increased sales.
  • Special Events are used to attract customers and
    increase sales.

11
Chapter 8 MarketingMarketing Concepts
  • The Two Cs of Marketing
  • The marketing department must consider two major
  • external factors the competition and the
    consumer.
  • The Competitive Market - The competitive market
    refers to the sellers of a specific product, and
    is often expressed in terms of the total dollars
    spent annually on the product. The percentage of
    the market that a company or brand has is called
    its market share. A market segment is a part of
    the overall market with similar characteristics.
  • The soft drink market has a flavoured market
    segment (root beer for example) and an energy
    drink segment (Red Bull for example).
  • The two ways to increase market share are to
    increase the size of the overall market (the
    introduction of energy drinks created a new
    segment) and to take sales away for the
    competition.
  • Competition among Products - Indirect competition
    means products or services are not directly
    related to each other. Products that are similar
    to one another are called direct competition.
  • All products and services compete for the
    consumers money in some way.
  • Indirect Competition Is competition between
    products or services that are not directly
    related to each other such as a teen with 25 who
    decides on spending it on movie tickets or on a
    CD.
  • Discretionary Income The portion of ones
    disposable income that is not already committed
    to paying for necessities and can be used to buy
    things for pleasure, satisfaction, and comfort.
  • Disposable Income Is the amount of income that
    is left after taxes have been paid. This income
    can be used to pay for the basic necessities such
    as food, clothing, and shelter.
  • Direct Competition Competition between products
    that are very similar and have only minor
    differences. These products that compete
    directly with each other do so through image,
    quality, price, design, features, and benefits.

12
Chapter 8 MarketingMarketing Concepts
  • The Consumer Market
  • In their effort to be competitive, businesses
    study
  • and target the consumer market, the potential
    users of a product or service. These consumers
    can be identified by demographics and lifestyle.
  • Demographics
  • Demographics is the study of obvious
    characteristics that categorize human beings.
    Some examples of demographics include the
    following
  • Demographics are used by businesses to target
    specific consumers.
  • Age Age defines our tastes as well as our needs
    and wants. Some age groups are consumers, but
    not always customers. Adults or parents are
    gatekeepers, or the person who makes buying
    decisions for others, often children who can
    influence their decisions.
  • Gender Some products lines are distinctly
    marketed to men or women, but more and more
    traditionally gender marketed products are being
    targeted to both groups (detergent and power
    tools are examples).
  • Family life cycle Peoples stage in the family
    life cycle often determines needs and wants. New
    parents need baby items and seniors may buy a
    retirement escape.
  • Income level Is the grouping of consumers by how
    much money they make or have. Some products are
    marketed to consumers in every income bracket
    (Kelloggs Corn Flakes), some are not (Mercedes).
  • Ethnicity and culture Businesses target people
    based on their background and customs.
  • Lifestyle study is called psychographics.
  • Lifestyle is the way people live, including their
    values, beliefs, and motivations.
  • When marketing to demographic groups, marketers
    need to consider their lifestyles because a
    persons beliefs (such as being environmentally
    conscious or concerned about diet) influence what
    they purchase.

13
Chapter 8 MarketingAdvertising
  • Creating Good Advertising
  • Good advertisements sell products by making the
    consumer remember the brand name of their
    products or services.
  • Can be referred to as the AIDA principal
    Attention, Interest, Desire, and Action
  • The 4 standard rules for creating good
    advertising are summarized as follows
  • Attract attention develop a good headline
    Print ads need a
    good headline, it should not be more than seven
    words, it should mention the brand, and should
    encourage receiver to read the rest of the ad.
    Broadcast ads attract attention with sound,
    unusual visuals, attractive people, celebrities,
    or something funny.
  • Gain interest make people want to read, watch,
    or listen. Print ads should be
    easy to read and to the point. Broadcast ads
    should get to the message quickly. Visual images
    should be strong.
  • Build desire help the customer want your
    product. Print ads
    should build desire with words, adding benefits
    with each line. Broadcast ads repeat brand names.
  • Get action always ask for the sale. Ask the
    consumer to buy now, give them reasons, and
    provide the necessary information so that they
    can.
  • Types of Advertising
  • Advertising is the paid-for promotion of a
    businesses goods and services using a variety of
    mass media to target a market.
  • Advertising, that always is the advertisers
    point of view, costs a lot of money.
  • Publicity, usually more believable that
    advertising, is information about a business,
    either positive or negative, that appears in the
    media and is not paid for by the business.
  • Some companies hire public relations (PR) firms
    that can influence the media with well written
    positive stories about the business.

