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Chapter 01

Marketings Value toConsumers, Firms,

and Society

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

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Management 3500, 10 & 11, Course Objectives

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 knowledgeabout 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.

Upon successful completion of the course, the student will have developed:

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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.

1-3

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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.

1-4

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More than Selling or Advertising

All ThoseBicycles!

The Management Job in Marketing

More than Selling and Advertising

1-5

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Things a Firm Should Do in Producing a

Bike

Themarketingmix

The

Predict Wants

Estimate Demand

Predict When

Determine Where

Estimate PriceDecide Promotion

Estimate Competition

Provide Service

Analyze Needs

1-6

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Production vs. Marketing

Creates Customer Satisfaction

Marketing

Makes sure right goods &

services are produced

Production

Making Goods

Performing Services

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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

1-9

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Marketing

Stimulates

New Ideas

Courtesy of The Procter & Gamble Company.

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What Is Marketing?

and

Macro View

Social process

Matches supply

with demand

Micro View

Set of activities

Performed by

individual

organizations

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Th

e

The performance of activities that

seek to accomplish an

organizations objectives byanticipating customer or client

needs and directing a flow of need-

satisfying goods and services fromproducer to customer or client.

Micro-Marketing

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Marketing

Key

Characteristics

Profit andNonprofit

More thanPersuasion

Begins with

Needs

Doesnt Go It

Alone

Involves

Exchanges

Builds

Relationships

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Building

Customer

Relationships

1-14

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Macro-Marketing

A social process that directs an

economys flow of goods and

services from producers toconsumers in a way that effectively

matches supply and demand and

accomplishes the objectives ofsociety.

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Macro-Marketing

Key

Characteristics

MatchesProducers and

Consumers

Emphasis is on

Whole System

EveryEconomy

Needs It

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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.

1 18

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Marketing Facilitates Production and

Consumption (Exhibit 1-1) P. 9

Production Sector

Marketing

needed to

overcome

discrepancies

and

separations

Discrepancies ofQuantity

Discrepancies of

Assortment

Spatial Separation

Separation in Time

Separation of

Information

Separation in

Values

Separation of

Ownership

Consumption Sector

1-18

1 19

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Universal Functions of Marketing

MarketingFunctions

Buying Selling

Transporting

Storing

Standardization

& GradingFinancing

Risk Taking

Market

Information

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E-commerce refers to exchanges betweenindividuals or organizationsand activities thatfacilitate those exchangesbased on applicationsof information technology.

Innovations in e-commerce are making many firmsand markets more effective (work better) and/ormore efficient (less costly)

Examples:

Websites the facilitate promotion, buying andselling

Shared databases that allow buyers and sellers do abetter job in planning inventory requirements

Online Auction sites to match supply and demand

E-Commerce

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Advertising agencies

Marketing research firms

Independent product-testing laboratories

Internet service providers

Public warehouses

Transporting firms

Communications companies

Financial institutions (including banks)

Collaborators Facilitate Marketing Functions

1 22

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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 value

measure

Freedom of

choice

Governments

role limited

1-22

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Model of a Market-Directed Macro-Marketing

System (Exhibit 1-2) P. 14

Many Individual Producers(heterogeneous supply)

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

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

1 24

1-25

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

Profit (or another measure

of long-term success) as

an objective

Total

company

effort

Customer

satisfaction

The

Marketing

Concept

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Exhibit 1-4: Some Differences in Outlook between Adopters of the

Marketing Concept and the Typical Production-Oriented Managers.

(p.18)

M k ti C t & C t V l

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Marketing Concept & Customer Value

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

Customer value takes the customers point of view

But customer may not explicitly think in terms ofcosts and benefits

Costs and benefits are not just limited to economicconsiderations

Examples: Convenience in purchasing

Emotional reactions (status needs, etc.)

In a competitive market, the firm that offers superiorvalue is likely to win business and get repeatcustomers

1-28

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Creating

Customer

Satisfaction

Prestige Brands Holdings, Inc.

1-29

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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 tostay 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

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The Marketing Concept and Customer Value

Costs Benefits

Take Customers Pointof View

Customer May Not

Dwell On Value

Where DoesCompetition Fit?

Customer Value

Builds Relationships

Customer value

reflects

benefits and costs

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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.

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 reallycounts is if the customer thinks its a good value.

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

least expensive.

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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.

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Total CompanyEffort to Satisfy

Customers

Total CompanyEffort to Satisfy

Customers

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

Build Profitable

CustomerRelationships

Attract

Customers

Offer Superior

Customer Value

Satisfy

Customers

Retain Customers

Increase Sales to

Customers

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Government

Marketing

Th M k ti C t S i l1-35

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Social

Responsibility

The Marketing Concept, Social

Responsibility, and Marketing Ethics

Should All

Needs Be

Satisfied?

What if Profits

Suffer?

Micro - MacroDilemma

The Marketing Concept Guides Ethics

Group Needs Individual Needs

Do All

Marketers Act

Responsibly?

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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 theindividuals impact the total organization

Red Face Test/Newspaper Test

Social Responsibility and Marketing Ethics

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The Micro-

Macro

Dilemma

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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.

1-39

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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.

1-40

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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

1-41

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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