Chapter 01 Marketings Value to Consumers, Firms, and Society

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Management 3500, 10 & 11, Course Objectives

Upon successful completion of the course, the student will have developed: An understanding of marketing terminology and marketing concepts. Knowledge to facilitate practical application of marketing principles. Knowledge in the following specific areas of marketing:
The role of marketing in the macro and micro environments. Buyer needs and behavior, and the use of such information. Marketing Research and Competitive Intelligence. The Marketing Mix (4 Ps): Product, Place, Promotion, and Price.

An understanding of how the marketing manager uses knowledge about the Customer, Company, Competitors, and Context (4 Cs) as the foundation for creation of a marketing strategy, the marketing mix that best serves the needs of the target market at a profit. Verbal skills in communicating marketing concepts.

At the end of this presentation, you should be able to:

1. Know what marketing is and why you should learn about it.

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2. Understand the difference between marketing and macro-marketing.

3. Know the marketing functions and why marketing specialistsincluding intermediaries and collaboratorsdevelop to perform them. 4. Understand what a market-driven economy is and how it adjusts the macro-marketing system.

At the end of this presentation, you should be able to:

5. Know what the marketing concept isand how it should guide a firm or nonprofit organization.

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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.

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The Management Job in Marketing

More than Selling or Advertising

More than Selling and Advertising All Those Bicycles!

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Things a Firm Should Do in Producing a Bike

Analyze Needs

Predict Wants

The The marketing mix Estimate Demand

Predict When Determine Where Estimate Price Decide Promotion Estimate Competition

Provide Service

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Production vs. Marketing

Marketing
Makes sure right goods & services are produced

Production
Making Goods Performing Services

Creates Customer Satisfaction

Customer Satisfaction
Customer satisfaction is the extent to which a firm fulfills a consumers needs, desires, and expectations As some needs are met, others may become more important Expectations may change based on experiences
Satisfying experiences increase expectations Disappointing experiences reduce expectations Realistic or Unrealistic Expectations

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Marketing Is Important to You!

Important to every consumer!

Important to your job!

Affects innovation and standard of living

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Marketing Stimulates New Ideas

Courtesy of The Procter & Gamble Company.

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What Is Marketing?

Micro View
Set of activities Performed by individual organizations

Macro View
and
Social process Matches supply with demand

Micro-Marketing
The performance of activities that seek to accomplish an T organizations objectives by h anticipating customer or client e needs and directing a flow of needsatisfying goods and services from producer to customer or client.

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Marketing
Profit and Nonprofit More than Persuasion

Builds Relationships

Key Characteristics

Begins with Needs

Involves Exchanges

Doesnt Go It Alone

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Building Customer Relationships

Macro-Marketing
A social process that directs an economys flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.

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Macro-Marketing
Emphasis is on Whole System Every Economy Needs It Key Characteristics

Matches Producers and Consumers

AMA Definition
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Marketing Facilitates Production and Consumption (Exhibit 1-1) P. 9

Production Sector

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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

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Universal Functions of Marketing

Buying Market Information Risk Taking

Selling

Transporting

Marketing Functions
Storing Standardization & Grading

Financing

E-Commerce
E-commerce refers to exchanges between individuals or organizationsand activities that facilitate those exchangesbased on applications of information technology. Innovations in e-commerce are making many firms and markets more effective (work better) and/or more efficient (less costly) Examples:
Websites the facilitate promotion, buying and selling
Shared databases that allow buyers and sellers do a better job in planning inventory requirements Online Auction sites to match supply and demand

Collaborators Facilitate Marketing Functions

Advertising agencies

Marketing research firms

Independent product-testing laboratories Internet service providers Public warehouses Transporting firms

Communications companies
Financial institutions (including banks)

How Decisions are Made in an Economic System

Command Economy Market-Directed Economy

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Government officials decide May work well if: Simple economy Little Variety Adverse Conditions

