Unit 3: Marketing

3a. Identify the major components of the marketing mix

  • What are the four Ps of marketing?
  • What are the main components of each of the four Ps of marketing?
  • Can you name two examples of marketing strategies?

Businesses need to market their product or service to generate revenue. Marketing your product or service to a potential customer involves many more steps and is much more complicated than simple advertising. By understanding the target market, marketers can better focus their marketing efforts.

The 4Ps of marketing include product (what is sold), price (how much the product costs), place (where the product is sold, such as online or in a physical store), and promotion (how the product will be promoted to the target market).

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3b. Describe how segmentation and research foster an understanding of consumer behavior

  • What is primary and secondary research?
  • What is demographic and psychographic data?
  • What is segmentation as it relates to marketing?
  • Can you name one way a business might use geographic data to market its product or service?

Businesses often conduct research to understand their customers, so they are sure to design products that will meet the needs of their customers, and they know how to reach their customers to market their products or services.

A marketer may conduct primary and secondary research to determine a more successful way to market a product. Primary research (original data collected directly by the researcher for a specific purpose) may include a focus group, interviews, or a survey of potential customers. Secondary research includes data that was previously collected by someone else and is available for analysis, such as business reports or government data.

A marketer can focus marketing efforts on the target market by segmenting the market. Segmentation is the process of dividing a broad consumer market into sub-groups based on shared characteristics. It helps to narrow down and specify who may purchase the product. Geographic data includes information about customers' physical locations, such as country, region, city, or postal code; it helps the marketer focus marketing efforts even further. In comparison, psychographics is the study of consumers based on psychological attributes such as personality, values, opinions, attitudes, interests, and lifestyles; psychographic data considers the psychological reasons consumers may buy a product. By conducting research, a business owner may better understand the market where they will sell products or services.

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3c. Describe the marketing concept

  • How does advertising differ from marketing?
  • Does a business have an obligation to protect its customers?
  • What step of the marketing process refers to the responsibility for customer safety?

Marketing involves more than reaching as many people as possible through advertising, which is the paid promotion of products, services, or ideas through various media channels, such as television, radio, print, digital platforms, or outdoor displays. The advertising process begins with finding market opportunities. Marketing to consumers is a relatively old concept, but the ways to market have changed considerably. After a marketer determines the target market, a marketing plan can be developed to help focus marketing efforts.

All business owners must consider CSR and their obligation to consumers. Producing products that may harm consumers can only lead to negative feedback and reviews, which can damage a company. It's important to think about creating products that consumers can safely use. The safer a product, a company may wish to use that safety information in advertising.

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3d. Describe the evolution of marketing

  • What are the four approaches to marketing?
  • Why might a customer buy products that are of lesser quality?
  • What is a selling approach?

The four approaches to marketing include production (how will this product be produced or created?), product, selling, and marketing. Marketing practices have changed since the days of bartering, when someone who created something met and sold it to their customers in the town square. A skilled craftsman was often the only product supplier to a large region. Demand was high, but supply was low. During the Industrial Revolution, manufacturers began incorporating mass production techniques. While societal demand had increased, consumers could buy what they needed from a much larger pool of manufacturers. Demand was still high, but supply was much higher.

Since customers had more items to choose from, manufacturers had to think of ways to increase demand for their products. For example, they could build better-quality products, lower their prices, make their products look better (even if they weren't!), and convince customers they had to have that particular gadget or product. Manufacturers also had to find ways to let their customers know about the wonderful products they had available and where they could buy them.

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3e. Differentiate between the components of a marketing strategy

  • How would you define segmentation?
  • What is an example of a strategy a marketer might use to identify their target market?
  • Can you define the dimensions of segmentation: demographic, geographic, behavioral, and psychographic?
  • What is a SWOT analysis?

A target market is the population most likely to purchase your product or services. The better you define this market, the more focused your marketing efforts may be.

