What is Marketing? Professor Chip Besio Cox School of Business Southern Methodist University

What Is Marketing?  Advertising?  Selling?  Sales promotion?

What Is Marketing?  Marketing is [the] “process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others [Italics mine].” ***Philip Kotler

What Is Marketing?  Marketing is so basic that it cannot be considered a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view [Italics mine]. *** Peter Drucker

The Evolution of Marketing  Production orientation  Sales orientation  Marketing orientation

The Evolution of Marketing -- Auto Industry  Production orientation  Mass production  …Any color they wanted so long as it was black. - H. Ford  Sales orientation  Mass advertising  Price rebates  Marketing orientation  No haggle pricing  Customer satisfaction focus

Production Orientation Marketing Orientation Persuade customer to Persuade firm to want what firm has have what the customer wants Generic Product Differentiated Lowest Cost Competitive Quality and Advantage Service Volume, Objectives Market Position, Margins Customer Satisfaction Short-term Time Horizon Long-term

What Is Marketing? Core Concepts Source: Prentice Hall Products and Services Value, satisfaction, and quality Needs, wants, and demands Exchange, transactions, and relationships Markets

The Marketing Concept needs and wants  Focus on customers’ needs and wants  Orient activities of the firm toward them customer valuecustomer satisfactionrelationships  Achieve long-term goals by offering customer value, generating customer satisfaction and developing relationships with customers Adapted from Prentice Hall

What Motivates Consumers?  Needs  Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging “I am thirsty”  Wants  Wants - form that a human need takes as shaped by culture and individual personality. “I want a Coca-Cola”  Demands  Demands - human wants backed by buying power “I can buy a Coca-Cola” Adapted from Prentice Hall

This Is a Need Needs - state of felt deprivation including physical, social, and individual needs.

This Is a Want Wants - form that a human need takes, as shaped by culture and individual personality.

This Is Demand “Demand” Wants Buying Power

Need / Want Fulfillment  Needs and Wants Fulfilled through a Marketing Offer :  Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

What Satisfies Consumer’s Needs and Wants?  Products  Products - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want  Examples  Examples: food, electronics, cars, jewelry, clothing, and machinery  Services  Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything  Examples  Examples: banking, airlines, haircuts, and hotels Adapted from Prentice Hall

How Consumers Choose Products and Services  Customer Value  Customer Value - benefit that the customer gains from owning and using a product compared to the cost of obtaining it  Customer Satisfaction  Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations Source: Prentice Hall

How Consumers Obtain Products and Services  Exchanges and Transactions  Exchanges and Transactions - trade of values between parties, usually involving money  Development of Relationships  Development of Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers Source: Prentice Hall

 The firm creates a sustainable competitive advantage over its rivals The Marketing Concept -- Major Goals By:  focusing on satisfying consumer needs and wants  generating customer value and satisfaction  developing relationships with customers  The result:

Emerging Challenges for Marketers Nonprofit Marketing Information Technology Ethical Concerns Globalization Changing World Economy Source: Prentice Hall

Marketing Mix -- The Four P’s P RICE ROMOTION LACE RODUCT

The Marketing Mix - Product  Product line breadth and depth  Product characteristics (e.g., quality, features, design, reliability)  Brand  Packaging  Services  Return and/or warranty policies  The product is much more than the tangible item that the customer sees

The Marketing Mix - Price  List price  Discounts  Bundling  Terms (e.g., 2/10, net 30)  Credit  Price includes the tools that determine how much and when the customer pays

The Marketing Mix - Promotion  Advertising  Sales promotion  Direct marketing  Public relations  Personal selling  Promotion (what many people commonly think of as marketing) includes all communications with potential customers that are intended to influence their attitudes, beliefs and purchase decisions

The Marketing Mix - Place  Shelf location  Display  Inventory  Distribution channels  Transportation  Territory or coverage  Place involves how and when the customer gets the product

Marketing Mix - Summary  Marketers have many more tools at their disposal to achieve company objectives than you might have thought