EBP 1014 Ch. 01

Welcome to the World of Marketing

Creating and Delivering Value

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Chapter Objectives

• Understand who marketers are, where they work, and marketing’s role in the firm

• Explain what marketing is and how it provides value to everyone involved in the marketing process

• Understand the range of services and goods that are marketed

• Understand value from the perspectives of customers, producers, and society

• Explain the basics of marketing planning and the marketing mix tools used in the marketing process

• Explain the evolution of the marketing concept

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Welcome to a Branded World

“Brand You”• You are a product and have

“market value” as a person• You “position” yourself for a

job• Don’t “sell yourself short”• You package & promote

yourself

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The Who & Where of Marketing

• Marketers:Are real people who make choices that affect

themselves, their companies, & millions of consumers (see “Real People, Real Choices”)

Work cross-functionally within the firmEnjoy exciting, diverse careers

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The Value of Marketing

• Definition of marketing (AMA, 2004) An organizational function

and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders

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Marketing is about Meeting Needs

• Meeting the needs of diverse stakeholders Buyers, sellers, investors,

community residents, citizens

• Marketing concept Identifying consumer

needs and providing products that satisfy those needs

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Marketing Is about Meeting Needs (cont’d)

• The modern marketplace may take the form of a mall, a mail-order catalog, a TV shopping network, an eBay auction, or an e-commerce Web site

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Marketing Is about Creating Utility

• Utility: the sum of the benefits we receive from using a product/serviceForm utilityPlace utilityTime utilityPossession utility

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Marketing Is about Exchange Relationships

• An exchange occurs when something is obtained for something else in return, like cash for goods or servicesBuyer receives product that satisfies needSeller receives something of equivalent value

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The Evolution of Marketing

• The Production Era

• The Selling Era

• The Consumer Era

• The New Era

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The Production Era

• Focus on the most efficient ways to make and distribute products, like Henry Ford’s Model T & Ivory soap

• Marketing plays an insignificant role

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The Selling Era

• Focus on one-time sales of goods rather than repeat business

• Marketing viewed as a sales function

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The Consumer Era

• Focus on satisfying customers’ needs and wants

• Marketing becomes more important in the firm

• Total Quality Management (TQM) widely followed in marketing community

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The New Era: Make Money and Act Ethically

• Focus on building long-term bonds with customers.

• Marketing uses customer relationship management (CRM) to track consumers’ preferences and tailor the value proposition to each individual

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The New Era: Focusing on Social Benefits

• Social marketing concept: satisfy customers’ needs and also benefit society

• Sustainability: meeting present needs and ensuring that future generations can meet their needs

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The New Era: Focusing on Accountability

* Measuring how much value is created by marketing activities

• 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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Measuring Value

• Scorecard: marketing department’s report card on how company/brand is actually doing in achieving various goals

Quarterly Scores 2003

Item Text 1st Qtr. 2nd Qtr. 3rd Qtr.

Satisfaction with

C1 Employee responsiveness 60% 65% 68%

C2 Product selection 60% 62% 63%

C3 Service quality 60% 62% 55%

Table 1.3 (Abridged)

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What Can Be Marketed?

• From serious goods and services to fun thingsFrom serious goods and services to fun things Goods and services mirror changes in popular culture Goods and services mirror changes in popular culture Marketing messages may communicate myths of a culture Marketing messages may communicate myths of a culture

• Product: any good, service, or ideaProduct: any good, service, or idea Consumer goods/servicesConsumer goods/services Business-to-business goods/servicesBusiness-to-business goods/services Not-for-profit marketingNot-for-profit marketing

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The Marketing of Value

• Value: the benefits a customer receives from buying a good or service

• Marketing communicates the value proposition: a marketplace offering 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

• The ratio of costs to benefits

• Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product itself

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Value from the Seller’s Perspective

• Value for the seller takes many formsMaking a profitable exchangeEarning prestige among rivalsTaking pride in doing what a company does wellNonprofits: motivating, educating, or delighting the

public

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Calculating the Value of a Customer

• Single transactions don’t provide companies with the value they desire

• Lifetime value of a customer: How much profit a company expects from a customer’s purchases now and in the future

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Providing Value to Stakeholders

• Competitive advantage: The ability of a firm to outperform the competition by providing customers with a benefit the competition cannot provide.

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Adding Value throughthe Value Chain

• Value chain: a series of activities involved in designing, producing, marketing, delivering, and supporting any product Inbound logisticsOperationsOutbound logisticsMarketing final productService

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Figure 1.2:Making & Delivering Value

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Value from Society’s Perspective

• How marketing transactions add or subtract value from society

• Stressing ethics/social responsibility is often good business in the long run

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The Dark Side of Marketing

* Marketers– Illegal activities such as “bait and switch”– Products that encourage antisocial behavior

*Consumers– Terrorism– Addictive consumption– Exploited people– Illegal activities– Shrinkage– Anticonsumption

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Marketing as a Process

• Marketing planning Analyzing the marketing

environment Developing a marketing plan Deciding on a market

segment Choosing the marketing mix --

product, price, promotion, and place

Group Discussion

• Think of any brands in the current market that are not marketed well or lack of marketing.

• List down at least 10 brands (they can be goods/services).

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