BASIC MARKETING For use only with Perreault/Cannon/ McCarthy texts, © 2011 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 1 Marketing’s Value to Consumers, Firms, and Society

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 mico-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.

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.

More than Selling or Advertising All Those Bicycles! The Management Job in Marketing (brand names, different kinds & types of bicycles with various features, price range), More than Selling and Advertising

Things a Firm Should Do in Producing a Bike The marketing mix The marketing mix Predict Wants— types of bicycles/which consumers to satisfy Estimate Demand—# of riders/buying estimates Predict When—consumer will want to buy Determine Where—consumers will be Estimate Price— consumer will pay/profit Decide Promotion—kinds Estimate Competition-- producers Provide Service-- problems Analyze Needs—various models of bicycles

Production vs. Marketing Creates Customer Satisfaction Marketing Makes sure right goods & services are produced Production Making Goods Performing Services Production Making Goods Performing Services

Marketing Is Important to You! Important to every consumer! (people pay; buy products; advertising) Important to every consumer! (people pay; buy products; advertising) Important to your job! (market themselves; career opportunities) Important to your job! (market themselves; career opportunities) Affects innovation and standard of living (stimulates research/innovation) Affects innovation and standard of living (stimulates research/innovation)

Marketing Stimulates New Ideas Courtesy of The Procter & Gamble Company.

Marketing Affects Innovation (Whirlpool Duet washer and dryer shows how marketing not only generates completely new products, but improvements to mature products—such as major appliances). © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

What Is Marketing? and Macro View (meets objectives of society) Macro View (meets objectives of society) Social process Matches supply with demand Micro View (anticipate customer need) Micro View (anticipate customer need) Set of activities Performed by individual organizations

Marketing Key Characteristics Key Characteristics Profit and Nonprofit More than Persuasion More than Persuasion Begins with Needs (not the production process) Doesn’t Go It Alone (or take the place of other business activities) Doesn’t Go It Alone (or take the place of other business activities) Involves Exchanges (something of value to acquire something of value) Builds Relationships (lead to repeat purchase)

Building Customer Relationships It’s not just a laptop. It’s knowing each pilot’s aircraft is fit to fly before an urgent mission. (withstand drops, bangs, dust, and moisture)

Macro-Marketing Key Characteristics Key Characteristics Matches Producers and Consumers Emphasis is on Whole System Emphasis is on Whole System Every Economy Needs It

Can Mass Production Satisfy a Society’s Consumption Needs? Economies of Scale - Lower Unit Cost Unit Cost $ Producers Consumers Marketing Functions Marketing Functions Marketing Bridges the Gap! Output

Overcoming Spatial Separation overcome space, time, and information between producers and consumers

Marketing Facilitates Production and Consumption (cost/competitive prices---satisfying need/ability to pay) Production Sector Marketing needed to overcome discrepancies and separations Discrepancies of Quantity Discrepancies of Assortment Spatial Separation Separation in Time Separation of Information Separation in Values Separation of Ownership Consumption Sector

Universal Functions of Marketing Marketing Functions Buying (looking and evaluating) Buying (looking and evaluating) Selling (Promoting) Selling (Promoting) Transporting (moving Goods from A to B) Transporting (moving Goods from A to B) Storing (Holding) Storing (Holding) Standardization & Grading (sorting by Size & quality) Standardization & Grading (sorting by Size & quality) Financing (providing Cash) Financing (providing Cash) Risk Taking (assuming responsibility for uncertainties) Risk Taking (assuming responsibility for uncertainties) Market Information Market Information

Who Performs Marketing Functions? Rather than production; some organizations specialize in trade (buying/selling); other organizations specialize in activities other than buying/selling. Transport Firms ISP's Product Testing Firms Ad Agencies Research Firms Wholesalers Other Specialists Retailers Consumers Producers

How Decisions are Made in an Economic System OR Command Economy Command Economy Government officials decide May work well if: Simple economy Little Variety Adverse Conditions Market-Directed Economy Adjusts itself Price is value measure Freedom of choice Government’s role limited

Model of a Market-Directed Macro-Marketing System Monitoring by government(s) and public interest groups

Marketing’s Role Has Changed Over Time Focus: Sell Surplus Focus: Sell Surplus Long-Run Customer Satisfaction Focus: Increase Supply Focus: Increase Supply Focus: Beat Competition Focus: Beat Competition Focus: Coordinate and Control Focus: Coordinate and Control Simple Trade Era Production Era Sales Era Marketing Department Era Marketing Company Era

The Marketing Concept Profit (or another measure of long-term success) as an objective Total company effort Customer satisfaction The Marketing Concept

Creating Customer Satisfaction Prestige Brands Holdings, Inc.

