Marketing/Introduction
From Wikibooks, the open-content textbooks collection
Marketing
Ch.1-Introduction Ch.2-Marketing Strategy Ch.3-Marketing Plan Ch.4-Targeting & Segmentation
Ch.5-Consumer Behavior Ch.6-Product Development Ch.7-Market Research Ch.8-Marketing Ethics
| Consumption is the sole end and purpose of all production |
Contents |
[edit] The Organization
The exchange that occurs between customers and product, service or idea providers is the soul of marketing. Any action made by an organization to get a better deal from this exchange can be called a marketing tool.
An organization which utilizes marketing can be a business, charity, government or not-profit; and in some cases an individual may decide to market themselves, often with a direct or indirect commercial purpose. Their objectives could include promoting their products and services, encouraging a particular school of thought or bringing coverage and understanding to a particular event of cause.
Marketing can be used to create demand for something new, and also to drive demand to a particular organization or vendor, it is the way to get a better deal for both, the organization and its customers.
Some think that the role of marketing and sales can often overlap, and indeed it happens, because both funtions have a shared responsability to offer and get a better deal than other suppliers.
A software services company may decide to cold call IT executives and push the advantages of their services over using in-house resources or deploying alternative vendors. The marketing function may have developed the strategy and the contacts they would like to target, while the sales function would execute on this plan and potentially track and react to results in consultation with marketing. With this blurring of roles, some companies may employ one person responsible for both functions. In most cases, organizations would expect the sales function to close sales, and for the marketing function to generate demand. Marketing helps an entity to supply its products, services and ideas to other entities by creating demand.
[edit] The Market (Customers)
The market, as it applies to marketing, consists of all prospective customers for a given product, service, or idea. These customers may be individuals or organizations who are willing and able to purchase the organization’s product offering. A potential customer will decide to buy or not buy a product based on many different factors, some of which are: need, price, alternatives, ability to purchase, etc.
[edit] The Product
Products that can be marketed include: all goods, services, and ideas that are sold or traded. Products can be either tangible as in the case of physical goods, or intangibles such as those associated with service benefits or ideas (intellectual property) or any combination of the three.
[edit] Goods
Goods are a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer.
[edit] Services
A service is the non-material equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.
[edit] Ideas (Intellectual Property)
Intellectual Property is any creation of the intellect that has commercial value, but is sold or traded only as an idea, and not a resulting service or good. This includes copyrighted property such as literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and industrial processes.
[edit] Product Pricing
Once an organization has its product to sell, it must then determine the appropriate price to sell it at. The price is generally set at a level which indicates a balance of supply and demand. For example, if a products price is too high, demand will be correspondingly low; but if the price is too low, demand will be correspondingly higher. Five factors must be taken into account in pricing a product:
- Cost of producing the product: the price must be higher than the cost to produce it, if a profit is to be made
- Price of an alternative, but similar product: when an item's price rises above the cost of a close substitute, the quantity demanded drops sharply
- Customary price levels of that product: people are accustomed to paying a certain amount for a certain type of product, and increasing the price beyond this amount will cause sales to drop dramatically
- Customer perception of the price itself: also referred to as psychological pricing or odd-number pricing. For example: raising a price from 98 cents to 99 cents will cause little change in demand, but raising a price from 99 cents to $1.00 will cause demand to fall disproportionally because $1.00 is perceived to be a significantly higher price.
- Competition in the marketplace:Competition in the marketplace can be on account of too many players providing similar products meeting the same need. Too many options will reduce sales for a particular product and hence affect price.
[edit] Product Promotion
Once an organization has produced a product, and priced it appropriately, it then needs to promote the product by letting the market know that it exists, and is available for purchase. If the market does not know the product exists, and is for sale, the product may never sell even if it is a perfect product at the perfect price and there is strong demand in the market for it.
Promotion involves disseminating information about a product, product line, brand, or company. There are four primary ways to promote:
- Advertising
- Personal selling
- Sales discounts
- Public relations/Publicity
[edit] Product Distribution
Once an organization has produced, priced, and promoted a product, it then needs to distribute that product to the market for easy access. Some distribution examples:
- Selling direct to the customer
- Mail order (including Internet and telephone sales)
- Retail sales to each customer in a store
- Bulk sales to a wholesaler, who in turn sells to retailers
