Fundamentals of Marketing LESSON 3: Importance of Marketing

Learning Objectives After completing this lesson, students will be able to: Define the role of marketing within the organization Illustrate the Market Myopia Describe the importance of customer satisfaction

Marketing makes buying easy for customers. Marketing serves as a bridge between the customer and the seller of products and services. Marketing makes buying easy for customers. Marketing creates new and improved products at lower prices.

The functions of marketing add value to a product Utility The functions of marketing add value to a product The added value is called Utility Utilities are the attributes of a product or service that make it capable of satisfying consumer’s wants and needs There are 5 utilities involved with all products Form Time Place Possession Information

Form Utility Involves changing raw material or putting parts together to make them more useful Form Utility deals with making or producing things

An Example of Form Utility A Tree In its original state it has value as an object of beauty, supplies oxygen, prevents soil erosion, and provides a home for animals. When a tree is cut down and used in making other products its usefulness changes. The raw material becomes part of a new product that has a different value Form Utility takes place also when a manufacturer assembles parts into a product pieces of wood assembled into furniture

Place Utility Having a product where customers can buy it Businesses study consumer shopping habits to determine the best sales outlets for their products Outlets include catalogs, the internet, retail stores

Time Utility Having the product available at a certain time of the year or a convenient time of day The value of the product is increased by having it available when consumers want them Time Utility requires the marketer to plan ahead in order to have the right product at the right time Toy companies introduce new toys for Christmas every February at the Toy Fair in New York City

Possession Utility The exchange of a product for some monetary value Alternatives to cash may be accepted these include: In business to business situations companies also grant customers credit Credit Cards Checks Installment Plans Layaway Possession Utility is involved every time legal ownership of a product changes hands

Information Utility Involves communication with the consumer Examples of sources of information: Sales Associates Packaging Tags and Labels Advertising Owner’s Manuals Internet Sites Telephone Customer Service

Benefits of Product Utility Added value Increases demand, increased demand allows manufacturers to produce in larger quantities which reduces the cost of each item When a product becomes popular the number of merchants offering the product will increase, this increases competition which reduces the price Competition also makes manufacturers improve products to better satisfy customer wants and needs

Marketing Myopia Theodore Levitt proposed market definitions of a business are superior to product or technological definitions. Target Markets/Groups and Marketing Needs. Every major industry was once a growth industry. Railroads, Hollywood and others.

Marketing Myopia No guarantee against product obsolescence. Company’s own product research will, or another company will produce, product obsolescence.

Marketing’s Role The chief executive has the inescapable responsibility for creating this environment, viewpoint, attitude and inspiration. Sets the company’s style, direction and goals.

Marketing’s Role Marketing should try to mobilize the company’s resources to develop customer satisfaction. Requests from the marketing department sometime increase product design, material costs, disrupt production schedules, increase finance and accounting costs and create budget headaches.

Customer Satisfaction Building Customer Relationships CRM – Customer relationship management . . . “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.”

Relationship Building Blocks: Value and Satisfaction Customer Perceived Value The customers’ evaluation of the difference between benefits and costs. Customers often do not judge values and costs accurately or objectively. Customer Satisfaction Product’s perceived performance relative to customers’ expectations.

Customer Relationship Levels and Tools Basic relationships low margin customers Full partnerships key customers Frequency marketing programs Reward customers who buy frequently or in large amounts Club marketing programs Offer members special discounts and create member communities

The Changing Nature of Customer Relationships Relating with more Carefully Selected Customers Relating for the Long-Term Relating Directly