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

Adopting The Marketing Concept Now Flying To More Places In Europe.

Value (difference between benefits and costs of obtaining those benefits) The Marketing Concept and Customer Value (difference between benefits and costs of obtaining those benefits) CostsBenefits Take Customer’s Point of View Customer May Not Dwell On Value Where Does Competition Fit? Customer Value Builds Relationships Customer value reflects benefits and costs Customer value reflects benefits and costs

Costs, Benefits, and Customer Value Perceived superior value Perceived inferior value High Low Costs target customer sees to obtain benefits Benefits target customer sees in a firm’s goods and services Customer’s perceived fair value line

Interactive Exercise: Customer Value

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.”

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.

Total Company Effort to Satisfy Customers Putting It All Together Build Profitable Customer Relationships Attract Customers Attract Customers Offer Superior Customer Value Satisfy Customers Satisfy Customers Retain Customers Increase Sales to Customers

The Marketing Concept Applies in Nonprofit Organizations Newcomers to Marketing Will “Satisfied Customers” Offer Support? Exits to accomplish a goal unrelated to traditional customer satisfaction; raise money from non-customer groups & spend it on other customers The Bottom Line? may not have a traditional “bottom line” economic measure of success The Bottom Line? may not have a traditional “bottom line” economic measure of success May Not Be Organized for Marketing Characteristics of Nonprofit Organizations

Government Marketing

Marketing Concept Used by Nonprofit Services © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

BASIC MARKETING For use only with Perreault/Cannon/ McCarthy texts, © 2011 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Social Responsibility and Marketing Ethics Social responsibility concerns a firm's obligation to improve its positive effects on society and reduce its negative effects Marketing ethics are the moral standards that guide marketing decisions and actions

Social Responsibility The Marketing Concept, Social Responsibility, and Marketing Ethics Should All Needs Be Satisfied? What if Profits Suffer? Micro - Macro Dilemma The Marketing Concept Guides Ethics Group NeedsIndividual Needs Do All Marketers Act Responsibly? Do All Marketers Act Responsibly?

BASIC MARKETING For use only with Perreault/Cannon/ McCarthy texts, © 2011 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Micro-Macro Dilemma Micro-macro dilemma: what is good for some producers and consumers may not be good for society as a whole. Examples: –some consumers want handguns, but guns can be dangerous –all terrain vehicles are fun for some people, but may result in injuries or damage to wilderness areas –non-returnable soft drink bottles are convenient, but sometimes result in litter and dangerous broken glass along highways. –repairing an old air-conditioning system might save the owner money, but might require continued use of ozone depleting fluorocarbons (used as coolant)

The Micro- Macro Dilemma How can you help protect the prairie and the penguin?

Social Responsibility © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Study Question 1.. The marketing concept can be applied by: A. a nurses association. B. cosmetic manufacturers. C. nonprofit hospitals. D. national parks. E. all of the above.

Study Question 2.. Administrators at a university noted that they were 200 students short of their enrollment projection as the start of the school year approached. The president of the university, fearing a revenue shortage, told the director of admissions, "You need to use whatever means necessary to get enough students to meet the projection before classes start. Run ads in the newspaper, call high school guidance counselors, recruit from our pool of rejected applicants—whatever it takes." The university president is operating as though he was in the: A. Simple trade era. B. Production era. C. Sales era. D. Marketing department era. E. Marketing company era.

Study Question 3.. If the family units on a South Pacific-island nation made all the products they consume, it would be a good example of: A. a pure subsistence economy. B. a market-directed economy. C. a micro-marketing system. D. a command economy. E. none of the above.

Study Question 4.. Managers who think of customers existing to buy the firm's output rather than of firms existing to serve customers and—more broadly—the needs of society, have a A. marketing orientation. B. production orientation. C. selling orientation. D. dynamic orientation. E. customer orientation.

Study Question 5.. Marketing could NOT take place without A. intermediaries. B. collaborators. C. two or more parties who are willing to exchange something for something else. D. a high standard of living. E. all of the above.