BASIC MARKETING Chapter 01 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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BASIC MARKETING
Chapter 01Marketing’s Value to Consumers, Firms, and Society
McGraw-Hill/Irwin Copyright © 2011 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 specialists—including intermediaries and collaborators—develop to perform them.
4. Understand what a market-driven economy is and how it adjusts the macro-marketing system.
1-2
At the end of this presentation, you should be able to:
5. Know what the marketing concept is—and 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.
1-3
More than Selling or AdvertisingMore than Selling or Advertising
All Those All Those Bicycles!Bicycles!
The Management Job in Marketing
More than Selling and AdvertisingMore than Selling and Advertising
1-4
Things a Firm Should Do in Producing a Bike
Themarketing mix
ThePredict WantsPredict Wants
Estimate DemandEstimate Demand
Predict WhenPredict When
Determine WhereDetermine Where
Estimate PriceEstimate Price
Decide PromotionDecide Promotion
Estimate CompetitionEstimate Competition
Provide ServiceProvide Service
Analyze NeedsAnalyze Needs
1-5
Production vs. Marketing
Creates Customer SatisfactionCreates Customer Satisfaction
Marketing
Makes sure right goods & services are produced
Production
• Making Goods
• Performing Services
Production
• Making Goods
• Performing Services
1-6
Marketing Is Important to You!
Important to every consumer!Important to every consumer!
Important to your job!Important to your job!
Affects innovation and standard of living
Affects innovation and standard of living
1-7
Marketing Stimulates New Ideas
Courtesy of The Procter & Gamble Company.
1-8
Marketing Affects Innovation1-9
What Is Marketing?
and
Macro ViewMacro View
• Social process
• Matches supply with demand
Micro ViewMicro View
• Set of activities
• Performed by individual organizations
1-10
Marketing
KeyCharacteristics
KeyCharacteristics
Profit and NonprofitProfit and Nonprofit
More than PersuasionMore than Persuasion
Begins with Needs
Begins with Needs
Doesn’t Go It Alone
Doesn’t Go It Alone
Involves ExchangesInvolves
Exchanges
Builds Relationships
Builds Relationships
1-11
Building Customer Relationships
1-12
Macro-Marketing
KeyCharacteristics
KeyCharacteristics
Matches Producers and
Consumers
Matches Producers and
Consumers
Emphasis is on Whole System
Emphasis is on Whole System
Every Economy Needs It
Every Economy Needs It
1-13
Can Mass Production Satisfy a Society’s Consumption Needs?
Economies of Scale - Lower Unit CostEconomies of Scale - Lower Unit Cost
UnitCost
$
ProducersProducers ConsumersConsumersMarketingFunctionsMarketingFunctions
Marketing Bridges the Gap!Marketing Bridges the Gap!Output
1-14
Overcoming Spatial Separation
1-15
Marketing Facilitates Production and Consumption (Exhibit 1-1)
Production Sector
Marketing needed to overcome
discrepancies and
separations
• Discrepancies of Quantity
• Discrepancies of Assortment
• Spatial Separation
• Separation in Time
• Separation of Information
• Separation in Values
• Separation of Ownership
Consumption Sector
1-16
Universal Functions of Marketing
MarketingFunctions
BuyingBuying SellingSelling
TransportingTransporting
StoringStoring
Standardization& Grading
Standardization& GradingFinancingFinancing
Risk TakingRisk Taking
MarketInformation
MarketInformation
1-17
Who Performs Marketing Functions?
TransportFirms
ISP's
ProductTestingFirms
Ad Agencies
ResearchFirms
Wholesalers OtherSpecialists
Retailers
Consumers
Producers
1-18
How Decisions are Made in an Economic System
OR
CommandEconomy
CommandEconomy
• Government officials decide
• May work well if:• Simple
economy• Little Variety• Adverse
Conditions
Market-Directed Economy
Market-Directed Economy
• Adjusts itself
• Price is value measure
• Freedom of choice
• Government’s role limited
1-19
Model of a Market-Directed Macro-Marketing System (Exhibit 1-2)
Monitoring by government(s)and public interest groups
1-20
Marketing’s Role Has Changed Over Time
Focus: Sell Surplus
Focus: Sell Surplus
Long-RunCustomer Satisfaction
Long-RunCustomer Satisfaction
Focus:
Focus: Increase Supply
Focus: Increase Supply
Focus: Beat Competition
Focus: Beat Competition
Focus: Coordinate and ControlFocus:
Coordinate and Control
Simple Trade EraSimple Trade Era
Production EraProduction Era
Sales EraSales Era
Marketing Department Era
Marketing Department Era
Marketing Company EraMarketing Company Era
1-21
The Marketing Concept (Exhibit 1-3)
Profit (or another measure of long-term success) as
an objective
Total company
effort
Customer satisfaction
The MarketingConcept
1-22
Creating Customer Satisfaction
Prestige Brands Holdings, Inc.
