McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Define marketing and identify the diverse factors influencing marketing activities.

LO1

Explain how marketing discovers and satisfies consumer needs.

Distinguish between marketing mix elements and environmental forces. LO3

LO2

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO:

1-2

Explain how organizations build strong customer relationships and customer value through marketing.

Describe how today’s customer relationship era differs from prior eras oriented to production and selling.

LO4

LO5

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO:

1-3

You Are a Marketing Expert Already

• Involved in 1,000s of Buying Decisions

• May Be Involved in Selling Decisions

1-4

The American Marketing Association (AMA) defines marketing as:

The activity for creating, communicating, delivering and exchanging offerings that benefit the organization, its stakeholders, and society at large.

WHAT IS MARKETING? LO1

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Marketing Seeks to:

Exchange items to allow the satisfaction of these wants and needs

• Discover Needs and Wants of Customers

• Satisfy Them

WHAT IS MARKETING? DELIVERING BENEFITS

LO1

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DIVERSE FACTORS INFLUENCE

MARKETING ACTIVITIES LO1

Within the organization

Forces outside of the organization

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Within the Organization Itself, marketing is influenced by:

● The company mission and objectives

● The type of business it’s in

● Company goals and objectives

The organization, in general, can control the 4Ps of marketing:

● Product

● Price

● Place

● Promotion

These are referred to as the Marketing Mix; more on these later…

Environmental Forces: outside the organization and beyond their control

● Economic considerations

● Social considerations

● Technical advances

● Competition

● Regulatory forces

FIGURE 1-2 (p. 6) A marketing department relates to many people, organizations, and environmental forces

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HOW MARKETING DISCOVERS

CONSUMER NEEDS-THE CHALLENGE: NEW

PRODUCTS

LO2

Consumers May Not Know or Cannot Describe What They Need or Want

Most New Products Fail

The Challenge:

Focus on the Consumer Benefit

Learn From the Past

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Some quick facts about new products:

● About 33,000 new products introduced in the USA each year

● Approximately 94% (about 31,000) fail

● Benefits vs Showstoppers (factors that might doom the product to failure)

Dr. Care Vanilla-Mint Aerosol Toothpaste What “benefits” and what “showstoppers”?

LO2

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Hot Pockets Subs Microwaveable Snacks What “benefits” and what “showstoppers”?

LO2

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iRobot Scooba Robotic Floor Washer What “benefits” and what “showstoppers”?

LO2

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Coca Cola C2 (reduced calorie soda with some

sugar) What “benefits” and what “showstoppers”?

LO2

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Need

Want

Does Marketing Persuade People to Buy the “Wrong” Things?

HOW MARKETING

DISCOVERS CONSUMER NEEDS NEEDS VS. WANTS

LO2

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FIGURE 1-3 (p9) Marketing discovers consumer needs through research; satisfies them with a marketing program combining 4Ps

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Marketing tries to influence what we buy

● At what point do we want government and society to stop in to protect consumers?

●Rx drugs? Candy? Soda? Dangerous products?

● Need to analyze consumers to understand what they need/want and why this is so

MARKETING SATISFIES CONSUMER NEEDS LO3

Potential customers make up a market: people with both the desire and ability to buy a specific item

Don’t try to sell to everyone; concentrate efforts on specific consumers who make up our Target Market

Control what we can; be aware of forces outside our control

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Providing Unique Value = Loyal Customers

● The essence of marketing

● Questions a company must ask:

● How do our customers perceive value?

● How do I create that value?

● How do I deliver that value to my customers?

THE MARKETING PROGRAM CUSTOMER VALUE AND RELATIONSHIPS

LO4

Customer Value: unique benefits received by targeted buyers, including quality, convenience, on-time delivery, and both before & after sale service at specific price

Why? Loyal customers = repeat customers…

Obstacle to this: Internet purchases; customers don’t feel that “connection” to the company

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Value Strategies to Provide Customer Value

● Best Price

● Best Service

● Best Product

Costco and Starbucks What customer value strategy?

LO4

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THE MARKETING PROGRAM LO4

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● Developing, maintaining effective customer relationships easy to understand; hard to do

● Utilize elements of the marketing mix to formulate a marketing program

● Try to develop a personal, ongoing relationship between organization and individual customers

FIGURE 1-4 (p13) Marketing programs for two new 3M Post-it® brand products targeted at two distinct customer segments: college students and office workers

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HOW MARKETING BECAME IMPORTANT EVOLUTION OF THE MARKET ORIENTATION

LO5

Production Era

Sales Era

Marketing Concept Era

Customer Relationship Era

• Market Orientation

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HOW MARKETING BECAME IMPORTANT ETHICS AND SOCIAL RESPONSIBILITY

LO5

Ethics in marketing not usually addressed by existing laws, regulations

Should customer information be sold?

Should safety data be disclosed?

Social Responsibility: society as a whole

Societal Marketing Concept ties meeting wants/needs to society’s well being

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HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING

LO6

Who Markets?

What Is Marketed?

• Goods • Services • Ideas 1-30

HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING

LO5

Who Benefits?

Who Buys & Uses What Is Marketed? • Ultimate Consumers

• Organizational Buyers

How Do Consumers Benefit? Utility

Form Utility; Place Utility; Time Utility;

Possession Utility

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Marketing creates its utilities by bridging space (place utility) and hours (time utility) to provide products (form utility) for consumers to own and use (possession utility)

3M’S POST-IT® FLAG HIGHLIGHTER:

EXTENDING THE CONCEPT!

VIDEO CASE 1

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DESIGNING A CANDY BAR

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Ghirardelli Milk Chocolate with Caramel Squares

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