Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society...

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Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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Page 1: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Chapter 1Marketing’s Value to Consumers, Firms, and Society

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Page 2: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 3: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 4: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 5: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Things a Firm Should Do in Producing a Bike

Themarketing mix

Themarketing mix

Predict 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

Page 6: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 7: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 8: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Marketing Stimulates New Ideas

Courtesy of The Procter & Gamble Company.

1–8

Page 9: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Marketing Affects Innovation

1–9

Page 10: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 11: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 12: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Building Customer Relationships

1–12

Page 13: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 14: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 15: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Overcoming Spatial Separation

1–15

Page 16: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 17: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Universal Functions of Marketing

MarketingFunctions

BuyingBuying SellingSelling

TransportingTransporting

StoringStoring

Standardization& Grading

Standardization& GradingFinancingFinancing

Risk TakingRisk Taking

MarketInformation

MarketInformation

1–17

Page 18: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Who Performs Marketing Functions?

TransportFirms

ISP's

ProductTestingFirms

Ad Agencies

ResearchFirms

Wholesalers OtherSpecialists

Retailers

Consumers

Producers

1–18

Page 19: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 20: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Model of a Market-Directed Macro-Marketing System (Exhibit 1-2)

Monitoring by government(s)and public interest groups

1–20

Page 21: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 22: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 23: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Creating Customer Satisfaction

Prestige Brands Holdings, Inc. 1–23

Page 24: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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 need

B. Total company effort

C. Customer satisfaction

D. Marketing orientation

E. Product orientation1–24

Page 25: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Adopting the Marketing Concept

1–25

Page 26: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

The Marketing Concept and Customer 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

Page 27: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 28: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Interactive Exercise: Customer Value

1–28

Page 29: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 30: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 31: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 32: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 33: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Government Marketing

1–33

Page 34: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Marketing Concept Used by Nonprofit Services

1–34

Page 35: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Social Responsibility

Social Responsibility

The Marketing Concept, Social Responsibility, and Marketing Ethics

Should All Consumer Needs Be Satisfied?

Should All Consumer 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

Page 36: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

The Micro-Macro Dilemma

1–36

Page 37: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

Social Responsibility

1–37

Page 38: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 39: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 40: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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

Page 41: Essentials of Marketing Chapter 1 Marketing’s Value to Consumers, Firms, and Society McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.

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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