Chapter 1 –World of Marketing
Section 1.1: What is Marketing?
Because of competition, an organized Marketing Planis essential.
Define “Marketing”.The process of developing, promoting, and distributing products, or goods and services, to satisfy customers’ needs and wants.
Goods are tangible items such as sports equipment. That is, you can touch and feel them. Servicesare intangible products, such as going to a movie. That is, you cannot touch or feel it.
The Marketing Process
Developingproducts involve studying consumers to determine what they want, and then designing the products that will satisfytheir needs and wants.
Promotional activities help to educate consumers, create interest and desire, make a sale, and create an image for a company and its products.
Distribution is the means of getting the product into the hands of the customer.
Successful organizations follow a MarketingConcept.
Define “Marketing Concept”. Idea that organizations need to satisfy their customers while also trying to reach their organizations’ goals.
The first step in creating a marketing concept involves identifying the Customers.
Define “Market”.Potential customers with shared needs who have the desire and ability to buy a product.
Organizations spend lots of money to learn about their customers’ needs and wants.
Define “Needs”.A lack of basic necessities, such as food, clothing, or shelter.
Define “Wants”.Things that people desire based on personality, experiences, or information about a product.
Having a clear picture about the targetmarket makes developing a marketing plan easier to accomplish.
Define “Target Market”.A specific group of consumers that an organization selects as the focus of its marketing plan.
Back in the 1950’s massmarketingwas more common. This involves promoting products with one key message that is directed to everyone.
Today, marketing efforts are more sophisticated due to availabilityof informationand computer technology.
The U.S. census provides useful information about thedemographicsof our nation.
Define “Demographics”.Statistics that describe a population in terms of personal characteristics.
Businesses use demographic information to develop their marketingplans.
Examples of Demographics include:Age, income, occupation, gender, ethnic background, and educational levels.
Marketers use a tool to develop strategies called the Marketing mix.
Define “Marketing Mix”.A combination of four basic marketing strategies, known as the 4 P’s—product, place, price, and promotion.
To be effective, all 4 P’s in a marketing plan must focus on the target market.
Product decisions involve the goods, services, or ideas used to satisfy consumer needs. Designing, Naming, and packaging a product are major considerations.
Pricedecisions involve the exchange process between the customer and the seller.
Price Determination Factors include (4 of them):
a.Cost of making or buying a product for resale.
b.Expenses related to marketing the product.
c.Competition
d.What the consumer is willing to pay.
Placedecisions involve making the product available to the customer. Place decisions also include determining a channelof distribution.
Define “Channel of Distribution”.Path a product takes from the producer to consumer.
Promotion decisions involve how the goods or services are communicated to the consumer. Promotionsmay use any combination of advertising, sales promotion, publicity, and personal selling.
Section 1.2: Economics of Marketing
The Economicsof marketing sports and entertainment have a great impact globally as well as locally.
Define “Economics”.The study of the choices and decisions that affect making, distributing, and using goods and services.
A measure of economic growth is the GrossDomesticProduct.
Define “GDP”.The value of all goods and services produced within a country.
2% of the GDP is represented by Agriculture. 18% is represented by Industry and 80% is represented by Services.
Profit allows companies to stay in business.
Define “Profit”.Money left after all costs and expenses of a business are paid.
As with most businesses, there is a financial risk, or possible lossinvolve with sports and entertainment events.
Competitionis the basis of the free enterprise system.
Define “Competition”.The struggle among companies for customers.
Two other risks handled by businesses are Unforeseen happenings and Lawsuits.
2 ways to handle these risks are insurance and proper employee training and event planning.
Price competition follows the concept of demand elasticity and available substitutes. That is, when there are many substitutes for a product, demand for a product is elastic, meaning that a change in price affects demand for your product.
Define “Supply”.All the products available for sale.
Define “Demand”.The customers’ desire to buy products.
If there is limited supply and high demand, businesses can charge HIGHER prices. If there is a great number of products available and low demand, prices need to be LOWER .
Non-price competition involves factors other than price, such as quality, service, or image.
Inherent in the free enterprise system is the right to own property and start a business.
Intellectual property rights are intangible and are protected by patents, copyrights, and trademarks.
Define “Copyright”.The legal protection of a creator’s intellectual property or products.
Define “Royalty”. A payment you receive for use of your copyrighted material.
How do royalties work?Every time a clip is aired the artist receives a payment.
Patents are granted for 20 years to protect owners of patented products. Patented inventions are protected from others making, using, importing,selling or offeringthem for sale..
Trademarks on words, names, symbols, sounds, or colors distinguish goods and services are also registered with the USPTO. Trademarks can berenewed over and over again. A company’s image, reputation, and profits are linked to its trademark.
TYPES OF BUSINESS OWNERSHIP
Sole proprietorship of a business involves only one owner.
Benefits are (4 of them):
a.Ease in starting and ending the business.
b.Complete control
c.All decisions made by one owner
d.All profits go to the owner
Disadvantages are (3 of them):
a.Lack of finances to expand
b.Unlimited liability
c.Time spent to run business
When there are 2 or more owners, the business is a partnership.
Advantages are (4 of them):
a.Shared financial investment
b.Shared responsibilities
c.Shared expertise
d.Ability to expand
Disadvantages are (5 of them):
a.Unlimited liability
b.Difficulty in withdrawing
c.Death dissolves partnership
d.Disagreements
e.Share Profits
It is a good idea to prepare a partnership agreement before starting a business. It should cover the % of partner investment, Share in profits/losses, partners’ responsibilities, as well as how the partnership will handle the death of a partner.
A partnership may have a silent partner making the business a limited partnership. There must be at least one general partner who assumes unlimited liability. All of the limited partners enjoy limited liability.
A corporation is a business entity that has the ability to conduct business and enter into contracts apart from its owner or owners. It must be chartered, which requires providing information to the state in which it plans to operate. The information needed includes name , number of shareholders, type of business, products, selling locationand members of board of directors.
Owners of a corporation are called stockholders or shareholders.
Corporation advantages (5 of them) include:
a.ability to generate capital investment
b.limited liability
c.ability to expand
d.ease of joining and leaving
e.ability to hire experts
Disadvantages (4 of them) include:
a.complex structure
b.higher tax rate
c.double taxation
d.increased govt. regulations
AnS corporation must follow all the same govt. regulations but is taxed like a partnership. Restrictions include: no more than 35 shareholders and no more than 80% of revenue can come from foreign sources.
Host locations benefit economically from sports and/or entertainment events and marketing.
On a local level, sporting events and entertainment venues economically impart areas in which they operate because they draw audiences.
Hosting the Olympics creates a huge economic impact on a region before, during, and after the event. Most Olympic sites expect the economic impact to continue well after the Game are over because of the publicity during the Games.