Michael R. Solomon Greg W. Marshall Elnora W. Stuart M A R K E T I N G Real People, Real Choices Fourth Edition CHAPTER 1 Welcome to the World of Marketing: Creating and Delivering Value Objectives in this chapter: Know who marketers are, where they work. Define what marketing is. Discuss the range of services and goods that are marketed. Understand value from the perspectives of the customers, producers, and society Understand the basics of marketing planning and the marketing mix tools used in the marketing process Describe the evolution of the marketing concept. Michael R. Solomon Greg W. Marshall Elnora W. Stuart

The Value of Marketing Marketing is the adaptive process, in society and organizations, of collaborating to communicate, create, provide, and sustain value for customers through exchange relationships while meeting the needs of diverse stakeholders. Value is delivered to everyone who is affected by a transaction. Stakeholders are buyers, sellers, investors in a company, citizens where goods and services are made or sold – any person that has a “stake” in the outcome.

Marketers do it to satisfy needs… Most successful firms practice the marketing concept first identify consumer needs and then provide products that satisfy those needs A need is the difference between a consumer’s actual state and some ideal or desired state physical needs psychological needs Need depends on individual’s history experiences and cultural environment.

Aveeno Aveeno satisfies a need by providing blemish-free skin

Needs versus Wants A need is the difference between the actual and ideal states of being A want is a desire for a particular product used to satisfy that need wants are culturally and socially influenced

Crest Whitestrips Crest Whitestrips provide a benefit many consumers want today: whiter teeth

A marketplace can take many forms No longer face to face

Marketing Creates Utility Form Place Time Possession Utility is the benefits we receive from using a product/service. Providing value to customers by: Form – transfering raw materials into finished products. Nordstrom – purchase a pair of jeans – alteration lady. Walter E Smithe choose wood type of style, top, legs, etc. Place – making products available where customers want them – in store, or shipping direct and on time. On-line shopping need BEFORE x-mas. Time – storing products until they are needed – Guys in Denver? That started the rent furniture place for college students. Book example – renting a wedding gown because you only wear it once – why buy. Jumpy things in summer. Possession – Allowing the consumer to own, use, and enjoy the product.

What Can Be Marketed? Consumer Goods and Services Business-to-Business Goods and Services Not-for-Profit Marketing Idea, Place, and People Marketing Consumer goods – tangible Services – intangible, never own Business-2-Business goods – aka industrial goods – goods bought by business to use in the making of other goods (more than consumer) Not for Profit organizations participate in marketing – Zoos, churches, etc. Industry advertising – Milk, Pork, Cheese, Cotton, Idea – Only you can prevent forest fires, this is your brain on drugs, Place – come back to Jamaica People – Miley Cyrus aka Hannah Montana – How was she marketed – TM? How did they work hard to gain exposure to these potential customers?

Non-profit organizations like zoos need to market themselves too! Oregon Zoo Non-profit organizations like zoos need to market themselves too! Look at website – Marketing by showing what events are taking place etc.

Providing Value to Stakeholders Competitive Advantage Distinctive Competency Value Chain Competitive Edge – Providing customers with a benefit the competition can’t – Differential Benefit – uniqueness/different Distinctive competency – superior capability of a firm in comparison to its direct competitor – what makes McD #1?

Figure 1.1: A Value Chain for HP Inbound Logistics – bringing in materials to make the product Operations – converting the materials into the final product Outbound logistics – shipping out the final product Service – servicing the product/customer

Value from Society’s Perspective Some feel that marketers manipulate consumers, while others feel people should be responsible for their own choices. What do you think – what are some ways marketers manipulate? Tobacco – Joe Camel – Younger kids – Alcohol – mtv McD?

Marketing as a Process Marketing planning What product benefits will our customers be looking for in 3-5 years? What capabilities does our firm have that set it apart from the competition? What additional customer groups might provide important segments for us in the future? What legal issues may affect our business? Technology/Environment?

Target Markets Mass Market - all possible customers regardless of differences in their specific needs and wants developing a basic product and a single strategy for everyone Market segments - distinct groups of customers within a larger market A target market - an organization’s chosen segment Plan how the target market should perceive the product in comparison to competitors’ brands - the market position Guitar center – would they mass market? If they did how? What is their tm? What are other market segments they can target? Give me a name of a store? Give me a name of a product?

Figure 1.3: The Marketing Mix Product – physical object, service idea, person, event, or place offered to satisfy consumer needs and wants Product Line – Closely related products mkt. by org. Place – Physical Distribution Promotion – Provides info. about product Advertising, mail, coupons, etc. Price – $ $ $ $ $ $ $ $ $ $ $ $

Marketing Mix Decisions Product What new products should we introduce? What are our objectives with each product? Which products should we phase out? What type of service do our customers expect? Place Where do our customers shop? Should we sell directly to our customers? How should we ship the product? Promotion What are our promotion objectives? What medium should we use? Price What message does our price send? Is our price consistent with our value? Should we change our price? How will our price affect demand?

The Evolution of Marketing Production Era Selling Era Consumer Orientation New Era Orientation

Ford This 1949 Ford ad illustrates the choices awaiting people after World War II.

New Era Orientation Customer relationship management Social benefits Accountability Marketing metrics

Oris Oris gives back to the community by donating money to disabled people who want to learn how to fly an airplane

Issues for Discussion_1 Have you ever pirated software? How about music? Is it ethical to give or receive instead of paying for it? As a typical student, how does marketing satisfy your needs? What areas of your life are affected by marketing? Can you think of firms that still operate with a production orientation? A selling orientation? What changes would you recommend for these firms?