McGraw-Hill/Irwin Copyright © 2011 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 factors 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. LO4 LO5 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO: 1-3

INNOVATION AND MARKETING AT 3M: HOW DISCOVERING STUDENT STUDY HABITS LAUNCHED A NEW PRODUCT 1-4

INNOVATION AND MARKETING AT 3M DISCOVERING & SATISFYING STUDENT STUDY NEEDS + Felt Tip Highlighters = 3M product that will combine Post-it ® Notes or Post-it ® Flags and Highlighters 3M Post-it ® Notes or Post-it ® Flags 1-5

 Marketing is NOT Easy WHAT IS MARKETING ? LO1  You Are a Marketing Expert Already Involved in 1,000s of Buying Decisions May Be Involved in Selling Decisions 1-6

1.True 2.True 3.(c) plastic bottles FIGURE 1-1 FIGURE 1-1 The see-if-you’re-really-a- marketing-expert test 1-7

MARKETING MATTERS Payoff for the Joys (!) and Sleepless Nights (?) of Starting Your Own Small Business: YouTube!!!! LO1 1-8

 Marketing Seeks to: Marketing Seeks to:  Exchange Exchange Discover Needs and Wants of Customers Satisfy Them WHAT IS MARKETING? DELIVERING BENEFITS LO1 AMA Definition of Marketing 1-9

WHAT IS MARKETING? DIVERSE FACTORS INFLUENCE MARKETING ACTIVITIES LO1  The Organization Itself and Its Departments  Society  Environmental Forces 1-10

FIGURE 1-2 FIGURE 1-2 A marketing department relates to many people, organizations, and environmental forces 1-11

WHAT IS MARKETING? REQUIREMENTS FOR MARKETING TO OCCUR LO1  Parties with Unsatisfied Needs  A Desire and Ability to be Satisfied  A Way for the Parties to Communicate  Something to Exchange 1-12

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 “Focus on the Consumer Benefit” “Learn From the Past”  The Challenge: 1-13

Dr. Care Vanilla-Mint Aerosol Toothpaste What “benefits” and what “showstoppers?” LO2 1-14

Hot Pockets Panini Microwaveable Snacks What “benefits” and what “showstoppers?” LO2 1-15

AT&T CruiseCast What “benefits” and what “showstoppers?” LO2 1-16

Pepsi Max What “benefits” and what “showstoppers?” LO2 1-17

 Need  Want  Does Marketing Persuade People to Buy the “Wrong” Things?  Market Market HOW MARKETING DISCOVERS CONSUMER NEEDS NEEDS VS. WANTS LO2 1-18

FIGURE 1-3 FIGURE 1-3 Marketing seeks to discover consumer needs through research and then satisfy them with a marketing program 1-19

HOW MARKETING SATISFIES CONSUMER NEEDS LO3 Promotion Place  Target Market Target Market  The 4 P’s: Controllable Marketing Mix Factors The 4 P’s: Controllable Marketing Mix Factors Product Price $

HOW MARKETING SATISFIES CONSUMER NEEDS LO3 Technological Regulatory  Uncontrollable Environmental Forces Uncontrollable Environmental Forces Social Economic Competitive 1-21

THE MARKETING PROGRAM CUSTOMER VALUE AND RELATIONSHIPS LO4 Best Price Best Service  Customer Value Customer Value Best Product  Value Strategies 1-22

Southwest Airlines, Starbucks, and Home Depot What customer value strategy? LO4 1-23

THE MARKETING PROGRAM RELATIONSHIP MARKETING LO4 Easy to Understand  Relationship Marketing Relationship Marketing Hard to Do  Marketing Program Marketing Program 1-24

3M’S STRATEGY & MARKETING PROGRAM HELPING STUDENTS STUDY LO4  Move from Ideas to a Marketable Highlighter Product  Add the Post-it ® Flag Pen  Develop a Marketing Program for the Post-it ® Flag Highlighter and Pen 1-25

FIGURE 1-4 FIGURE 1-4 Marketing programs for two new 3M Post-it ® brand products targeted at two distinct customer segments: college students and office workers 1-26

