7/29/2019 MKT 3301 CH 1 PP

1/41

Essentials of Marketing

Chapter 1

Marketings Value toConsumers, Firms, andSociety

McGraw-Hill/I rwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

7/29/2019 MKT 3301 CH 1 PP

2/41

At the end of this presentation, you should

be able to:

1. Know what marketing is and why you should learnabout 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 howit adjusts the macro-marketing system.

12

7/29/2019 MKT 3301 CH 1 PP

3/41

At the end of this presentation, you should

be able to:

5. Know what the marketing concept isand how itshould 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.

13

7/29/2019 MKT 3301 CH 1 PP

4/41

More than Selling or Advertising

All ThoseBicycles!

The Management Job in Marketing

More than Selling and Advertising

14

7/29/2019 MKT 3301 CH 1 PP

5/41

Things a Firm Should Do in Producing a

Bike

Themarketingmix

Themarketingmix

Predict Wants

Estimate Demand

Predict When

Determine Where

Estimate Price

Decide Promotion

Estimate Competition

Provide Service

Analyze Needs

15

7/29/2019 MKT 3301 CH 1 PP

6/41

Production vs. Marketing

Creates Customer Satisfaction

Marketing

Makes sure right goods &

services are produced

Production

Making Goods

Performing Services

16

7/29/2019 MKT 3301 CH 1 PP

7/41

Marketing Is Important to You!

Important to every consumer!

Important to your job!

Affects innovation and

standard of living

17

7/29/2019 MKT 3301 CH 1 PP

8/41

Marketing

Stimulates

New Ideas

Courtesy of The Procter & Gamble Company.

18

7/29/2019 MKT 3301 CH 1 PP

9/41

Marketing Affects Innovation

19

7/29/2019 MKT 3301 CH 1 PP

10/41

What Is Marketing?

and

Macro View

Social process

Matches supplywith demand

Micro View

Set of activities

Performed byindividualorganizations

110

7/29/2019 MKT 3301 CH 1 PP

11/41

Marketing

Key

Characteristics

Profit andNonprofit

More thanPersuasion

Begins withNeeds

Doesnt Go It

Alone

Involves

Exchanges

BuildsRelationships

111

7/29/2019 MKT 3301 CH 1 PP

12/41

Building

Customer

Relationships

112

7/29/2019 MKT 3301 CH 1 PP

13/41

Macro-Marketing

Key

Characteristics

MatchesProducers and

Consumers

Emphasis is on

Whole System

EveryEconomy

Needs It

113

7/29/2019 MKT 3301 CH 1 PP

14/41

Can Mass Production Satisfy a Societys

Consumption Needs?

Economies of Scale - Lower Unit Cost

UnitCost

$

Producers ConsumersMarketing

Functions

Marketing Bridges the Gap!

Output

114

7/29/2019 MKT 3301 CH 1 PP

15/41

Overcoming

Spatial

Separation

115

7/29/2019 MKT 3301 CH 1 PP

16/41

Marketing Facilitates Production and

Consumption (Exhibit 1-1)

Production Sector

Marketingneeded toovercome

discrepanciesand separations

Discrepancies of Quantity

Discrepancies ofAssortment

Spatial Separation

Separation in Time

Separation of Information

Separation in Values

Separation of Ownership

Consumption Sector 116

7/29/2019 MKT 3301 CH 1 PP

17/41

Universal Functions of Marketing

MarketingFunctions

Buying Selling

Transporting

Storing

Standardization

& GradingFinancing

Risk Taking

Market

Information

117

7/29/2019 MKT 3301 CH 1 PP

18/41

Who Performs Marketing Functions?

Transport

Firms

ISP's

Product

Testing

Firms

Ad Agencies

Research

Firms

Wholesalers Other

Specialists

Retailers

Consumers

Producers

118

7/29/2019 MKT 3301 CH 1 PP

19/41

How Decisions are Made in an Economic

System

OR

CommandEconomy

Governmentofficials decide

May work well if:

Simpleeconomy

Little Variety Adverse

Conditions

Market-DirectedEconomy

Adjusts itself

Price is valuemeasure

Freedom ofchoice

Governments

role limited

119

7/29/2019 MKT 3301 CH 1 PP

20/41

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 andseparation of producers and consumers

To create value and direct flow ofneed-satisfying goods and services

Many Individual Consumers

(heterogeneous demand)

Monitoring by government(s)and public interest groups

120

7/29/2019 MKT 3301 CH 1 PP

21/41

Marketings Role Has Changed Over Time

Focus:Sell Surplus

Long-Run

Customer Satisfaction

Focus:

