Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Customer-Driven Marketing Chapter 1

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 1.Explain how marketing creates utility through the exchange process. 2.Contrast marketing activities during the four eras in the history of marketing. 3.Define the marketing concept and its relationship to marketing myopia. 4.Describe the characteristics of not-for-profit marketing.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 5.Describe the five types of nontraditional marketing. 6.Outline the changes in the marketing environment due to technology. 7.Explain the shift from transaction-based marketing to relationship marketing. 8.Identify the universal functions of marketing. 9.Demonstrate the relationship between ethical business practices and marketplace success.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Marketing is the process of planning and executing the conception of, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. “Our principal roles are: To always understand and satisfy the needs of marketers so as to provide them with products and services that will help them be better marketers. To empower marketers through information, education, relationships and resources that will enrich their professional development and careers. To advance the thought, application and ethical practice of marketing.” Source: AMA, Marketing Power Web Site AMA Mission Statement

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Music to a Marketer’s Ears “They’re the best.” “I always eat there.” “I only fly with that airline.” “I buy my electronics at that store.”

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Four Types of Utility a Marketing provides inputs related to consumer preferences, but the actual creation of form utility is the responsibility of the production function. MarketingRetail sales (in exchange for currency or credit-card payment); swap meets Ability to transfer title to goods or services from marketer to buyer Ownership (possession) MarketingSoda machines in school lobbies; coffee and snacks in Barnes & Noble bookstores; day cares in office complexes; ATM machines in gas stations; mailboxes outside convenience stores Availability of goods and services at convenient locations Place MarketingOne-hour dry cleaning; LensCrafters eyeglass guarantee; Federal Express’ guarantee of package delivery by 10:30 a.m. the next day Availability of goods and services when consumers want them Time Production a Skippy Peanut Butter; State Farm automobile insurance policy; Boeing 767 aircraft Conversion of raw materials and components into finished goods and services Form Organizational Function Responsible ExamplesDescriptionType

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. By creating Time, Place, and Ownership Utility, FedEx is adding value. Creating Utility

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Variables - Marketing Mix Product Price Promotion Distribution Using the Marketing Mix to build long term relationships.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. How to Create Customers Identifying customer needs Designing goods and services that meet those needs Communicating information about those goods and services to prospective buyers Making the goods or services available at times and places that meet customers’ needs Pricing goods and services to reflect costs, competition, and customers’ ability to buy Providing for the necessary service and follow- up to ensure customer satisfaction after the purchase

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Four Eras of Marketing History “A good product will sell itself.” “Creative advertising and selling will overcome consumers’ resistance and convince them to buy.” “The consumer rules! Find a need and fill it.” “Long term relationships with customers and other partners lead to success.” Prior to 1920’sto 1950’s Since 1950’sSince 1990’s Era ProductionSales PriorMarketingRelationship In the United States and other highly industrialized economies

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Netpulse, LLC uses a monitoring system to help in diagnosing problems from a remote location. They also provide innovative ways to help their customers, Health Club Owners, attract members. Netpulse, LLC has the ability to provide cardiovascular equipment with a flat LCD screen enabling exercisers to surf the web, listen to CDs, watch personal TV, and still use the equipment. This is a good example of providing for a “win, win situation” leading to Relationship Marketing, the building of long term relationships. Relationship Marketing

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Emergence of the Marketing Concept Seller’s Market - Market in which there are more buyers for fewer goods and services. Buyer’s Market - Market in which there are more goods and services than people willing to buy them. Consumer Orientation - Emphasizes first determining unmet consumer needs and then designing a system for satisfying them. Marketing Concept - Company-wide consumer orientation with the objective of achieving long-run success.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Myopia Management’s failure to recognize the scope of its business.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Avoiding Marketing Myopia by Focusing on Benefits “We are in the entertainment business.” “We are in the video game business.” Sony “We are in the financial services business.” “We are in the stock brokerage business.” Prudential Securities “We are in the transportation business.” “We are in the airline business.” Northwest Airlines “We are a communications company.” “We are a telephone company.” MCI Worldcom Marketing-Oriented Description Myopic DescriptionCompany

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Categories of Nontraditional Marketing U.S. Army: An Army of One. United Way brings out the best in all of us. Tech Corps: America needs to know. Marketing efforts of mutual-benefit organizations, service organizations, and government organizations that seek to influence others to accept their goals, receive their service, or contribute to them in some way Organization marketing NASCAR Pepsi 400; American Cancer Society Relay for Life Marketing of sporting, cultural, and charitable activities to selected target markets Event marketing “Welfare to Work. It works.” “Friends don’t let friends drive drunk.” Identification and marketing of a social issue, cause, or idea to selected target markets Cause marketing Georgia: Experience the Soul of Georgia; Belize: Catch the Adventure; Tennessee: Sounds Good to Me Marketing efforts designed to attract visitors to a particular area; improve consumer images of a city, state, or nation; and/or attract new business Place marketing Celebrity Britney Spears; athlete Tiger Woods; political candidates Marketing efforts designed to cultivate the attention and preference of a target market toward a person Person marketing ExamplesBrief DescriptionType

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Technology Revolution in Marketing  Interactive marketing - Buyer-seller communications.  Internet - All-purpose global network of 50,000 different networks.  World Wide Web (WWW or Web) - Interlinked collection of graphically rich information sources within the larger Internet.  Broadband technology - Extremely high speed, always-on Internet connection.  Interactive television service - A package that includes a return path for viewers to interact with programs on commercials.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Online Techniques – Four Broad Categories 1.The virtual storefront allows customers to view and order merchandise. 2.Interactive brochures range from simple, one-page electronic flyers to multimedia presentations. 3.Online newsletters provide current news, industry information, and contacts and links for internal and external customers. 4.The Web - Consumers can order catalogs, refer to lists of frequently asked questions with answers, place order online, and send questions to company representatives.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The Web Marketing Questions  What types of goods and services can be successfully marketed on the Web?  What characteristics make a successful Web site?  Does the Internet offer a secure way to process customer orders?  How will Internet sales affect traditional store- based and non-store retailing and distribution?  What is the best use of this technology in a specific firm’s marketing strategy: promotion, image building, or sales?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Relationship Marketing The development, growth, and maintenance of long- term, cost-effective exchange relationships with individual customers, suppliers, employees, and other partners for mutual benefit. Advocate Loyal Supporter Regular Purchaser New Customer

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Eight Universal Marketing Functions 1. Buying 2. Selling 3. Transporting 4. Storing 5. Standardizing and grading 6. Financing 7. Risk Taking 8. Securing Marketing Information

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Increased Employee Loyalty Better Public Image Market Place Success Improved Financial Performance Programs that Promote Ethical Behavior & Social Responsibility Produce