Chapter 1

Report
Essentials of Marketing
Chapter 1
Marketing’s Value to
Consumers, Firms, and
Society
McGraw-Hill/Irwin
Copyright © 2012 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
The Management Job in Marketing
More than Selling or Advertising
More than Selling
and Advertising
All Those
Bicycles!
1–4
Things a Firm Should Do in Producing a
Bike
Analyze Needs
The
The
marketing
marketing
mix
Estimate
Demand mix
Predict Wants
Predict When
Determine Where
Estimate Price
Decide Promotion
Estimate Competition
Provide Service
1–5
Production vs. Marketing
Marketing
Makes sure right goods &
services are produced
Production
• Making Goods
• Performing Services
Creates Customer Satisfaction
1–6
Marketing Is Important to You!
Important to every consumer!
Important to your job!
Affects innovation and
standard of living
1–7
Marketing
Stimulates
New Ideas
1–8
Courtesy of The Procter & Gamble Company.
Marketing Affects Innovation
1–9
What Is Marketing?
Micro View
Macro View
• Set of activities
• Social process
• Performed by
individual
organizations
and
• Matches supply
with demand
1–10
Marketing
Profit and
Nonprofit
Builds
Relationships
More than
Persuasion
Key
Characteristics
Involves
Exchanges
Begins with
Needs
Doesn’t Go It
Alone
1–11
Building
Customer
Relationships
1–12
Macro-Marketing
Every
Economy
Needs It
Emphasis is on
Whole System
Key
Characteristics
Matches
Producers and
Consumers
1–13
Can Mass Production Satisfy a Society’s
Consumption Needs?
Economies of Scale - Lower Unit Cost
Unit
Cost
$
Output
Marketing Bridges the Gap!
Producers
Marketing
Functions
Consumers
1–14
Overcoming
Spatial
Separation
1–15
Marketing Facilitates Production and
Consumption (Exhibit 1-1)
Production Sector
Spatial Separation
Separation in Time
Discrepancies of Quantity
Discrepancies of
Assortment
Marketing
needed to
overcome
discrepancies
and separations
Separation of Information
Separation in Values
Separation of Ownership
Consumption Sector
1–16
Universal Functions of Marketing
Buying
Market
Information
Selling
Transporting
Marketing
Functions
Risk Taking
Financing
Storing
Standardization
& Grading
1–17
Who Performs Marketing Functions?
Producers
Wholesalers
Transport
Firms
Retailers
Ad Agencies
ISP's
Product
Testing
Firms
Other
Specialists
Research
Firms
Consumers
1–18
How Decisions are Made in an Economic
System
Market-Directed
Economy
Command
Economy
• Government
officials decide
• May work well if:
• Simple
economy
• Little Variety
• Adverse
Conditions
• Adjusts itself
OR
• Price is value
measure
• Freedom of
choice
• Government’s
role limited
1–19
Model of a Market-Directed Macro-Marketing
System (Exhibit 1-2)
Many Individual Producers
(heterogeneous supply)
Intermediaries
Collaborators
Perform universal marketing functions
To overcome discrepancies and
separation of producers and consumers
Monitoring by government(s)
and public interest groups
To create value and direct flow of
need-satisfying goods and services
Many Individual Consumers
(heterogeneous demand)
1–20
Marketing’s Role Has Changed Over Time
Simple Trade Era
Focus:
Sell Surplus
Production Era
Focus:
Increase Supply
Sales Era
Focus:
Beat Competition
Marketing Department
Era
Focus:
Coordinate and Control
Marketing Company Era
Focus: Long-Run
Customer Satisfaction
1–21
The Marketing Concept (Exhibit 1-3)
Total
company
effort
Customer
satisfaction
The
Marketing
Concept
Profit (or another measure
of long-term success) as
an objective
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 need
B.
Total company effort
C.
Customer satisfaction
D.
Marketing orientation
E.
Product orientation
1–24
Adopting the
Marketing
Concept
1–25
The Marketing Concept and Customer Value
Take Customer’s Point
of View
Customer Value
Reflects
Benefits and Costs
Customer May Not
Dwell on Value
Costs
Benefits
Where Does
Competition Fit?
Customer Value
Builds Relationships
1–26
Costs, Benefits, and Customer Value
(Exhibit 1-5)
High
Perceived
superior
value
Benefits target
customer sees
in a firm’s
goods and
services
Low
Perceived
inferior
value
Low Costs target customer
sees to obtain benefits
High
1–27
Interactive Exercise: Customer Value
1–28
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
Putting It All Together (Exhibit 1-6)
Total Company
Effort to Satisfy
Customers
Build Profitable
Customer
Relationships
Offer Superior
Customer Value
Increase Sales to
Customers
Attract
Customers
Retain Customers
Satisfy
Customers
1–31
The Marketing Concept Applies in Nonprofit
Organizations
Will “Satisfied
Customers”
Offer
Support?
Newcomers
to Marketing
Characteristics
of Nonprofit
Organizations
May Not Be
Organized for
Marketing
The Bottom
Line?
1–32
Government
Marketing
1–33
Marketing Concept Used by Nonprofit
Services
1–34
The Marketing Concept, Social
Responsibility, and Marketing Ethics
Group Needs
Social
Responsibility
Micro - Macro
Dilemma
Should All
Consumer
Needs Be
Satisfied?
Individual Needs
Do All
Marketers Act
Responsibly?
What if Profits
Suffer?
The Marketing Concept Guides Ethics
1–35
The MicroMacro
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
 Buying function
 Customer satisfaction
 Selling function
 Innovation
 Transporting function
 Marketing
 Storing function
 Pure subsistence economy
 Standardization and grading
 Macro-marketing
 Financing
 Economies of scale
 Risk-taking
 Universal functions of
marketing
 Market information function
 Intermediary
1–40
Key Terms

Collaborators
 Marketing company era

E-commerce
 Marketing concept

Economic system
 Production orientation

Command economy
 Marketing orientation

Market-directed economy
 Customer value

Simple trade era
 Micro-macro dilemma

Production era
 Social responsibility

Sales era
 Marketing ethics

Marketing department era
1–41

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