Class notes
MOS 2320 Lecture 5
- Course
- Mos 2320 (MOS2320)
- Institution
- Western
Lecture notes of 5 pages for the course Mos 2320 at Western (Lecture note 5)
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Chapter 1: Marketing FundamentalsWhat is Marketing?
Every day we engage in marketing—we exchange something of value that satisfies a need
How is marketing used to create value in products or services?
Marketing is a set of business practices designed to plan for and present an organization’s product or services in
ways that build effective customer relationships
o Good marketing is not a random activity, it requires thoughtful planning
Firms develop a marketing plan that specifies their marketing activities for a specific period of time, composed
of:
o An analysis of the current marketing situation
o Opportunities and threats for the firm
o Marketing objectives and strategies specified in terms of the 4 P’s
o Action programs
o Projected or pro forma income (and other financial) statements
The written marketing plan is divided into components:
o How the product/ service will be conceived or designed
o How much it should cost
o Where and how it will be promoted
o How to get it to the consumer
Marketing is About Satisfying Consumer Needs and Wants
A need is when a person feels deprived of the basic necessities of life
o I.e. food, clothing, shelter, safety
A want is the particular way in which the person chooses to fulfill his/ her need
o Shaped by a person’s knowledge, culture, and personality
o I.e. when we are hungry, we need something to eat. One person may get pizza, while another will want
sushi
To understand needs and wants, the company must identify their market
o Refers to the groups of people who need or want a company’s products or services and have the ability
and willingness to buy them
Markets can be segmented/ divided into groups of people who are pertinent to an organization for particular
reasons
o I.e. the marketplace for soft drinks may include most people in the world, but Pepsi and Coke divide the
population into categories
Not practical to sell products to the whole population
A target market is the customer segment or group to whom the firm is interested in selling its products or
services
o I.e. Lexus’ target market would be those who can afford to buy expensive cars
Marketing Entails an Exchange
Marketing is about an exchange—the trade of things of value between the buyer and seller so that each is better
off as a result
I.e. purchasing a song from the iTunes store—the consumer gets the song, apple gets money and information
Apple uses this valuable information you provide to facilitate future exchanges and solidify its relationship with
you
o “Recommended for you”, “You may also like…”
o Shows complete album and similar albums to a song you downloaded
Marketing Requires Marketing Mix Decisions
The marketing mix (4 P’s) = product, price, place, promotion—the controllable set of activities that a firm uses
to respond to the wants of its target markets
Product: Creating Value
The purpose of marketing is to create value by developing a variety of offerings including goods, services, and
ideas to satisfy customer needs
Goods are items that can be physically touched
, o I.e. clothing, shoes, food…
Nike primarily makes shoes but adds value to its products
o I.e. it offers custom designs, adds celebrity endorsement
Services are intangible customer benefits that are produced by people or machines and cannot be separated from
the producer
o I.e. air travel, banking, beauty treatments, entertainment…
Using an ATM or teller is an example of using a service
o Cash machines add value to your banking experience by being conveniently located, fast, and easy to use
Many offerings represent a combination of goods and services
o I.e. when you go to Hakim Optical, you can have your eyes examined (service) and purchase new contact
lenses (good)
o At a concert, you can purchase a t-shirt or cd
Ideas include thoughts, opinions, philosophies, and intellectual concepts that also can be marketed
o I.e. groups promoting bicycle safety go to schools, give talks and sponsor bike helmet poster contests
Price: Transacting Value
Price is everything the buyer gives up—money, time, energy—to acquire a specific product or service
Marketers must determine the price of a product carefully on the basis of the potential buyer’s belief about its
value
I.e. Air Canada can take you from Toronto to New York- the price you pay depends on how far in advance you
book your ticket, the time of year, whether you want to fly economy or business class
For marketers, the key to determining prices is figuring out how much consumers are willing to pay so that they
are satisfied with the purchase and the seller achieves a reasonable profit
Place: Delivering Value
Place describes all the activities necessary to get the product from the manufacturer or producer to the right
consumer when that consumer wants it
Specifically deals with retailing and marketing channel management
Marketing channel management is the set of approaches and techniques that firms employ to efficiently and
effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction
into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right
locations, and at the right time, while minimizing system wide costs and satisfying the service levels required by
the customers
I.e. in frozen desserts, marketing channel considerations have pushed a growing number of businesses to adopt
multiple convenient locations and self-service delivery systems
o Rather than requiring a large store, Yogurty’s has set up smaller kiosk-type storefronts
Without a strong and efficient distribution system, merchandise isn’t available when or where customers want it
o They are disappointed, and sales and profits suffer
Promotion: Communicating Value
Even the best products or services will go unsold if marketers cannot communicate their value to customers
Promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product
or service to influence their opinions or elicit a response
Promotion generally can enhance a product or service’s value
o I.e. Parasuco jeans—their provocative advertising has helped create an image that says more than “use
this product and you will look good”
Marketing Can be Performed by Both Individuals and Organizations
Marketing intermediaries, such as retailers, accumulate merchandise from producers in large amounts and then
sell it to you in smaller amounts
The process by which businesses sell to consumers is known as B2C (business to consumer) marketing
The process of selling merchandise or services from one business to another is called B2B (business to business)
o Some companies are engaged in B2C and B2B marketing at the same time
With eBay, Kijiji, and PayPal, consumers have started marketing their products and services to other consumers
—called C2C (consumer to consumer)
Social media is quickly becoming an integral part of marketing and communications strategies
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