Focus:Increase Supply

Focus:Beat Competition

Focus:Coordinate and Control

Simple Trade Era

Production Era

Sales Era

Marketing DepartmentEra

Marketing Company Era

121

7/29/2019 MKT 3301 CH 1 PP

22/41

The Marketing Concept (Exhibit 1-3)

Profit (or another measure

of long-term success) as

an objective

Total

company

effort

Customer

satisfaction

The

Marketing

Concept

122

7/29/2019 MKT 3301 CH 1 PP

23/41

Creating

Customer

Satisfaction

Prestige Brands Holdings, Inc. 123

7/29/2019 MKT 3301 CH 1 PP

24/41

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 entersthe 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 elementof 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

124

7/29/2019 MKT 3301 CH 1 PP

25/41

Adopting the

Marketing

Concept

125

7/29/2019 MKT 3301 CH 1 PP

26/41

The Marketing Concept and Customer Value

Costs Benefits

Take Customers Point

of View

Customer May NotDwell on Value

Where DoesCompetition Fit?

Customer ValueBuilds Relationships

Customer ValueReflects

Benefits and Costs

126

7/29/2019 MKT 3301 CH 1 PP

27/41

Costs, Benefits, and Customer Value

(Exhibit 1-5)

Perceived

superior

value

Perceived

inferior

value

High

HighLow

Low

Costs target customersees to obtain benefits

Benefits target

customer seesin a firms

goods andservices

127

7/29/2019 MKT 3301 CH 1 PP

28/41

Interactive Exercise: Customer Value

128

7/29/2019 MKT 3301 CH 1 PP

29/41

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.B. The only time its really necessary to demonstrate

superior customer value is right before the actual sale.

C. My main concern is with meeting this months sales

quotaIll worry about relationship building later.

D. I might think my product is a good value, but what really

counts is if the customer thinks its a good value.

E. Customer value really boils down to which product is the

least expensive. 129

7/29/2019 MKT 3301 CH 1 PP

30/41

Checking Your Knowledge

A computer manufacturer is attempting to increase thecustomer value associated with purchases of its products.Which of the following might be a way to achieve thisincrease 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 thetarget market.

130

7/29/2019 MKT 3301 CH 1 PP

31/41

Total CompanyEffort to Satisfy

Customers

Total CompanyEffort to Satisfy

Customers

Putting It All Together (Exhibit 1-6)

Build Profitable

CustomerRelationships

Attract

Customers

Offer Superior

Customer Value

Satisfy

Customers

Retain Customers

Increase Sales to

Customers

131

Th M k ti C t A li i N fit

7/29/2019 MKT 3301 CH 1 PP

32/41

The Marketing Concept Applies in Nonprofit

Organizations

Newcomersto Marketing

Will Satisfied

Customers

OfferSupport?

The BottomLine?

May Not BeOrganized for

Marketing

Characteristics

of Nonprofit

Organizations

132

7/29/2019 MKT 3301 CH 1 PP

33/41

Government

Marketing

133

M k ti C t U d b N fit

7/29/2019 MKT 3301 CH 1 PP

34/41

Marketing Concept Used by Nonprofit

Services

134

Th M k ti C t S i l

7/29/2019 MKT 3301 CH 1 PP

35/41

Social

Responsibility

The Marketing Concept, Social

Responsibility, and Marketing Ethics

Should AllConsumer

Needs Be

Satisfied?

What if Profits

Suffer?

Micro - MacroDilemma

The Marketing Concept Guides Ethics

Group Needs Individual Needs

Do All

Marketers Act

Responsibly?

135

7/29/2019 MKT 3301 CH 1 PP

36/41

The Micro-

Macro

Dilemma

136

7/29/2019 MKT 3301 CH 1 PP

37/41

Social Responsibility

137

7/29/2019 MKT 3301 CH 1 PP

38/41

You should now be able to:

1. Know what marketing is and why you should learnabout 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 howit adjusts the macro-marketing system.

138

7/29/2019 MKT 3301 CH 1 PP

39/41

You should now be able to:

5. Know what the marketing concept isand how itshould 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.

139

7/29/2019 MKT 3301 CH 1 PP

40/41

Key Terms

Production

Customer satisfaction

Innovation

Marketing

Pure subsistence economy

Macro-marketing

Economies of scale

Universal functions ofmarketing

Buying function

Selling function

Transporting function

Storing function

Standardization and grading

Financing

Risk-taking

Market information function Intermediary

140

7/29/2019 MKT 3301 CH 1 PP

41/41

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