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Chapter Questions Why is marketing important? What is the scope of marketing? What are some of the fundamental

marketing concepts? How has marketing management

changed?

What are the tasks necessary forsuccessful marketing management?

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Definition of MarketingDefinition of Marketing

Marketing: the process of planning andexecuting the conception, pricing,promotion, and distribution of ideas, goods,

services, organizations, and events to createand maintain relationships that will satisfyindividual and organizational objectives.

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American Marketing AssociationsAmerican Marketing Associations new officialdefinition of marketing released August 2004:

Marketing is an organizational function and a setof processes for creating, communicating anddelivering value to customers and formanaging customer relationships in ways thatbenefit the organization and its stakeholders.

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Why the change?Why the change?

From AMA 9/15/04 issue of Marketing News The impetus to examine and possibly revise theofficial definition came from AMA CEO DennisDunlap. Currently, marketers are nearly unanimous

in believing that the industry is rapidly changing,though that was not always the case.

The first official definition of marketing wasadopted in 1935 by the National Association of Marketing Teachers, a predecessor of the AMA. Itwas adopted by the AMA in 1948, and again in1960 when the AMA revisited the definition anddecided not to change it. This original definition

stood for 50 years, until it was revised in 1985. 1-5

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Both definitions also identify the marketingvariables that together provide customer

satisfaction ProductProduct PricePrice PromotionPromotion DistributionDistribution

Creating customers that want to stay withyou is all about identifying needs, providinggoods and services that meet those needs,

pricing, and follow-up service.

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Definition of Marketing

Marketing is a societal process by which individualsand groups obtain what they need and want through

creating, offering, and freely exchanging productsand services of value with others. (Philip Kotler) Marketing is the performance of business activities

that directs the flow of goods and services from producer to customer or user. (American MgtAssociation )

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Marketing

Marketing creates utility throughthe exchange process

Utility : Want-satisfying powerof a good or service

Form utility

Time utility Place utility Ownership utility

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Four Types of UtilityFour Types of Utility

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Type Description Examples

Organizational Function

Responsible

Form Conversion of rawmaterials andcomponents intofinished goods andservices

J.P. Morgan Chase checkingaccount; Lincoln Navigator; RamenNoodles (nutrition for students whoare hungry, broke, and cantorwontcook)

Production

Time Availability of goods andservices whenconsumers want them

Digital photographs; LensCrafterseyeglass guarantee; UPS Next DayAir

Marketing

Place Availability of goods andservices at convenientlocations

Soft-drink machines outside gasstations; on-site day care; banks ingrocery stores

Marketing

Owner-ship

Ability to transfer title togoods or services frommarketer to buyer

Retail sales (in exchange forcurrency or credit-card payment)

Marketing

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What is Marketed? Goods Services Events Experiences Persons

Places Properties Organizations Information Ideas

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What is MarketingManagement?

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Marketing management is theart and science

of choosing target marketsand getting, keeping, and growing

customers throughcreating, delivering, and communicating

superior customer value.

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Elements of a ModernMarketing System

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SuppliersSuppliers

End UserMarket

End UserMarket

MarketingIntermediaries

MarketingIntermediaries

CompetitorsCompetitors Company(Marketer)Company

(Marketer)

E n v

i r o

n m e n

t

E n v i r o n m e n t

Modern Marketing System

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Marketing Orientations or Concepts

1. The Production Concept2. The Product Concept

3. The Selling Concept4. The Marketing Concept5. The Customer Concept6. The Societal Marketing Concept

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Marketing Management

Philosophies

15

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

Consumers favor products that areavailable and highly affordable.

Improve production and distribution.

Consumers favor products that offerthe most quality, performance, andinnovative features.

Consumers will buy products only if the company promotes/ sells these

products. Focuses on needs/ wants of target

markets & delivering satisfactionbetter than competitors.

Focuses on needs/ wants of targetmarkets & delivering superior value.

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Production EraProduction Era Prior to 1920s Production orientation Business success often defined solely

in terms of production victories

Sales EraSales Era Prior to 1950s Customers resist nonessential goods

and services Personal selling and advertisings task

is to convince them to buy

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Marketing EraMarketing Era Since 1950s Marketing Concept Emerges Satisfying customer needs

Emergence of the MarketingEmergence of the MarketingConceptConcept Shift from sellers to buyers market Companywide consumer orientation Objective of achieving longrun success

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Marketing and Sales

Concepts Contrasted

18

Factory Existing

Products

Sellingand

Promoting

ProfitsthroughVolume

The Selling ConceptThe Selling Concept

StartingPoint Focus Means Ends

Market CustomerNeedsIntegratedMarketing

Profitsthrough

Satisfaction

The Marketing ConceptThe Marketing Concept

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Societal Marketing

Concept

19

SocietalMarketingConcept

Company(Profits)

Consumers(Want Satisfaction)

Society(Human Welfare)

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Core Marketing Concepts

Needs, wants,and demands

Productsand services

Value,satisfaction,and quality

Exchange,transactions,

and relationships

Markets

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What are ConsumersNeeds, Wants and

Demands? NeedsNeeds - state of felt deprivation for basic items

such as food and clothing and complex needssuch as for belonging. i.e. I am hungry.