Adjusts itself

OR

Price is value measure Freedom of choice

Governments role limited

Model of a Market-Directed Macro-Marketing System (Exhibit 1-2) P. 14

Many Individual Producers (heterogeneous supply)

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Intermediaries

Collaborators

Perform universal marketing functions

To overcome discrepancies and separation of producers and consumers To create value and direct flow of need-satisfying goods and services Many Individual Consumers (heterogeneous demand) Monitoring by government(s) and public interest groups

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Marketings Role Has Changed Over Time

Simple Trade Era Focus: Sell Surplus Focus: Increase Supply

Production Era

Sales Era Marketing Department Era Marketing Company Era

Focus: Beat Competition

Focus: Coordinate and Control Focus: Long-Run Customer Satisfaction

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The Marketing Concept (Exhibit 1-3) P. 16

Customer satisfaction The Marketing Concept

Total company effort

Profit (or another measure of long-term success) as an objective

Exhibit 1-4: Some Differences in Outlook between Adopters of the Marketing Concept and the Typical Production-Oriented Managers. (p.18)

Marketing Concept & Customer Value

Customer value concerns the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits

Customer value takes the customers point of view

But customer may not explicitly think in terms of costs and benefits Costs and benefits are not just limited to economic considerations Examples: Convenience in purchasing Emotional reactions (status needs, etc.)

In a competitive market, the firm that offers superior value is likely to win business and get repeat customers

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Creating Customer Satisfaction

Prestige Brands Holdings, Inc.

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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 registera 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 stores 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. B. C. D. E. Customer need Total company effort Customer satisfaction Marketing orientation Product orientation

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The Marketing Concept and Customer Value

Take Customers Point of View Customer value reflects benefits and costs

Customer May Not Dwell On Value

Costs

Benefits
Where Does Competition Fit? Customer Value Builds Relationships

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Checking Your Knowledge

Which of the following statements, made by marketing managers, illustrates an understanding of the concept of customer value? A. Its more important to acquire new customers than to retain old ones. The only time its really necessary to demonstrate superior customer value is right before the actual sale. My main concern is with meeting this months sales quotaIll worry about relationship building later. I might think my product is a good value, but what really counts is if the customer thinks its a good value. Customer value really boils down to which product is the least expensive.

B.
C.

D.
E.

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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. B. C. D. E.

Reduce price. Increase technical support for customers. Increase warranty coverage. Offer free shipping. Any of the above, depending on the needs of the target market.

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Putting It All Together (Exhibit 1-6) P. 21

Total Company Effort to Satisfy Customers Build Profitable Customer Relationships Increase Sales to Customers Offer Superior Customer Value

Attract Customers

Retain Customers

Satisfy Customers

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Government Marketing

The Marketing Concept, Social Responsibility, and Marketing Ethics

Group Needs Micro - Macro Dilemma Individual Needs

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Social Responsibility

Should All Needs Be Satisfied?

Do All Marketers Act Responsibly?

What if Profits Suffer?

The Marketing Concept Guides Ethics

Social Responsibility and Marketing Ethics

Social responsibility concerns a firm's obligation to improve its positive effects on society and reduce its negative effects Marketing ethics are the moral standards that guide marketing decisions and actions Since the Marketing Concept involves the total organization, the ethics practices of the individuals impact the total organization Red Face Test/Newspaper Test

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The MicroMacro Dilemma

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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 specialistsincluding intermediaries and collaboratorsdevelop to perform them. 4. Understand what a market-driven economy is and how it adjusts the macro-marketing system.

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You should now be able to:

5. Know what the marketing concept isand 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.

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Key Terms
Production Customer satisfaction Buying function Selling function

Innovation
Marketing Pure subsistence economy

Transporting function
Storing function Standardization and grading

Macro-marketing
Economies of scale Universal functions of marketing

Financing
Risk-taking Market information function

Intermediary

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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