Marketing Principles



Pre Reading Comment  - Chapters 10 & 11

These chapters do a good job of describing many fundamental concepts of marketing.  Read both chapters carefully but pay special attention to six main topics:  value, 4Ps, market segmentation, product life cycle, branding, and distribution channels. See also pages 53-55 for a discussion of customer rights.


Lecture Notes

Lecture Summary

·        Value and marketing

·        4Ps

·        Target markets and segmentation

·        Product Life Cycle

·        Branding

·        Distribution Channels

·        Marketing Ethics


Major Points


Why would you spend $6 for a hamburger at some restaurants when you can get one for $2 at McDonalds or make one at home for less than $1?  All people have limits to what they can spend, so why would they ever spend more than the minimal amount?  Why is the cheapest product rarely the one that sells the best?  What makes a higher priced product sometimes more valuable to consumers than a lower priced good?


Activity #1:  What traits provide value in restaurants?  Why might someone prefer a $6  hamburger?  Try to list at least ten value traits.


Activity #2:  What value traits are you creating for your business plan?  How do you know those traits are valuable to your customer?  How could you learn more about what customers value?


The Marketing Strategy (4Ps)

Any discussion of marketing strategy usually begins with efforts to consider the 4 Ps (product, pricing, place, and promotion).  What is important about the 4 Ps is that too many people think “marketing” means “selling.”  But in fact there are many aspects to marketing beyond actually pushing a product on potential customers.  We have to understand what makes the product special, what price is best, what venue to use when selling it, and what promotional avenue to choose. 


Activity #3:  What marketing strategy will you use as part of your business plan?  Describe the special characteristics of your product, your pricing strategy, the means you plan to use to get your product to customers, and your promotional ideas.  For pricing, place and promotion, list three alternative possibilities with a rationale for each.


Target markets and Segmentation

Potential customers can be grouped in many ways – by location, by education, gender, hobbies, and personal attitudes.  The problem for marketers is to first determine the ideal market segment, and then determine how to appeal to that segment.


Activity #4:  Pick a particular brand and model of car.  What market segment do you think is being targeted by ads for that car?  Why is that segment being pursued?  What other segments are being ignored in the ads?  Why?  Pick another segment that you think might be profitable.  What would you change in promotional approaches to reach them?


Product Life Cycle

The four stages of the product life cycle (introduction, growth, maturity, decline) should serve as a warning to every business – growth does not go on forever.  Nevertheless, decline can be delayed. 


Activity #5:  Pick a product or service that had a relatively short life cycle (such as a musical group).  How was the product introduced?  What caused it growth?   What could have been done to delay its decline?


Activity #6:  What competitive forces might cause your business to stop growing?  What can you do to respond to them?



What does it mean that one fast-food restaurant has a nationally known name on it while another fast-food restaurant serves the same food, but has a name that is unknown?  Which would you rather stop at?  Which one would you pay more for?  If you owned the unknown restaurant, how hard would you work to establish a known brand?  How could you compete with the national brand?


Activity #7:

Name five brands that you make an effort to purchase.  Why do you choose them?


Distribution Channels

Pages 330-334 provide a good list of ways you can get a product to customers.  The list also suggests that there are many ways to reach customers beyond those that business novices may be aware of.  Each involves choices, and each involves benefits and disadvantages.


Activity #8:  Create a table of advantages and disadvantages for each of the 8 channels listed.  The table should look something like this:





Direct to consumers



Via retail



Via wholesale



Via agents



Agent to consumer and businesses



Direct to businesses



Wholesale to businesses



Wholesale to business retailer




Activity #9:  What distribution channel will you use for your business?  What makes it best?  What other alternative might work for you?


Marketing Ethics

The Better Business Bureau was established in an effort to encourage companies to tell the truth about their products.  Since then legislation and lawsuits have helped ensure customer rights.  But there are still many practices that are unethical, even if they are strictly legal.  There are various definitions of “ethical behavior,” but they all begin with treating people the way you would like to be treated.  To help clarify correct treatment, professional bodies often set up statements or lists of right such as those on pages 53-54.


Activity #10: If you were to build a list of customer rights, what would it say in response to these examples:


  • Every Saturday morning small children are shown ads for products.
  • The most expensive, most sugar-laden cereals are positioned at the height of children in a grocery store.
  • Sale items are positioned so they are hard to find.
  • Violent video games are sold to 13 year olds
  • You buy a product only to discover it requires a great deal of assembly, using tools you do not have.
  • When you sign a lease, you discover requirements that were not told to you when you first visited the rental property.
  • You buy a computer program, and then discover that it can only be used on a version of a computer you do not have.
  • [Add five examples of your own]



Business Plan Aspects

  1. Create a marketing plan for your business plan.  Begin with the target market, explain what value you think you can provide customers, and then describe each of the 4Ps you will employ.