Essentials of Marketing Chapter 1 Marketing s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
At the end of this presentation, you should be able to: 1. Know what marketing is and why you should learn about it. 2. Understand the difference between marketing and macro-marketing. 3. Know the marketing functions and why marketing specialists including intermediaries and collaborators develop to perform them. 4. Understand what a market-driven economy is and how it adjusts the macro-marketing system. 1 2
At the end of this presentation, you should be able to: 5. Know what the marketing concept is and how it should guide a firm or nonprofit organization. 6. Understand what customer value is and why it is important to customer satisfaction. 7. Know how social responsibility and marketing ethics relate to the marketing concept. 8. Understand the important new terms. 1 3
The Management Job in Marketing More than Selling or Advertising More than Selling All Those and Advertising Bicycles! 1 4
Things a Firm Should Do in Producing a Bike Analyze Needs The marketing mix Predict Wants Estimate Demand Predict When Determine Where Estimate Price Decide Promotion Estimate Competition Provide Service 1 5
Production vs. Marketing Marketing Makes sure right goods & services are produced Production Making Goods Performing Services Creates Customer Satisfaction 1 6
Marketing Is Important to You! Important to every consumer! Important to your job! Affects innovation and standard of living 1 7
Marketing Stimulates New Ideas 1 8 Courtesy of The Procter & Gamble Company.
Marketing Affects Innovation 1 9
What Is Marketing? Micro View Set of activities Performed by individual organizations and Macro View Social process Matches supply with demand 1 10
Marketing Profit and Nonprofit More than Persuasion Builds Relationships Key Characteristics Begins with Needs Involves Exchanges Doesn t Go It Alone 1 11
Building Customer Relationships 1 12
Macro-Marketing Emphasis is on Whole System Every Economy Needs It Key Characteristics Matches Producers and Consumers 1 13
Unit Cost $ Can Mass Production Satisfy a Society s Consumption Needs? Economies of Scale - Lower Unit Cost Output Marketing Bridges the Gap! Producers Marketing Functions Consumers 1 14
Overcoming Spatial Separation 1 15
Marketing Facilitates Production and Consumption (Exhibit 1-1) Production Sector Spatial Separation Discrepancies of Quantity Discrepancies of Assortment Marketing needed to overcome discrepancies and separations Separation in Time Separation of Information Separation in Values Separation of Ownership Consumption Sector 1 16
Universal Functions of Marketing Buying Selling Market Information Risk Taking Marketing Functions Transporting Storing Financing Standardization & Grading 1 17
Who Performs Marketing Functions? Producers Wholesalers Other Specialists Transport Firms ISP's Retailers Ad Agencies Product Testing Firms Research Firms Consumers 1 18
How Decisions are Made in an Economic System Command Economy Government officials decide May work well if: Simple economy Little Variety Adverse Conditions OR Market-Directed Economy Adjusts itself Price is value measure Freedom of choice Government s role limited 1 19
Model of a Market-Directed Macro-Marketing System (Exhibit 1-2) Many Individual Producers (heterogeneous supply) Intermediaries Collaborators Perform universal marketing functions To overcome discrepancies and separation of producers and consumers Monitoring by government(s) and public interest groups To create value and direct flow of need-satisfying goods and services Many Individual Consumers (heterogeneous demand) 1 20
Marketing s Role Has Changed Over Time Simple Trade Era Production Era Sales Era Marketing Department Era Marketing Company Era Focus: Sell Surplus Focus: Increase Supply Focus: Beat Competition Focus: Coordinate and Control Focus: Long-Run Customer Satisfaction 1 21
The Marketing Concept (Exhibit 1-3) Customer satisfaction The Marketing Concept Total company effort Profit (or another measure of long-term success) as an objective 1 22
Creating Customer Satisfaction Prestige Brands Holdings, Inc. 1 23
Checking Your Knowledge A store that is popular with newlyweds runs a wedding gift registry. Five minutes before closing time on a Sunday, a young couple enters the store and wants to register a process that usually takes 30 minutes or more. A sales associate advises the couple to come back when they have more time, even though a recent memo from the store s regional manager specifically instructed store personnel to stay after closing time to help such customers. Which key element of the marketing concept is the main problem area in this situation? A. Customer need B. Total company effort C. Customer satisfaction D. Marketing orientation E. Product orientation 1 24
Adopting the Marketing Concept 1 25
The Marketing Concept and Customer Value Take Customer s Point of View Customer Value Reflects Benefits and Costs Costs Benefits Customer May Not Dwell on Value Where Does Competition Fit? Customer Value Builds Relationships 1 26
Costs, Benefits, and Customer Value (Exhibit 1-5) High Benefits target customer sees in a firm s goods and services Perceived superior value Low Perceived inferior value Low Costs target customer sees to obtain benefits High 1 27
Interactive Exercise: Customer Value 1 28
Checking Your Knowledge Which of the following statements, made by marketing managers, illustrates an understanding of the concept of customer value? A. It s more important to acquire new customers than to retain old ones. B. The only time it s really necessary to demonstrate superior customer value is right before the actual sale. C. My main concern is with meeting this month s sales quota I ll worry about relationship building later. D. I might think my product is a good value, but what really counts is if the customer thinks it s a good value. E. Customer value really boils down to which product is the least expensive. 1 29
Checking Your Knowledge A computer manufacturer is attempting to increase the customer value associated with purchases of its products. Which of the following might be a way to achieve this increase in value? A. Reduce price. B. Increase technical support for customers. C. Increase warranty coverage. D. Offer free shipping. E. Any of the above, depending on the needs of the target market. 1 30
Putting It All Together (Exhibit 1-6) Build Profitable Customer Relationships Total Company Effort to Satisfy Customers Offer Superior Customer Value Increase Sales to Customers Attract Customers Retain Customers Satisfy Customers 1 31
The Marketing Concept Applies in Nonprofit Organizations Newcomers to Marketing Will Satisfied Customers Offer Support? Characteristics of Nonprofit Organizations May Not Be Organized for Marketing The Bottom Line? 1 32
Government Marketing 1 33
Marketing Concept Used by Nonprofit Services 1 34
The Marketing Concept, Social Responsibility, and Marketing Ethics Group Needs Micro - Macro Dilemma Individual Needs Social Responsibility Should All Consumer Needs Be Satisfied? Do All Marketers Act Responsibly? The Marketing Concept Guides Ethics What if Profits Suffer? 1 35
The Micro- Macro Dilemma 1 36
Social Responsibility 1 37
You should now be able to: 1. Know what marketing is and why you should learn about it. 2. Understand the difference between marketing and macro-marketing. 3. Know the marketing functions and why marketing specialists including intermediaries and collaborators develop to perform them. 4. Understand what a market-driven economy is and how it adjusts the macro-marketing system. 1 38
You should now be able to: 5. Know what the marketing concept is and how it should guide a firm or nonprofit organization. 6. Understand what customer value is and why it is important to customer satisfaction. 7. Know how social responsibility and marketing ethics relate to the marketing concept. 8. Understand the important new terms. 1 39
Key Terms Production Customer satisfaction Innovation Marketing Pure subsistence economy Macro-marketing Economies of scale Universal functions of marketing Buying function Selling function Transporting function Storing function Standardization and grading Financing Risk-taking Market information function Intermediary 1 40
Key Terms Collaborators E-commerce Economic system Command economy Market-directed economy Simple trade era Production era Sales era Marketing department era Marketing company era Marketing concept Production orientation Marketing orientation Customer value Micro-macro dilemma Social responsibility Marketing ethics 1 41