BURKS-Instructor Notes- INTRO2BUS- CHAP 10 MARKETING

LEARNING OBJECTIVES
1. Explain how marketing, product development, and sales must coordinate their
activities to align a company’s products with customer needs.
2. Describe the issues involved in marketing research to identify and respond to customer
needs.
3. Identify the four main elements of the marketing mix and discuss how the marketing
mix is used to differentiate a company’s products.
4. Describe the issues involved in marketing research to identify the needs of different
customer groups and market segments.
5. Differentiate between the three main approaches to market segmentation.

I. WHAT IS MARKETING?

1. An individual’s decisions about what to buy, or not, depends on their needs and wants.
Maslow’s Hierarchy of Need describes many of the motives that drive individual
purchases.
2. What to buy, how much to spend, and when to make a purchase are driven by complex
reasons.
3. Belief in the ability to earn in the future is the basis for the economic strength of our
economy, 65% of which is consumer driven sales.

A. Marketing, Product Development, and Sales

The definition and nature of marketing have been changing rapidly in the last
decade. It has shifted from using mass media through national channels to reach many
customers who wouldn’t be seen by salespeople.
1. Today, marketing is understood to be about persuading customers a product meets
their needs and convincing them to buy it. For instance, people need foot coverings, but
want Nikes.
2. A primary marketing task is to devise a marketing plan that will grab attention and
create a product image or identity in a consumer’s mind.
3. Marketing is much more complicated today because
(a) mass markets have fragmented into many different groups.
(b) new information technologies provide information to consumers through a
wide range of channels and media.
(c) the growing number of products in all categories make it difficult to get
consumer’s attention
4. The new American Marketing Association definition states that “marketing is an
organizational function and set of processes for creating, communicating, and delivering
value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.”
5. It is more difficult today to identify unmet customer needs, identify the kinds of
products to fill them, and suggest how to develop new products that will satisfy them
better than competitors.
6. Product development is the set of technical, scientific, and engineering processes that
create new or improved products to better satisfy customer needs.
7. A prototype is the first version or model of a new or redesigned product that will be
tested.
8. Sales is the development and use of methods to inform people about the value in a
company’s products and to directly persuade people to buy these products because they
will satisfy their needs better than the competing products.
9. Customer relationship management (CRM) tracks customer demands for and
satisfaction with a product to develop relationships with customers and maximize value a
company can deliver to them.
10. The process linking sales, product development, and marketing together to align with
customer needs is a circular one.

B. Marketing and the Business Vision or Mission

Companies engage in marketing to promote their products and brands to
customers. Even the best designed products will fail without a carefully conceived and
implemented plan to persuade people to buy it and try it.

1. A company’s business vision or mission is a brief, concise statement of its business

model that tells stakeholders why it is in business and how it intends to satisfy customer
needs better than competitors.
2. Its goal is to grab customers’ attention and to energize employees to deliver better
value.

C. The Product Life Cycle

The typical sequence of changes in demand for a product over time is its product
life cycle.
1. The stages of the product life cycle are: embryonic, growth, maturity and decline.
2. Product life cycles are shorter today because technology and customer tastes are
changing more rapidly.
3. The shorter the length of a company’s products’ life cycles, the greater the need for
rapid innovation and marketing processes.
4.The three major steps in creating a successful business model: identifying and
responding to customer needs, identifying customer groups and choosing which segments
to compete in, and using the marketing mix to differentiate products and persuade
customers to buy them.
II. MARKETING RESEARCH: IDENTIFYING AND RESPONDING TO
CUSTOMER NEEDS
Marketing research is the systematic search for information that uncovers
customer needs, the way these needs differ between customer groups, and whether or not
the products created by the marketing mix appeal to customers.
1. To begin research for a particular product, marketers must:
(a) identify customers existing needs for a particular product.
(b) uncover unmet needs the product does not satisfy.
(c) search for ways to make a product that better suits the unmet needs.
2. Marketing research can lead to building more appealing features into a product and
help make a product different and superior to those of competitors
3. Five main methods are used by marketing and product development to align products
with customer needs: focus groups, adopt a customer-oriented business definition,
involve leading customers, become a leading provider, and reverse engineering a product.

