Essentials of Marketing

Chapter 1 Marketings 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 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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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.

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 marketing mix Estimate Demand mix

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

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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

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Courtesy of The Procter & Gamble Company.

Marketing Affects Innovation

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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

110

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

112

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

Matches Producers and Consumers

113

Can Mass Production Satisfy a Societys Consumption Needs?

Economies of Scale - Lower Unit Cost Unit Cost $ Output Marketing Bridges the Gap! Producers Marketing Functions Consumers
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Overcoming Spatial Separation

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Marketing Facilitates Production and Consumption (Exhibit 1-1)

Production Sector
Spatial Separation
Separation in Time

Discrepancies of Quantity

Discrepancies of Assortment

Marketing needed to overcome discrepancies and separations

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
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Financing

Who Performs Marketing Functions?

Producers

Wholesalers

Other Specialists

Transport Firms ISP's Product Testing Firms

Retailers
Ad Agencies

Research Firms

Consumers
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How Decisions are Made in an Economic System

Command Economy Market-Directed Economy

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

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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 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 Focus: Beat Competition Focus: Coordinate and Control

Production Era

Sales Era Marketing Department Era Marketing Company Era

Focus: Long-Run Customer Satisfaction

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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

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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. Customer need

B.
C. D.

Total company effort

Customer satisfaction Marketing orientation

E.

Product orientation
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Adopting the Marketing Concept

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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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Costs, Benefits, and Customer Value (Exhibit 1-5)

High
Perceived superior value

Benefits target customer sees in a firms goods and services

Perceived inferior value

Low

Low Costs target customer sees to obtain benefits

High
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Interactive Exercise: Customer Value

128

Checking Your Knowledge

Which of the following statements, made by marketing managers, illustrates an understanding of the concept of customer value? A. B. C. D. E. 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. 129

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)

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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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?

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Government Marketing

133

Marketing Concept Used by Nonprofit Services

134

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?

What if Profits Suffer?

The Marketing Concept Guides Ethics

135

The MicroMacro Dilemma

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Social Responsibility

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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.

138

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.

139

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

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