Marketing Basics: Needs, Wants and Demands

• Marketing is a social and managerial process where individuals and organizations get what they need/want by creating/exchanging value.
• Marketing involves institutions and processes for creating, communicating, and delivering valuable offerings to customers, clients, partners, and society.
• In a changing business environment, marketing decisions facilitate exchange to satisfy customers and achieve defined objectives.
• A need is something basic and elementary for survival, like food, water, air, clothing, and shelter. Desires include products or services that are not essential but wished for.
• Demand relates to a specific want with the ability to pay for it.
• A company decides what to produce or serve, and customers should be informed about the products/services offered.
• The company must identify the best way the product reaches the customer.

Market Dynamics

• Market is where products/services are exchanged and where buyers and sellers meet.
• Marketers identify customer needs/desires, provide products/services, inform customers, choose markets, and seek market reaction feedback.
• Competition includes rival companies offering the same, similar, or substitute products/services.
• Environment includes all factors influencing company activity, like macro (natural, demographic, economic, etc.) and micro factors (company, suppliers, etc.).
• Marketing mix refers to the tools a firm uses to achieve objectives in the target market.

Product Attributes

• Product satisfies customer needs, desires, and demands and provides tangible and intangible attributes.
• Attributes of product: packaging, color, quality, brand, design, and warranty.
• Width of the product-mix represents the number of product types offered.
• Depth of the product-mix is related to the number of product variations within a type.
• Length of the product-mix measures the # of variants of all products offered.
• Consistency of the product-mix shows the relationship of products in consumption, production, distribution and promotional programs.
• Brand is a name, symbol, or design that distinguishes a product/service from competitors.
• Packaging protects the product and makes it more attractive, while labeling informs customers about manufacturer, content, and quality.

Determining Price

• Price represents the money, goods, or services exchanged for a product/service.
• Methods to determine price include those based on costs, competition, or customers.
• In markup pricing percentage is added to costs or selling price of the product. You can calculate this for costs per unit or selling price.
• Break-even point: the point where total revenues equal total costs.
• BEP price = fixed cost (FC) / Price (P) - variable costs per unit (AVC).
• P = profit (p) + (variable costs per unit (AVC) x quantity (Q)) + fixed costs (FC) / quantity (Q)

Competition and Customers

• The price of products/services can be set relative to competitors' prices.
• Conjoint analysis involves presenting product characteristics and benefits to customers to determine a suitable price.
• With experimentation, a product/service is offered at different prices in different locations to analyze customer response.
• The economic value of a product is associated with benefits and reduced costs compared to competitors.

Pricing Strategies

• Skimming sets high prices initially to recover R&D costs faster.
• Penetration sets lower prices to quickly gain market share.
• Competitive pricing sets prices at the same level as competitors.

Distribution

• Distribution, also known as "place," involves providing the product/service in the right quantity, place, and time.
• Products/services can be distributed directly or indirectly through zero, one, two, and three level channels.
• Activities that related to distribution channels are those of physical distribution.
• Transportation moves products from the seller to the buyer via various means
• Storage maintains and secures products. Public warehouses rent space and services.
• Stock management stores a set amount of products.

Promotion

• Aims to inform customers and persuade them to buy a particular product over competitors.
• Promotional mix: advertising, personal selling, sales promotion, publicity, public relations, and direct marketing.
• Advertising informs customers through mass media for persuasion, product advertising to create demands, institutional promotes name, image and reputation.
• Personal selling occurs during direct communication, enables retailers to adapt communication, and gains immediate customer response.
• Sales promotion increases sales in the short term especially for not loyal customers.
• Publicity is a non-paid-for promotion, that plays a positive role and customers believe in received information.
• Public relations programs are plans that generate positive relations that protects the company's image.
• Direct marketing represents communication with no involvement of intermediaries between companies and customers.

Promotional Budget

• Affordable: spends what the company can afford on promotion.
• Percentage-on-sales: allocates a percentage on sales for promotion.
• Competition-based: based on the competitors' budget.
• Fixed-sum-per-unit: promotion budget is based on produced/sold units of respective products.
• According to objective-and-task, companies should specific objectives they want to achieve through promotion.

Entrepreneurial Marketing

• Guerilla: Includes the marketing techniques that are attractive, unique, non-traditional to enable entrepreneurs to achieve their business goals..
• Ambush: 'an attack from a hidden position' and is closely related to sponsorship of major events and it is most common in sport.
• Buzz: a product/service is promoted by one person to another, without the knowledge, order, help or supervision of the company
• Viral: involves the transmission of information from a person to many others via internet.