The Marketing Process

Topics: Marketing, Strategic management, Customer relationship management Pages: 28 (7589 words) Published: February 29, 2012
Basic Quantitative Analysis for Marketing
Break-even Analysis

Fixed Cost – costs that remain constant over a range of activity irrespective of the quantity produced •ex: rent, insurance, depreciation, office overheads

Variable Cost – costs that vary directly with the quantity produced •ex: direct labor, direct materials, sales commissions

Break-Even Point – the point of production at which Total Revenue = Total Cost

Total Revenues = P X Q
Total Cost = TFC + TVC
Total Variable Cost (TVC) = VC/unit X Q
Contribution Margin (CM) = P – VC/unit
Total Contribution = (P – VC/unit) X Q

Break-Even Sales: BE$ = BEQ X P
BEP w/ profit goal = TFC + Profit Goal/CM
Bross Cord calculations
Given: Price gives 150% markup on variable costs
Variable Cost: P = 2.5VC → VC = 0.4P
Contribution Margin: CM = P – VC → P – 0.4P = 0.6P
Fixed Costs:
Trade Journal $2,500
Trade Promotion $465
Samples $750
Total Fixed Costs$23,715
BEQ = TFC/CM = 23,715/0.6P = 39,525/P
Break-Even Sales Revenue: BE$ = (39,525/P)*P = $39,525

Estimate for growth of sales:
(sales in future period – sales in current period) / sales in current period

Marketing: Creating & Capturing Customer Value

Marketing – the process by which companies create value for customers and build strong customer relationships in order to capture value from the customers in return •Marketing is managing profitable customer relationships

oAttracting new customers
oRetaining and growing current customers

The Marketing Process (a five-step model)
1.Understand the marketplace and customer needs and wants
2.Design a customer-driven marketing strategy
3.Construct an integrated marketing program that delivers superior value 4.Build profitable relationships and create customer delight 5.Capture value from customers and create profits and customer equity

1. Understand the marketplace and customer needs and wants
--Customer needs, wants, and demands
Needs – states of felt deprivation
Wants – the form human needs take as shaped by culture and individual personality Demands – human wants that are backed by buying power
--Market Offerings—Products, Services, and Experiences
Market Offering – some combination of products, services, information, or experiences offered to a market to satisfy a need or want •Consumers’ needs and wants are fulfilled through market offerings •Offer may include other entities, such as persons, places, organizations, information, or ideas Marketing Myopia – the mistake (made by some SELLERS) of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products --Customer Value and Satisfaction

oCustomers form expectations regarding value
oMarketers must deliver value to consumers
oA satisfied customer will buy again and tell others about their good experience

--Exchanges and Relationships
Exchange – the act of obtaining a desired object from someone by offering something in return •Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object •Relationships are built through delivering value and satisfaction

Market – the set of actual and potential buyers of a product or service •Marketers seek buyers that are profitable

2. Design a customer-driven marketing strategy
Marketing Management – the art and science of choosing target markets and building profitable relationships with them •What customers will we serve? (segmentation and targeting) oMarketing managers must decide which customers they want to target (customer management) and on the level, timing, and nature of their demand (demand management) oSome companies may practice demarketing to reduce the number of customers or to shift their demand temporarily or permanently •How...
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