3M STRATEGY & MARKETING PROGRAM MARKETPLACE SUCCESS? LO4  Developed Second Generation Post-it ® Flag Highlighter  Appeared on The Oprah Winfrey Show 1-27

FIGURE 1-5 FIGURE 1-5 Four different orientations in the history of American business Production Era Sales Era Marketing Concept Era Customer Relationship Era Market Orientation 1-28

HOW MARKETING BECAME IMPORTANT EVOLUTION OF THE MARKET ORIENTATION LO5  Customer Relationship Management (CRM) Customer Relationship Management (CRM)  Customer Experience Customer Experience What Firms Think They Offer Customers What Customers Say They Receive 1-29

HOW MARKETING BECAME IMPORTANT ETHICS AND SOCIAL RESPONSIBILITY LO5  Ethics  Social Responsibility Societal Marketing Concept Social Entrepreneurship 1-30

MAKING RESPONSIBLE DECISIONS Social Entrepreneurship Using Marketing to Help People LO5 Bridging Hand in Hand 1-31

HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING LO5  Who Markets?  What Is Marketed? Goods Services Ideas 1-32

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 How Do Consumers Benefit?: Utility Form Utility Place Utility Time Utility Possession Utility 1-33

3M’S POST-IT ® FLAG HIGHLIGHTER: EXTENDING THE CONCEPT! VIDEO CASE

VIDEO CASE 1 3M’s Post-it ® Flag Highlighter 1. (a) How did 3M’s David Windorski get ideas from college students to help him in designing the final commercial version of the Post-it ® Flag Highlighter? (b) How were these ideas important to the success of the product? 1-35

2. What (a) special advantages and (b) potential problems did 3M have in introducing a new highlighter-with-flags product for college students? VIDEO CASE 1 3M’s Post-it ® Flag Highlighter 1-36

3. Visit your college bookstore before you answer. (a) Where would you display the Post-it ® Flag Highlighter in a college bookstore and (b) How can the display increase student awareness of the product? VIDEO CASE 1 3M’s Post-it ® Flag Highlighter 1-37

4. In what ways might 3M try to promote its Post-it ® Flag Highlighter and make students more aware of the product? VIDEO CASE 1 3M’s Post-it ® Flag Highlighter 1-38

5. What are (a) the special opportunities and (b) potential challenges for 3M in taking its Post-it ® Flag Highlighter into international markets? (c) On which countries should 3M focus its marketing efforts? VIDEO CASE 1 3M’s Post-it ® Flag Highlighter 1-39

Marketing Marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit the organization, its stakeholders, and society at large. 1-40

Exchange Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. 1-41

Market A market consists of people with both the desire and the ability to buy a specific offering. 1-42

Target Market A target market consists of one or more specific groups of potential consumers toward which an organization directs its marketing program. 1-43

Marketing Mix The marketing mix consists of the marketing manager’s controllable factors—product, price, promotion, and place—that can be used to solve a marketing problem. 1-44

Environmental Forces Environmental forces consist of the uncontrollable forces in a marketing decision involving social, economic, technological, competitive, and regulatory forces. 1-45

Customer Value Customer value is the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price. 1-46

Relationship Marketing Relationship marketing links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. 1-47

Marketing Program A marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. 1-48

Marketing Concept A marketing concept is the idea that an organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals. 1-49

Market Orientation A market orientation occurs when an organization focuses its efforts on (1) continuously collecting information about customers’ needs, (2) sharing this information across departments, and (3) using it to create customer value. 1-50

Customer Relationship Management (CRM) Customer relationship management (CRM) is the process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace. 1-51

Customer Experience Customer experience is the internal response that customers have to all aspects of an organization and its offering. 1-52

Societal Marketing Concept Societal marketing concept is the view that organizations should satisfy the needs of consumers in a way that provides for society’s well-being. 1-53

Ultimate Consumers Ultimate consumers consist of the people who use the goods and services purchased for a household. Also called consumers, buyers, or customers. 1-54

Organizational Buyers Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale. 1-55

Utility Utility consists of the benefits or customer value received by users of the product. 1-56