14
Chapter 8 MarketingAdvertising
  • Common advertising classifications include
  • Comparing Types of Advertising
  • Advertisers use the following categories to help
    them select which media to use for a certain
    product promotion. These eight categories are
  • Reach means the number of people exposed to a
    message.
  • Frequency is the number of times an audience will
    see or hear the ad over a given period of time.
  • Selectivity means the ability of the medium to
    focus on a target audience.
  • Durability means how long the advertisement lasts
    in the house.
  • Lead-time means how fast the ad can be ready to
    run.
  • direct-to-home advertisements are messages (flyer
    or catalogue) that come
  • directly to a persons residence.
  • out-of-home are messages (billboard or bus ad)
    that the consumer is supposed
  • to receive while not at home.
  • Radio advertisements or go anywhere medium uses
    words sound to draw us in.
  • Television and effective but expensive medium,
    combines words, sound, and
  • images to reach very large audiences.
  • Newspaperads range from inexpensive local ads in
    classifieds to full page spreads in national
    publication
  • Magazines offer the opportunity to target
    specific groups of consumers with colour.
  • The Internet The Internet allows for three
    different types of advertising company websites,
    banner ads on other websites, and e-mail
    advertising. (Non-permission-based e-mail is
    called spamming.)

15
Chapter 8 MarketingMarketing Research
  • Market research is the collection and analysis of
  • Information that identifies specific groups of
    consumers who would use a
    particular product or service.
  • Types of Marketing Research
  • Marketers use different types of research
    depending on what information is needed, how it
    will be collected, and what will be done with the
    final information after it is analyzed. The
    following is a list of the most common types of
    research used by marketers
  • consumer research uses methods such as phone or
    personal interviews to discover what type of
    products consumers want and predicts the sales
    potential of that product.
  • market research identifies specific groups of
    consumers who would use a particular
    product/service
  • motivation research tries to find out why we buy,
    by looking at the emotional and rational motives
    that influence buying decisions.
  • pricing research helps a company decide if they
    can sell a product for a competitive price and
    make a profit.
  • competitive research looks for opportunities
    where competition is weak or absent and
    determines what competitors are doing.
  • product research Product research looks at
    details of a product or service and analyzes the
    impact these details might have on the market.
  • advertising research Advertising research gives
    information on effective ways to get a message to
    potential consumers.

16
Chapter 8 MarketingMarketing Research
  • Marketing Research Tools rely on secondary and
    primary data.
  • Secondary Data
  • Secondary data is information collected by
    others. Secondary data can be collected from Web
    sites, databases, periodicals, indexes, and
    professionally prepared marketing research
    reports.
  • Researchers re-interpret secondary data for their
    own or their clients purposes.
  • A lot of secondary data is available for free,
    however sources such as databases or reports can
    be costly (a beverage industry report costs
    almost 10 000).
  • Primary Data refers to current information that
    is collected and analyzed for a specific purpose.
    Methods include
  • test marketing involves producing a limited
    quantity of a new product and introducing it to
    one or two areas (in Ontario London,
    Peterborough, and Kingston are often used). This
    method is expensive and should be done carefully
    to ensure good decisions.
  • internal information sources includes data
    mining, analysis of a companys own records
    (sales, inventory, advertising, and promotional
    results), that gathers primary data on product
    history and/or customer behaviour.
  • Surveys are a planned set of questions used to
    gather data that can be analyzed to help solve
    problems. Most surveys us closed-ended questions
    for which respondents must select an answer from
    two or more choices they are given. Open-ended
    questions are questions that allows respondents
    to develop their own answers, they are difficult
    to analyze and are used only when very specific
    data is needed.
  • Observation is used to learn how people react to
    situations and it is done without interaction and
    often when the subject does not know they are
    being watched.
  • Focus groups are company-arranged meetings of
    potential consumers that the marketer observes
    during an organized discussion. Participants are
    usually paid.
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