A. Employ Focus Groups

A focus group is a collection of people brought together to share their thoughts
and feelings about a particular product and uncover how and why it does or does not
satisfy customer needs. Several sessions are needed from different groups to isolate
important issues, needs, and ideas for change.

B. Use a Customer-Oriented Approach

A customer-oriented approach avoids a product-oriented approach and uses
information elicited from customers to uncover features that would delight them.
Focusing only on the existing product doesn’t provide the insights needed to be
innovative and profitable.

C. Leading Customers
Leading customers are those who improvise their own solutions to problems
because no product yet exists to satisfy their needs.
1. More than 60% of new products are identified this way.
2. Staying close to your customers and seeing what they do to make things work is an
important way to find ideas for improvement or new products.
3. Involving customers in design improves features and uncovers ideas that help
customize new products.

D. Become a Leading Provider

A leading provider is an entrepreneur who sees an unmet before others do and
believes their new product will satisfy it.

E. Reverse Engineering
Reverse engineering involves purchasing the products of competitors and
carefully examining them for the qualities and features that make them successful or not.
D. The Ethics of Developing and Shaping Needs
The ethics of marketers shaping behavior and especially purchasing behavior is
one of those chicken/egg questions. Does marketing shape opinion and market choices or
do the markets shape the product development? The impact of marketing on culture and
vice versa is a difficult question.

III. MARKETING RESEARCH: IDENTIFYING CUSTOMER GROUPS AND

SERVING MARKET SEGMENTS
Companies develop a variety of models to appeal to customers in a market,
because different customer groups may have very different needs for a product.

A. Customer Groups and Market Segments

To decide which products and features to develop to suit different groups,
companies research the similarities and differences in their needs.
1. Customer groups are sets of people who have a similar need for a particular product.
2. A group that shares a similar or specific need for a product is treated as a market
segment.
3. Researchers try to discover the primary need or use a group of customers have for a
product and their income or buying power to determine a price range.
4. Once a market segment has been identified by primary need and price range,
researchers use demographics and lifestyle to develop profiles of characteristics of the
segment.

B. Three Approaches to Market Segmentation

Once segments have been identified, a company must decide how to tailor or
customize to each, and whether to make products for one, several, or all of these
segments.
1. Mass marketing chooses to make a product targeted at the average customer instead
of segmenting. It sells the same mass-produced product to all customers.
2. Multiple segment marketing recognizes the difference between customer groups and
targets most or all of them with products differentiated for their needs.
3. In focused marketing, a company chooses to develop products for only a few
customer groups.
4. Each of these segmentation strategies has pros and cons, but segmenting a market
allows marketers to increase sales revenues by increasing the sales within segments,
although the cost of differentiating is higher.

IV. MARKETING RESEARCH: PRODUCT DIFFERENTIATION THROUGH

THE MARKETING MIX
Once the marketing function has identified different customer needs and groups, it
next recommends the qualities, features, or characteristics a product offering should have
to satisfy them.
1. Product differentiation is the process of creating competitive advantage by designing
goods and services to better satisfy customer needs and deliver more value to them.
2. The marketing mix, the four “Ps”, accomplishes this goal through the combination of
creating the needed (a) product qualities and features, (b) price, (c) promotion, and (d)
place at which it is for sale.. The new definition for marketing reflects the need to add a
fifth “P” for people, as the emphasis on customer relationship management adds another
dimension.
3. Product differentiation and marketing to segments increases the operating costs of a
business because of the different marketing research and programs needed for each
segment. Costs of differentiation must be carefully balanced against the revenues a
company hopes to obtain.

A. Product Branding and the Marketing Message

A well-designed marketing mix creates a strong marketing message to attract
and inform customers about how and why a product will best satisfy their needs.
1. Product branding is the process of using a unique name, design, symbol and other
elements of the marketing mix to differentiate a product from competitors.
2. A brand name is the specific name, symbol, or sign a company uses to distinguish its
product and legally protects it from use by others.
3. Brand loyalty is the tendency of customers to consistently purchase a product over
time because they believe it can best satisfy their needs.

