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CHAPTER ELEVEN
Creating Products and Pricing Strategies to Meet Customers’
Needs
CHAPTER SUMMARY
This chapter discusses the marketing concept, which involves identifying consumer
needs and then producing the goods or services that will satisfy them while making a
profit. Relationship marketing entails forging long-term relationships with customers
which can lead to repeat sales, reduced costs, and stable relationships. strategy involves
five components called “the Five Ps” of marketing. This marketing mix consists of
product, price, place, promotion, and people.
An organization that wants to be successful must consider buyer behavior when
developing the marketing mix. Buyer behavior is the actions people take regarding
buying and using products. Cultural, social, individual, and psychological factors have an
impact on consumer decision-making from the time a person recognizes a need through
post-purchase behavior. The purchases that organizations make often involve greater
risk than purchases made by individual consumers. For this reason, businesses tend to
base purchase decisions on more data and make purchase decisions based on rational
decision making so purchases will optimize value for the organization and minimize risk.
The study of buyer behavior helps marketing managers better understand why people
make purchases. To identify the target markets that may be most profitable for the firm,
marketers use market segmentation, which is the process of separating, identifying, and
evaluating the layers of a market to identify a target market.
Companies use research to ensure they are listening to the voice of the customer.
Marketing research is the process of planning, collecting, and analyzing data relevant to
a marketing decision.
In marketing, a product (a good, service, or idea), along with its perceived attributes and
benefits, creates value for the customer. Products bought by businesses or institutions
for use in making other products are called business products. These products can be
commercial, industrial, or services products.
New products pump life into company sales, enabling the firm not only to survive but
also to grow. When a firm introduces a product that has a new brand name and is in a
product category new to the organization, it is classified as a new product. A new flavor,
size, or model using an existing brand name in an existing category is called a line
,extension. When a new product enters the marketplace in large organizations, it is often
placed under the control of a product or brand manager. A product manager develops
and implements a complete strategy and marketing program for a specific product or
brand of product. Product managers create marketing mixes for their products as they
move through the life cycle. The product life cycle is a pattern of sales and profits over
time for a product or a product category.
An important part of the marketing planning process is setting the right price. Price is
the perceived value that is exchanged for something else.
As customer expectations increase and competition becomes fiercer, perceptive
managers will find innovative strategies to satisfy demanding consumers and establish
unique products in the market. Satisfying customers requires the right prices. The
internet has delivered pricing power to both buyers and sellers. Another significant
trend is the use of one-to-one marketing to create a customized marketing mix for each
consumer.
LEARNING OUTCOMES
1. What are the marketing concept and relationship building?
Marketing includes those business activities that are designed to satisfy
consumer needs and wants through the exchange process. Marketing managers
use the “right” principle—getting the right goods or services to the right people
at the right place, time, and price, using the right promotional techniques.
Today, many firms have adopted the marketing concept. The marketing concept
involves identifying consumer needs and wants and then producing products
(which can be goods, services, or ideas) that will satisfy them while making a
profit. Relationship marketing entails forging long-term relationships with
customers, which can lead to repeat sales, reduced costs, and stable
relationships.
2. How do managers create a marketing strategy?
A firm creates a marketing strategy by understanding the external environment,
defining the target market, determining a competitive advantage, and
developing a marketing mix. Environmental scanning enables companies to
understand the external environment. The target market is the specific group of
consumers toward which a firm directs its marketing efforts. A competitive
advantage is a set of unique features of a company and its products that are
perceived by the target market as significant and superior to those of the
competition.
September 5, 2018 2
, 3. What is the marketing mix?
To carry out the marketing strategy, firms create a marketing mix—a blend of
products, distribution (place) systems, prices, promotion, and people. Marketing
managers use this mix to satisfy target consumers. The mix can be applied to
non-business as well as business situations.
4. How do consumers and organizations make buying decisions?
Buyer behavior is what consumers and businesses do to buy and use products.
The consumer purchase decision-making process consists of the following steps:
recognizing a need, seeking information, evaluating alternatives, purchasing the
product, judging the purchase outcome, and engaging in post-purchase
behavior. Several factors influence the process. Cultural, social, individual, and
psychological factors have an impact on consumer decision-making. The business
purchase decision-making model includes the following steps: need recognition,
setting specifications, information search, evaluation of alternatives against
specifications, purchase, and post-purchase behavior. The main differences
between consumer and business markets are purchase volume, number of
customers, location of buyers, direct distribution, and rational purchase
decisions. Companies learn more about their target markets by conducting
marketing research—the process of planning, collecting, and analyzing data
relevant to a marketing decision.
5. What are the five basic forms of market segmentation?
Success in marketing depends on understanding the target market. One
technique used to identify a target market is market segmentation. The five basic
forms of segmentation are demographic (population statistics), geographic
(location), psychographic (personality or lifestyle), benefit (product features),
and volume (amount purchased).
Business markets may segment based on geography, volume, and benefits, just
as consumer markets are. However, organizations might also segment based on
use of the product, characteristics of purchasing function, and size of the client
or industry, as well as other considerations related to characteristics of business
customers.
