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MTKG 325Principles of Marketing

Karen Porter

Syllabus

Who am I?

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Information Sheets

Name Major Where you work Any marketing-related job experience Career goals Something unique about yourself/what

you like to do in Missoula/where you’re from

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Marketing Careers

Marketers:– May have a wide variety of job

titles– Work cross-functionally within

the firm– Work in a wide variety of types

of organizations– See Table 1.1, p. 7-8– Marketing Mgr Median $100K

Get the scoop on marketing salaries! Visit the Occupational Outlook Handbook!

Marketing Career Opportunities

Advertising – Agencies (1 person – intl)– In-house (Aramark – childcare)– Media

Brand Management– Karen: Lottery / Childcare

B2B Marketing– Karen: Consulting

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Marketing Career Opps

Supply Channel Management (ex: TLC) Direct Response Marketing International Marketing Marketing Models / Systems Analysis Marketing Research New Product Development (ex: TLC) Retail Management (ex: store & ecom)

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Marketing Career Opps

Services Marketing (ex: childcare, edu) Sales & Sales Management (ex: TLC) MISSING FROM TEXT:

– Website Development and Online Marketing– Social Media Management– Mobile Marketing

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The Value of Marketing

What is marketing?

– The activity, institutions, and functions/ processes for

• Creating, communicating, and delivering value to customers

• Managing customer relationships to benefit the firm (organization) and its stakeholders (customers, clients, partners, society).

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Marketing Meets Needs Marketing meets the needs of diverse

stakeholders– Stakeholders are buyers, sellers, investors,

community residents, citizens Marketing concept

– First identify customer needs – Then provide products that satisfy those

needs– While making a profit/remaining in business

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Marketing Is about Creating Utility

Utility: The sum of the benefits a customer receives from using a product/service– Form utility – What comprises the product or service

– Place utility – Where that product is delivered(and is it accessible?)

– Time utility – When is it available? (ex: rental cars)

– Possession utility – Give consumers choices to own or experience the product or service

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Marketing Is about Exchange Relationships

Exchange - the heart of every marketing act An exchange occurs when something is

obtained for something else in return – Nonprofits: motivating, educating, or delighting the

public Value is in the eye of the beholder

– Discuss: shoes / cars Marketers must create an attractive value

proposition - WIIFM

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The Evolution of Marketing

The Production Era– Production orientation

The Sales Era– Selling orientation

The Relationship Era– Consumer orientation– Total quality management

The Triple Bottom Line Era

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The Evolution of Marketing: The Production Era

Dominated by production orientation: Marketing played insignificant role

A management philosophy that emphasizes the most efficient ways to produce and distribute products

Demand exceeded supply– Marketing played an insignificant role

Examples of products created under a production orientation: – Henry Ford’s Model T and Ivory soap

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The Evolution of Marketing: The Selling Era When product availability exceeds

demand, businesses may focus on a one-time sale of goods rather than repeat business– Great Depression– After WWII

Dominated by selling orientation:– Managerial view of marketing as a sales

function, or a way to move products out of warehouses to reduce inventory (hard sell / “buyer beware”)

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The Evolution of Marketing: The Relationship Era

70s - Inflation / 80s RecessionShifting focus to a customer orientation/marketing concept:

– A management philosophy that emphasizes satisfying customers’ needs and wants

Marketing becomes more important in the firmTotal Quality Management (TQM) is widely followed in the marketing community

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The Evolution of Marketing: The Triple Bottom Line Era

Focuses on building long-term bonds with customers: CRM

Seeks to maximize the financial, social, and environmental bottom lines (profit, people, planet)– Make Money and a Contribution = Corporate Social

Responsibility (CSR) – company supports social causes– Sustainability: Creating products that meet present needs

and ensuring that future generations can have their needs met

Greater focus on accountability-marketing metrics– ROI (Return on Investment) is the direct financial impact of a

firm’s expenditure of resources such as time or money

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What Can Be Marketed? From “serious” goods/services to fun things Product: any good, service, or idea

– Consumer goods/services• Chia pets, Ben & Jerry, NFL, soup, dental care

– Business-to-business goods/services• Consulting, software, medical equipment, etc.

– Not-for-profit marketing• United Way, Race for the Cure, etc.

– Idea, place, and people marketing• Meth – Not Even Once, Taylor Swift, Travel MT

YOU!

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The Marketing of Value

Value: – The benefits a customer receives from buying

a good or service– JM: relative to price paid + non-monetary

costs Marketing communicates the value

proposition: – A [statement] that fairly and accurately sums

up the value that the customer will realize if he/she purchases product/service

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Value from the Customer’s Perspective

Customer perspective:– Value is the ratio of costs (price) to benefits

(utilities)– Value proposition includes the whole bundle

of benefits the firm promises to deliver, not just the benefits of the product itself

• Brand image is a critical component

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Building LONG-TERM Value Through Customer RELATIONSHIPS

Customers are now regarded as partners rather than victims

It is more expensive to attract new customers than to retain current ones

Calculating the lifetime value of a customer allows a firm to decide which customers are “worth keeping” vs. which should be “fired”

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The Value of a Customer to the Firm: A CRM Perspective

“Customer Relationship Marketing” – Transaction vs. relationship focus – Lifetime value of a customer – Cheaper to retain current customers than

attract new ones– 80/20 rule: Not all customers are created

equal– Company may sacrifice short-term gains for

life-time value

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More on CRM

• “Permission-based” marketing: opt-in• Individualized offers • Database used for

• Tiering • Tailoring

• Also: cross-sell; up-sell; bundle

21More in Ch. 4, Ch. 7, Ch. 12

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Providing Value Through Competitive Advantage

Creating a competitive advantage requires:– Identification of a distinctive competency:

The ability of a firm to outperform the competition by providing customers with a benefit the competition cannot provide

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Consumer-Generated Value:Facilitated by Web 2.0

“User-generated content”– Everyday people functioning in marketing

roles such as:• Creating ads• Providing input into new product development• Serving as retailers

– Social networking is growing explosively• Wisdom of crowds

– Open source business models

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Value from Society’s Perspective

Marketing transactions and company activities influence the world and add or subtract value from society

Stressing ethical or socially responsible decisions is often good business in the long run

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The Dark Side of Marketing

Marketing is often criticized Illegal practices do occur Some marketing activities have

detrimental effects on society The dark side of consumer behavior:

– Terrorism, addictive consumption, exploitation, illegal activities, shrinkage, anticonsumption

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Marketing as a Process

Marketing planning (thinking carefully and strategically about the big picture)– Analyzing the marketing environment – Developing a marketing plan– Deciding on a market segment– Choosing the marketing mix—product,

price, promotion, and place

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The Marketing Mix

Karen’s Marketing Mix

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Marketer’s Strategic Toolbox: The Marketing Mix (4 Ps)

Product

Place

Price: – Value = Benefits (functional + symbolic)/Price ($ + Non-monetary)

Promotion (Marketing Communications)– advertising, – public relations, – personal selling, – sales promotion

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4Ps Mandatories Each P must align with target market

needs & expectations Each P must align with the other P’s

– Consistency – Synergy– Examples:

• Godiva vs. Hershey • Bud vs. __?