1-23
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 register—a 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 store’s 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 needB. Total company effortC. Customer satisfaction D. Marketing orientationE. Product orientation
1-24
Adopting The Marketing Concept
1-25
The Marketing Concept and Customer Value Value
Costs Benefits
Take Customer’s Point of View
Take Customer’s Point of View
Customer May Not Dwell On Value
Customer May Not Dwell On Value
Where Does Competition Fit?
Where Does Competition Fit?
Customer Value Builds Relationships
Customer Value Builds Relationships
Customer value reflects
benefits and costs
Customer value reflects
benefits and costs
1-26
Costs, Benefits, and Customer Value(Exhibit 1-5)
Perceivedsuperior
value
Perceivedinferiorvalue
High
HighLow
Low
Costs target customer sees to obtain benefits
Benefits targetcustomer sees
in a firm’s goods and services
Custo
mer
’s pe
rceiv
ed fa
ir va
lue lin
e
1-27
Interactive Exercise: Customer Value1-28
Checking Your Knowledge
Which of the following statements, made by marketing managers, illustrates an understanding of the concept of customer value?
A. “It’s more important to acquire new customers than to retain old ones.”B. “The only time it’s really necessary to demonstrate superior customer value is right before the actual sale.”C. “My main concern is with meeting this month’s sales
quota—I’ll worry about relationship building later.”D. “I might think my product is a good value, but what really counts is if the customer thinks it’s a good value.”E. “Customer value really boils down to which product is the least expensive.”
1-29
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. 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 the
target market.
1-30
Total Company Effort to Satisfy
Customers
Total Company Effort to Satisfy
Customers
Total Company Effort to Satisfy
Customers
Total Company Effort to Satisfy
Customers
Putting It All Together (Exhibit 1-6)
Build Profitable Customer
Relationships
Build Profitable Customer
Relationships
AttractCustomers
AttractCustomers
Offer Superior Customer ValueOffer Superior
Customer Value
SatisfyCustomers
SatisfyCustomersRetain CustomersRetain Customers
Increase Sales to Customers
Increase Sales to Customers
1-31
The Marketing Concept Applies in Nonprofit Organizations
Newcomers to MarketingNewcomers to Marketing
Will “Satisfied Customers”
Offer Support?
Will “Satisfied Customers”
Offer Support?
The Bottom Line?
The Bottom Line?
May Not Be Organized for
Marketing
May Not Be Organized for
Marketing
Characteristics of Nonprofit
Organizations
Characteristics of Nonprofit
Organizations
1-32
Government Marketing
1-33
Marketing Concept Used by Nonprofit Services
1-34
Social Responsibility
Social Responsibility
The Marketing Concept, Social Responsibility, and Marketing Ethics
Should All Needs Be Satisfied?
Should All Needs Be Satisfied?
What if Profits Suffer?
What if Profits Suffer?
Micro - MacroMicro - MacroDilemmaDilemma
The Marketing Concept Guides EthicsThe Marketing Concept Guides Ethics
Group Needs Individual Needs
Do All Marketers Act Responsibly?
Do All Marketers Act Responsibly?
1-35
The Micro-Macro Dilemma
1-36
Social Responsibility
1-37
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 specialists—including intermediaries and collaborators—develop to perform them.
4. Understand what a market-driven economy is and how it adjusts the macro-marketing system.
1-38
You should now be able to:
5. Know what the marketing concept is—and 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.
1-39
Key Terms
Production
Customer satisfaction
Innovation
Marketing
Pure subsistence economy
Macro-marketing
Economies of scale
Universal functions of marketing
Buying function
Selling function
Transporting function
Storing function
Standardization and grading
Financing
Risk-taking
Market information function
Intermediary
1-40
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
1-41
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