6. What is a product, and how is it classified?
A product can be a good, service, or idea, along with its perceived attributes and
benefits, that creates customer value. Tangible attributes include the good itself,
packaging, and warranties. Intangible attributes can include the brand’s image or
September 5, 2018 3
must be attributed to OpenStax
CHAPTER ELEVEN
Creating Products and Pricing Strategies to Meet Customers’
Needs
CHAPTER SUMMARY
This chapter discusses the marketing concept, which involves identifying consumer
needs and then producing the goods or services that will satisfy them while making a
profit. Relationship marketing entails forging long-term relationships with customers
which can lead to repeat sales, reduced costs, and stable relationships. strategy involves
five components called “the Five Ps” of marketing. This marketing mix consists of
product, price, place, promotion, and people.
An organization that wants to be successful must consider buyer behavior when
developing the marketing mix. Buyer behavior is the actions people take regarding
buying and using products. Cultural, social, individual, and psychological factors have an
impact on consumer decision-making from the time a person recognizes a need through
post-purchase behavior. The purchases that organizations make often involve greater
risk than purchases made by individual consumers. For this reason, businesses tend to
base purchase decisions on more data and make purchase decisions based on rational
decision making so purchases will optimize value for the organization and minimize risk.
The study of buyer behavior helps marketing managers better understand why people
make purchases. To identify the target markets that may be most profitable for the firm,
marketers use market segmentation, which is the process of separating, identifying, and
evaluating the layers of a market to identify a target market.
Companies use research to ensure they are listening to the voice of the customer.
Marketing research is the process of planning, collecting, and analyzing data relevant to
a marketing decision.
In marketing, a product (a good, service, or idea), along with its perceived attributes and
benefits, creates value for the customer. Products bought by businesses or institutions
for use in making other products are called business products. These products can be
commercial, industrial, or services products.
New products pump life into company sales, enabling the firm not only to survive but
also to grow. When a firm introduces a product that has a new brand name and is in a
product category new to the organization, it is classified as a new product. A new flavor,
size, or model using an existing brand name in an existing category is called a line
,extension. When a new product enters the marketplace in large organizations, it is often
placed under the control of a product or brand manager. A product manager develops
and implements a complete strategy and marketing program for a specific product or
brand of product. Product managers create marketing mixes for their products as they
move through the life cycle. The product life cycle is a pattern of sales and profits over
time for a product or a product category.
An important part of the marketing planning process is setting the right price. Price is
the perceived value that is exchanged for something else.
As customer expectations increase and competition becomes fiercer, perceptive
managers will find innovative strategies to satisfy demanding consumers and establish
unique products in the market. Satisfying customers requires the right prices. The
internet has delivered pricing power to both buyers and sellers. Another significant
trend is the use of one-to-one marketing to create a customized marketing mix for each
consumer.
LEARNING OUTCOMES
1. What are the marketing concept and relationship building?
Marketing includes those business activities that are designed to satisfy
consumer needs and wants through the exchange process. Marketing managers
use the “right” principle—getting the right goods or services to the right people
at the right place, time, and price, using the right promotional techniques.
Today, many firms have adopted the marketing concept. The marketing concept
involves identifying consumer needs and wants and then producing products
(which can be goods, services, or ideas) that will satisfy them while making a
profit. Relationship marketing entails forging long-term relationships with
customers, which can lead to repeat sales, reduced costs, and stable
relationships.
2. How do managers create a marketing strategy?
A firm creates a marketing strategy by understanding the external environment,
defining the target market, determining a competitive advantage, and
developing a marketing mix. Environmental scanning enables companies to
understand the external environment. The target market is the specific group of
consumers toward which a firm directs its marketing efforts. A competitive
advantage is a set of unique features of a company and its products that are
perceived by the target market as significant and superior to those of the
competition.
September 5, 2018 2
, 3. What is the marketing mix?
To carry out the marketing strategy, firms create a marketing mix—a blend of
products, distribution (place) systems, prices, promotion, and people. Marketing
managers use this mix to satisfy target consumers. The mix can be applied to
non-business as well as business situations.
4. How do consumers and organizations make buying decisions?
Buyer behavior is what consumers and businesses do to buy and use products.
The consumer purchase decision-making process consists of the following steps:
recognizing a need, seeking information, evaluating alternatives, purchasing the
product, judging the purchase outcome, and engaging in post-purchase
behavior. Several factors influence the process. Cultural, social, individual, and
psychological factors have an impact on consumer decision-making. The business
purchase decision-making model includes the following steps: need recognition,
setting specifications, information search, evaluation of alternatives against
specifications, purchase, and post-purchase behavior. The main differences
between consumer and business markets are purchase volume, number of
customers, location of buyers, direct distribution, and rational purchase
decisions. Companies learn more about their target markets by conducting
marketing research—the process of planning, collecting, and analyzing data
relevant to a marketing decision.
5. What are the five basic forms of market segmentation?
Success in marketing depends on understanding the target market. One
technique used to identify a target market is market segmentation. The five basic
forms of segmentation are demographic (population statistics), geographic
(location), psychographic (personality or lifestyle), benefit (product features),
and volume (amount purchased).
Business markets may segment based on geography, volume, and benefits, just
as consumer markets are. However, organizations might also segment based on
use of the product, characteristics of purchasing function, and size of the client
or industry, as well as other considerations related to characteristics of business
customers.
6. What is a product, and how is it classified?
A product can be a good, service, or idea, along with its perceived attributes and
benefits, that creates customer value. Tangible attributes include the good itself,
packaging, and warranties. Intangible attributes can include the brand’s image or
September 5, 2018 3