By segmenting your market, you can better define the target market. This segmentation may include demographics, geographic data, behavioral data (data that reflects how consumers interact with products or services, including purchasing habits, brand loyalty, usage frequency, and decision-making patterns), or psychographic information.

Businesses often focus their marketing efforts on customers who are most likely to buy their products to save resources, such as time, personnel, and money. Note that a significant part of creating a marketing strategy for a business involves conducting market research, which we review in learning outcome 3g below.

Business owners conduct a SWOT analysis to identify and understand their business' strengths, weaknesses, opportunities, and threats. This examination helps them minimize and find solutions to their internal weaknesses or limitations, identify ways to respond appropriately to external threats or competitors, build on their internal strengths, and take advantage of any outside opportunities that come their way.

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3f. Analyze consumer decision-making processes to predict buying behavior

  • What are the five stages of the consumer decision-making process?
  • How is the consumer decision-making process different for buying an expensive luxury item vs. a candy bar?
  • How can you analyze purchasing behavior?

When analyzing why consumers buy a product, you may need to consider several issues related to purchasing behavior. These purchasing behaviors may include social functions ( my friends bought a similar dress for the prom, so I need that same designer for my dress), a routine response (I'm out of the product, so I need to repurchase), limited decision making ( I'm on my way to a meeting and need deodorant), or extensive decision making ( I plan to spend two or three months researching my new car purchase).

In addition to knowing their target market, business owners also need to identify the factors that influence whether their customers will buy their products. They need to understand their customers' decision-making process. Businesses use this information to convince consumers to buy their products. Knowing why consumers dislike their product provides an opportunity to make improvements.

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3g. Identify the implications of marketing research on marketing strategy

  • What is the difference between market size and market share?
  • How does a marketer cater to their target market's culture or behavior?
  • How does geography influence marketing strategies?

We have looked at how to determine market segmentation based on demographics (like age, gender, education level, or income), but marketing strategies can also be based on other research results.

By defining market size (the total population of potential customers) and market share (what percentage of the total market may purchase a product). As you can see, asking these questions will only help develop a solid marketing strategy. Conducting marketing research can help you better understand the market and help you create a better marketing plan.

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3h. Describe elements of customer relationship management, including customer life cycle and customer value proposition

  • What are the four concepts related to customer relationship management (CRM)?
  • What are the benefits of the customer value proposition?
  • What is the customer life cycle?

CRM is integral to any successful business. Many business managers use customer relationship management (CRM) software to keep track of each of their customers, such as to document when someone shows interest in their product, makes a purchase, has not made a purchase in a while, and when they are repeat customers. Online shopping can make it easier for companies to keep track of this information since customers provide their contact information when they visit their website. These contact points describe the customer life cycle: the stages a customer goes through in their relationship with a business, from initial awareness to purchase and potentially ongoing loyalty or eventual disengagement.

The customer value proposition explains the benefits that can be expected from a product or service. This description helps potential customers understand why they should buy a product and what they should expect it to do for them. In addition, consumers can expect a reason the product is needed and what needs or wants it may fulfill.

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3i. Identify the marketing implications of customer relationship management

Marketing involves building relationships with your customers. Since most people like to feel special, customers who feel valued as individuals are more likely to feel a sense of loyalty to a company they like and make additional purchases. Most companies rely on this repeat business to succeed. For example, if a sales department knows a customer buys a car every three years, it could use customer-relationship management software to be sure its staff contacts them every three years to remind them to stop by their dealership.

Customer relationship management software may be used by numerous departments at a company. As more information is put into the software, the customer may understand it better. For example, several departments at a college may use the software, including admissions, the registrar, financial aid, and the education department, which may record information about the student's journey throughout a degree or program. Not only does this system assist the college in record keeping, but it also assists the student in seeing what they need to pay and when, what classes they may take next, or even possible degrees they may pursue in the future.

