01 OVERVIEW OF MARKETING Chapter 1 starts the class out with an introduction to marketing. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1

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Overview of Marketing LO1 Define the role of marketing in organizations. LO2 List the elements of the marketing mix. LO3 Describe how marketers create value for a product or service. LO4 Understand why marketing is important both within and outside the firm. These are the learning objectives and will be explored in more detail in the following slides.

Apple How does this company provide value? Ryan Anson/AFP Getty Images How many of you own an Apple device? What do you find most valuable about these devices? How does Apple distinguish itself from similar services? Watch the video: http://www.youtube.com/watch?v=mFlK_MbFISw&safety_mode=true&persist_safety_mode=1&safe=active Would you find value in any of the devices shown in the video? How does this company provide value?

Why you will LOVE this class Good teacher You already know what marketing is Morning: Exchanged Chores (You Dishes; Me Dinner) Afternoon: Interviewed for a Job Evening: Attended Class for Money Late Tonight: Sell Old Textbook on eBay What type of marketing were you involved in today?

What is Marketing? Marketing is the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Do you agree? Some people feel this definition encompasses everything. Good marketing is not random. AMA DECA

The “Got Milk” advertising campaign was designed to help market a(n): Individual Firm Industry Organization Industry What industry was the campaign promoting?

Encouraged consumption of milk Advertising Agency: Goodby Silverstein & Partners Created for the California Milk Processor Board http://www.youtube.com/watch?v=OLSsswr6z9Y

Marketing Plan How the product/service will be conceived or designed How much it should cost Where and how it will be promoted How it will get to the consumer The marketing plan specifies the marketing activities for a specific period of time.

What is Marketing? What problems do you have for which there are no products to meet your needs? This is how marketers generate ideas for new products – by uncovering consumer needs.

What are the drawbacks a marketer might face when using Facebook? How could a marketer use Facebook, and what other social media tools could they use? What are the drawbacks a marketer might face when using Facebook?

Marketing is about Satisfying Customer Needs and Wants What group is Crest targeting with this ad? What other benefits of toothpaste might Crest advertise? What groups might these benefits appeal to? Understanding the marketplace is fundamental to marketing success. The marketplace is the world of trade and can be segmented. Marketers would like to sell to everyone but because marketing is expensive, good marketers only seek out people who have an interest in a product and the ability to buy it. ©Procter & Gamble

What is the difference between a need and a want?

When firms wishing to sell mobile devices (iPad) develop their marketing strategy, do they concentrate on satisfying their customers’ needs or wants?

What about a utilities company, such as the local power company?

A humanitarian agency, such as Doctors without Borders?

Marketing Entails an Exchange Both the buyer and seller should be better off as a result of an exchange.

Marketing Requires Product, Price, Place, and Promotion Decisions Choose a product you see in the classroom – VitaminWater, Coke, Aquafina – and describe the 4P’s for this product.

Product: Creating Value to create value by developing goods, services, and ideas, to satisfy customer needs Goods Services Ideas Royalty-Free/Corbis Name an example of a good (tangible) and how it is marketed. (Car) http://www.youtube.com/watch?v=q4Bk2TJJ6TM&safety_mode=true&persist_safety_mode=1&safe=active Name an example of a service (intangible) and how it is marketed. (Getting oil changed) http://www.youtube.com/watch?v=EylzOPN4V6Y&safety_mode=true&persist_safety_mode=1&safe=active Name an example of an idea (opinion, program, philosophies) and how it is marketed. (Drunk driving prevention) http://www.youtube.com/watch?v=qpYq9CBZoKQ&safety_mode=true&persist_safety_mode=1&safe=active What is the exchange these groups are asking consumers to enter? Flying Colours Ltd./Getty Images Roz Wodward/Getty Images

Price: Capturing Value Price is everything a buyer gives up (money, time, energy) in exchange for the product The key to determining prices is to figure out how much customers are willing to pay and assess whether a profit can be made at that point A good example of how price expresses value is the variations in price associated with air travel. The prices can vary based on demand for the flight, timing, and destinations.

Place: Delivering the Value Proposition all activities necessary to get the product to the right customer when the customer wants it Where would you find this product in the store? Place delivers the product to the customers. Often overlooked because it is not as readily visible from the consumer perspective. Suggest a few products and then trace the path those products likely take from manufacturer to retailer to consumer. Courtesy Horizon Organic Dairy

Promotion: Communicating Value informs, persuades, and reminds potential buyers about a product or service Calvin Klein’s provocative advertising has helped create an image that is filled with youth, style, and sex appeal. http://www.youtube.com/watch?v=owGykVbfgUE&safety_mode=true&persist_safety_mode=1&safe=active Photo by Paul Hawthorne/Getty Images

Lets apply marketing principles to finding a job Lets apply marketing principles to finding a job. If the person looking for the job is the product, describe the other three Ps.

Marketing Can be Performed by Individuals and Organizations Have you ever bought from other consumers online? Have you ever sold anything to other consumers online?

Marketing Impacts Stakeholders Society Customers Employees Supply Chain The “Got Milk” campaign was designed to benefit the dairy industry, and society. Marketing facilitates the sale of products or services to customers. Companies develop marketing programs to attract employees called employment marketing. Supply chain partners are involved in marketing to one another. Courtesy National Fluid Milk Processor Promotion Board; Agency: Lowe Worldwide, Inc.