B. Product
Product differentiation begins when a company creates real or perceived
differences between their product and that of competitors.
1. A company creates real differences in its product through superior quality, innovation,
and responsiveness to customers. Building in tangible differences in quality and
reliability make many customers willing to pay more.
2. Marketers create perceived differences in products by appealing to one or more of a
customer’s psychological needs.
3. Packaging is concerned with the “look” of a product and may convey upscale luxury
by its appearance or a “no-frills” low-cost appeal.
4. An effective marketing mix combines real and perceived differences to appeal to
customers.

C. Price
It is vital that marketing find out how much customers are willing to pay for a
differentiated product to cover the additional costs of creating it.
1. The target price is the price that a typical group of customers will be willing to pay
for a product with certain features and qualities.
2. Once a target price is known, a budget is developed for each element of the marketing
mix and product development must stay within that budget to reach profit targets.
3. The key point is that customers must find more value in a product than they pay for it.

D. Promotion
Promotion is used to inform customers about the attributes of its products and
persuade them to buy. Companies use a combination of the promotion mix methods of
advertising, sales promotion, public relations, and personal selling. Promotion is a way to
keep customers committed to a product and it is much more expensive to attract new
customers than to keep existing ones.
1. Advertising is the paid non-personal promotion of goods and services by an identified
sponsor using mass media to persuade or influence an audience. Three common
techniques are: repetition, bandwagon, and testimonials.
2. Sales promotions are non-personal persuasive efforts designed to boost sales
immediately such as coupons, discounts, rebates, and sales contests.
3. Public relations (PR) is the practice of conveying messages to the public through the
media to influence their opinion’s about the company and its products.
4. Personal selling is the direct, face-to-face communication by salespeople with
existing and potential customers to promote a company’s products.

E. Place
Place refers to the channels or pathways used to get products to customers.
1. The variety of channels available to marketers ranges from direct to customer
operations based online to personal sales in a bricks and mortar store.
2. Choosing the right combination of channels is affected by customer needs and
designed to be most appealing, get close as possible to the customer, and form the best
relationship with them.

F. Product Differentiation and Market Segmentation

It is vital to develop a clear message about how and why a company’s products
differ from one another as well as from the competition.
1. Companies choose a different marketing mix for the products in each market segment.
2. Product positioning is the process of customizing or tailoring a product to the
characteristics of a particular market segment, creating an image in the minds of the
people in that market segment.

REVIEW OF LEARNING OBJECTIVES

1. Explain how marketing, product development, and sales must coordinate their
activities to align a company’s products with customer needs.
The process linking sales, product development, and marketing together to align
with customer needs is a circular one. Product development designs new and improved
products, but must do so based on identifying customer needs. The best new product will
not succeed unless marketing informs potential buyers with an effective and informative
message.

2. Describe the issues involved in marketing research to identify and respond to

customer needs.
Marketing research is conducted to collect information that uncovers customer
needs and the way they differ between different customer groups. Customer needs are the
desires and requirements that can be satisfied by the qualities and features of a good or
service.
3. Identify the four main elements of the marketing mix and discuss how the
marketing mix is used to differentiate a company’s products.
Product differentiation is the process of creating a competitive advantage by
designing goods and services to satisfy customer needs. It is the result of the design of the
marketing mix that combines product, price, place, and promotion.

4. Describe the issues involved in marketing research to identify the needs of

different customer groups and market segments.
The three main issues in marketing research are to (1) identify customers’ existing
needs, (2) find ways to better satisfy needs, and (3) discover unmet needs.

5. Differentiate between the three main approaches to market segmentation.

The three main approaches to customer segmentation are (1)mass marketing
which chooses to make a product targeted at the average customer instead of segmenting.
It sells the same mass-produced product to all customers. (2) Multiple segment marketing
recognizes the difference between customer groups and targets most or all of them with
products differentiated for their needs. (3) In focused marketing, a company chooses to
develop products for only a few customer groups.