WantsWants - form that a human need takes asshaped by culture and individual personality.i.e. I want a hamburger, French fries, and a softdrink.

DemandsDemands - human wants backed by buyingpower. i.e. I have money to buy this meal.

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I want it, I need it..

5 Types of Needs

Stated needs Real needs

Unstated needs

Delight needs Secret needs

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Productsything that can be Offered to a Market to Satisfy a Need or Wan

ExperiencesExperiences PersonsPersons PlacesPlaces

OrganizationsOrganizations IdeasIdeasInformationInformation

What Will SatisfyConsumers Needs and

Wants?

ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Dont Result in the Ownership of Anything

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ExchangesExchanges TransactionsTransactions

RelationshipsRelationshipsBuilding a MarketingNetwork Consisting of The Company and All

Its SupportingStakeholders

How Do Consumers Obtain

Products and Services?

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Who Purchases Products and

Services?People WhoExhibit Need

Resources toExchange

Willingness toExchange

U n e x p e c t e d S i t u a t i o n a l F a c t o r s

Attitudesof

Others

Ethical

PotentialBuyers

Market Buyers who

share a particularneed or want that

can be satisfiedthrough exchange

or relationships.

ActualBuyers

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For an exchange to occur.. There are at least two parties. Each party has something that might be of

value to the other party. Each party is capable of communication

and delivery. Each party is free to reject the exchange

offer.

Each party believes it is appropriate ordesirable to deal with the other party.

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Demand States Negative Nonexistent Latent Declining

Irregular Unwholesome Full Overfull

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Key Customer Markets Consumer markets Business markets

Global markets Nonprofit/Government markets

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Marketing Mix and theCustomer

Four Ps Product Price Place Promotion

Four Cs Customer

solution Customer cost Convenience Communication

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The Marketing Mix Variables

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Marketing Challenges in theNew Connected

MillenniumConnecting

TechnologiesComputer

InformationCommunication Transportation

Connections with CustomersConnecting more selectively

Connecting for lifeConnecting Directly

Connections withMarketing Partners

Connecting with othercompany departments Connecting withsuppliers and distributors Connecting throughstrategic alliances

Connections withthe world aroundus GlobalConnections Connectionswith values andresponsibilities Broadened

connections

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Learn About & Track CustomersWith Databases

Communicate WithCustomers in Groups

Or One-on-One

Create Products &Services Tailored to

Meet Customer Needs

Distribute ProductsMore Efficiently &

Effectively

Connecting Technologies inComputers,

Telecommunications,Information, & Transportation

Help To:

Technologies for

Connecting

What aspects of the Internetmake it a goodforum formarketing?

How do Webcompaniescompete withbrick and mortarcompanies?

Click or pressspacebar to return

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The Internet The Internet has been hailed as the technology

behind a new model for doing business. New applications include:

Internet connecting with customers, Intranets connecting with others in the company, and Extranets connecting with strategic partners, suppliers,

and dealers. Purchasing will be over $1.4 trillion in 2003. 400,000 companies are now using the Internet to

do business.

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Direct Connections With

Customers Many companies use technologies to let them connect

more directly with their customers. Products available via telephone, mail-order catalogs, kiosks

and e-commerce. Some firms sell only via direct channels (i.e. Dell Computer,

www.Amazon.com), others use a combination. Direct marketing is redefining the buyers role in

connecting with sellers. Buyers are active participants in shaping the marketing offerand process; some buyers design their own products online

such as at www.LandsEnd.com.

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Connections WithMarketings Partners

Connecting Inside theCompany

Every employee mustbe customer-focused

Teams coordinateefforts towardcustomers

Connecting WithOutside Partners

Supply ChainManagement

Strategic Alliances

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Connections With the World

Around UsGlobal

Connections

ValuesConnections

Social ResponsibilityConnections

BroadeningConnections

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From Transaction-Based Marketing to

Relationship Marketing Transactionbased

marketing (Simpleexchanges)

Relationship marketing Lifetime value of a customer Converting new customers to

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One-to-One MarketingOne-to-One Marketing Customized marketing program

designed to build long-termrelationships with individualcustomers.

Identifying a firms best customersand increasing their loyalty.

Developing Partnerships andDeveloping Partnerships and

Strategic AlliancesStrategic Alliances Strategic Alliances : partnershipsbetween organizations that createcompetitive advantages

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Costs and Functions of Marketing

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Ethics and Social Responsibility:Doing Well by Doing Good

Increased Employee Loyalty

Better Public Image

Market Place Success

Improved Financial Performance