One of your friends was recently watching TV and saw an advertisement that she liked. She said “Wow, that was great marketing!” Was the ad in fact marketing?

Marketing Helps Create Value 1 2 3 4 5 Marketing has been through several eras. 1. H.Armstrong Roberts/Retrofile/Getty Images 2. Jamie Grill/Iconica/Getty Images 3. ©Ted Dayton Photography/Beateworks/Corbis 4. Ciaran Griffin/Stockbyte/Getty Images 5. ©Colin Anderson/Blend Images/Corbis

Production-Oriented Era Belief that a good product would sell itself Manufacturers concerned with product innovation Customers wants and needs didn’t matter Retail stores held merchandise until consumers wanted it

Sales-Oriented Era Great Depression caused consumers to buy less Manufacturers overproduced merchandise Depended on heavy personal selling and advertising

Market-Oriented Era Soldiers returned home from WWII Manufacturers focused on the consumer Malls/shopping centers became popular U.S. became a buyers market

Value-Based Marketing Era Companies satisfy customer wants and needs Marketers show customers value

The evaluation of marketing progressed along which continuum? Sales, marketing, value-based, production Marketing, value-based, production, sales Value-based, production, sales, marketing Production, sales, marketing, value-based Production, sales, marketing, value-based

Customers acting as collaborators to create the product/service Value Cocreation Customers acting as collaborators to create the product/service Nike allows customers to submit designs M&M lets customers specify their orders Nike ID http://store.nike.com/us/en_us/?l=shop,nikeid&cp=USNS_KW_0611081618 M&M customize http://www.mymms.com/utility.aspx

What value does Pandora provide customers? What are the advantages/disadvantages to using Pandora vs. another channel?

Mercedes-Benz manufactures the Smart Car, which sells for around $16,000, and the SL 65 AMG 2-door Roadster for over $100,000. Is Mercedes providing the target markets for these cars with a good value? Explain.

Check Yourself What is the definition of marketing? Marketing is about satisfying ______ and ______ . What are the four components of the marketing mix? Who can perform marketing? What are the various eras of marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Needs and wants Product, price, place, and promotion Individuals and organizations Production, sales, market, and value-based

Next Objectives Value-based marketing Providing better value than the competition How firms compete on based on value How companies create value-driven activities

What are your trade-offs? Cost Benefit 1 Benefit 2 Benefit 3 Have a student name a product. What is the cost you are willing to give up in order to get this product? What are the perceived benefits offered by this product? Customers seek the greatest benefits at the lowest costs. Marketing firms try to find the balance between benefits and their costs.

What is Value-Based Marketing? Business must know customers view of benefits Business must know how to improve on them Value-based marketing is not just about creating strong products and services, it involves deciding which products/services to provide for whom. Value does not just mean low prices. Consumers of Williams-Sonoma or Mercedes Benz believe they are receiving a good value because of the extra selection, quality, and service.

How Do Companies Compete on the Basis of Value? Consumers perceptions change quickly Competitors constantly enter markets Global pressures Marketers must keep an eye on the marketplace and adjust offerings to meet customer needs and keep ahead of competitors.

How Do Firms Become Value Driven? Relationships Balance Information #1: Share information about customers and competitors across their own organization and with other firms (manufacturers, transportation companies) #2: Strive to balance their customers’ benefits and costs #3: Concentrate on building relationships with customers

Sharing Information Purchase Information Forecast Sales Allocate Merchandise Fashion Designer collects purchase information and research on customer trends to determine what customers want to wear. Logisticians (in charge of getting merchandise to the stores) use this information to forecast sales and allocate merchandise to individual stores. How does your company share information?

Balancing Benefits with Costs Southwest Airlines Makes frequent and short trips Cuts costs with first come first seated structure IKEA Simple Designs Customers Assemble Product Is there something you would pay more for? Ex. Fast food delivery

Building Relationships with Customers Customer Relationship Management Building loyalty among the most valued customers Value-based marketing Think in terms of relationships not transactions Transactional Orientation Relational Orientation CRM Lemonade Stand (commercial but good concept) http://www.youtube.com/watch?v=YEa_RNSX5Xo

Check Yourself Does providing a good value mean selling at a low price? What type of relationship is best for providing value to customers? Value-based marketing isn’t just about low price, it is also about creating strong products and services. A relational orientation is based on the philosophy that buyers and sellers should develop a long-term relationship for the benefit of both parties.

Why Is Marketing Important? Jason Reed/Getty Images Digital Vision/Getty Images BananaStock/JupiterImages ©Edward Rozzo/Corbis Ask students why it is marketing so important? Advises production about how much of the product to make Tells logistics when to ship merchandise Creates relationships Identifies what customers value Informs customers of new products and services Expands products globally Important across the supply chain Enriches Society through social responsibility Helps entrepreneurs find unmet wants and needs (Ben & Jerry, Jeff Bezos Amazon, Reed Hastings, Netflix, Oprah, Mark Zuckerberg Facebook) ©Roy McMahon/Corbis Andrew Ward/Life File/Getty Images

Assume you have been hired into the marketing department of a major consumer products manufacturer, such as Nike. You are having lunch with some new colleagues in other departments—finance, manufacturing, and logistics. They are arguing that the company could save millions of dollars if it just got rid of the marketing department. Develop an argument that would persuade them otherwise.

Check Yourself List four functions that illustrate the importance of marketing. Expands global presence, pervasive across the supply chain, enriches society, can be entrepreneurial