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3j. Describe the brand, product development, technology adoption cycle, and product life cycle

  • What are brand and branding as they relate to marketing?
  • Why is purchasing something that has a familiar brand important to some consumers?
  • How does branding help or hinder marketing?
  • How would you describe the product life cycle?

Are you more likely to buy something with a familiar name or brand, or do you prefer a generic brand, such as the name of the pharmacy or grocery store you visit? What is a brand, and how are brands important to marketers and customers?

It is great for a business to have a brand everyone recognizes, but they need to have a product to create that brand. Remember that a product is a good or service a business offers to meet the needs of society. Branding occurs when a company creates a public perception of that brand. A brand is the public perception of a company's products or services.

There are four major categories of product development:

  • New to the market: a business creates a new product that has never been seen in the market before;
  • New to the company: a business decides to produce and sell a product similar to something another business is marketing;
  • Improvement of existing products: a business improves a product they already sell, perhaps due to market research or customer input; and,
  • Extension of product line: a business creates a variation of products it already sells.

Manufacturers of computer-based technologies (including phones and the latest audio equipment) should be familiar with their consumers' technology adoption cycle. This theory calls consumers who buy the latest technology as soon as it becomes available "innovators" and those who like to wait "laggards". The "early majority" and "late majority" are between those extremes.

A technology business wants to target the innovators in the introduction phase of its product life cycle because they can influence both the majority and the laggards. Marketing influences the product development process, as businesses determine what their customers will be willing to buy. Stages of product development include screening ideas, feasibility and analysis, creating a prototype, product testing, and commercial application.

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3k. Use product life cycles to determine marketing strategy

  • During what stage of the product life cycle should businesses focus their marketing efforts?
  • During what stage of the product life cycle should companies focus on branding?
  • What pricing strategies do marketers use during different phases of the product's life cycle?

The product life cycle is an important concept for businesses and marketers. Businesses may not need to implement extensive marketing campaigns for products that have been around for a while, since customers know they exist and will seek them out. However, businesses usually need to create marketing campaigns to introduce new products to generate interest and let customers know where to buy them.

The stages of the product life cycle include development, introduction, growth, maturity, and decline. Businesses should know where their product falls within its life cycle. This position within the product life cycle and technology adoption cycle will help its marketing department determine the best marketing strategy.

Businesses use their product's position in the product life cycle and technology adoption cycle to inform their pricing strategy. For example, a gaming system manufacturer that plans to introduce a new gaming system typically lowers the sales price of the older models to reduce its inventory. A business that begins selling its product to innovators may be able to offer a high price because these individuals may be willing to pay more to be the first ones in their community to have the latest gadgets.

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3l. Identify the marketing implications of e-business

  • What is the difference between e-commerce and e-business?
  • What are the seven categories of e-business?
  • Why might businesses decide to offer services online?
  • Why might a business use social media to market its goods or services?

Consumers expect to find information about a business and its products, whether the business is completely online or has a physical presence. Companies should understand their e-business (the conduct of business processes on the internet, including buying and selling products, supplies, and services, servicing customers, collaborating with business partners, and managing operations digitally) and e-commerce (specifically the buying and selling of goods and services over the internet) goals to control how customers perceive their online presence. Promoting an e-business can be done through a company website, blog, or even by answering questions on a company's Facebook page.

Today, most businesses also use social media to market their product or services. Social media is a great way for companies to connect with their customers and an easy way to promote products or services. Social media is also an inexpensive way to market a business. For example, at an expo, a business owner may give out free swag to potential consumers if they follow them on their Instagram or Facebook page.

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Unit 3 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

  • 4Ps of marketing
  • advertising
  • behavioral data
  • brand
  • branding
  • customer life cycle
  • customer relationship management (CRM)
  • customer value proposition
  • e-business
  • e-commerce
  • geographic data
  • market share
  • market size
  • place
  • price
  • primary research
  • product
  • product life cycle
  • promotion
  • psychographic data
  • secondary research
  • segmentation
  • SWOT analysis
  • target market
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