1. Copyright © 2012 McGraw-Hill Ryerson Limited Ajax Persaud Shirley Lichti Dhruv Grewal Michael Levy Chapter 1 Overview of Marketing

2. 1-2 Chapter Objectives LO1 Define marketing and explain its core concepts LO2 Illustrate how marketers create value for a product or service LO3 Summarize the four orientations of marketing LO4 Identify the role of customer relationship management in creating value LO5 Explain the importance of marketing both within and outside the firm LEARNING OBJECTIVES

3. 1-3 Chapter Roadmap

4. 1-4 Building Value BlackBerry launched in 2000 available on 595 networks in over 175 countries sales of over $19.9 billion, 53% outside North America satisfies demand for information in real time fierce competition from Apple, Android and others LO1,02

5. 1-5 What is Marketing? Marketing is a set of business practices designed to plan for and present an organization’s products or services in ways that build effective customer relationships LO1

6. 1-6 Just about buyers and sellers exchanging money for goods and services or about making a profit Marketing is NOT LO1

7. 1-7 Marketers must address the ethical implications of their actions on society in general. Marketer’s Responsibility LO1

8. 1-8 Entails Value Exchange The fundamental purpose of marketing is to create value for both the firm and customer. Value is in essence what you get for what you give up. LO2

9. 1-9 Which of the following statements about marketing is NOT true? A)Marketing entails an exchange. B)Marketing is simply about making a profit. C)Good marketing requires thoughtful planning. D)Because marketing costs money, good marketers carefully seek potential customers who have both an interest in the product and an ability to buy. Test Your Knowledge

10. 1-10 Marketing’s Core Aspects LO1

11. 1-11 Begins with understanding their needs and wants Developing products and services Market: refers to the group of people who need or want a company’s products or services and have the ability and willingness to buy them Target market: the customer segment to whom the firm is interested in selling its products Core One: Satisfying Customer Needs and Wants LO1

12. 1-12 Satisfying Customer Needs and Wants How does a company address the diverse needs and wants of consumers for dental care products? LO1

13. 1-13 Case in Point: Crest Challenge Answer Results Address the diverse needs and wants of consumers for dental care products. Develop a deep understanding of what benefits consumer are seeking in their dental care products and develop brands designed to deliver those benefits. Crest provides a wide variety of dental care products to deliver the desired benefits. LO1

14. 1-14 Case in Point: Crest Crest LO1

15. 1-15 Core Two: Marketing Entails Exchange The exchange can occur between any two parties Not simply a buyer and seller exchanging money for a good or service Can be an exchange of information for convenience LO1

16. 1-16 Marketing Entails an Exchange Communications/Delivery Money/Information Customers/ Consumers (Buyers) Goods/Services Producers (Sellers) CHAPTERS.ca LO1

17. 1-17 Which of the following is NOT part of a marketing exchange? A)Sellers provide products or services. B)Sellers communicate and facilitate delivery. C)Marketers assess the effectiveness of their advertising. D)Buyers complete the exchange by giving money and information to the seller. Test Your Knowledge

18. 1-18 Core Three: Marketing Requires Product, Price, Place, and Promotion Decisions LO2

19. 1-19 Product LO2 Goods Services Ideas: thoughts, opinions, philosophies and intellectual concepts Creating Value

20. 1-20 Price is everything the buyer gives up in exchange for the product. Price moneyenergy time LO2 Transacting Value

21. 1-21 Place All activities necessary to get the product to the right customer when that customer wants it. Supply chain management is the field that examines these activities. Where would you find this product in the store? LO2 Delivering Value

22. 1-22 Place: Marketing Channels Distribution Strategy How does a company get the product to the right customer when and where they want it? LO2

23. 1-23 Case in Point: Country Grocer Country Grocer Challenge Answer Results To expand distribution beyond the Ottawa area. Using an online distribution system to allow customers all over Canada to order directly from its store in Ottawa. Canadian Federation of Independent Grocers award of merit for 8 consecutive years Awarded the National Silver Award as the best store in Canada in the small surface category. LO2

24. 1-24 Case in Point: Country Grocer LO2

25. 1-25 Promotion The communication activities of marketing Used to inform, persuade and remind potential buyers Used to influence their opinions or elicit a response LO2 Communicating Value

26. 1-26 Promotion is ____________ by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. A)smoke-and-mirrors B)coercion C)teasing D)communication Test Your Knowledge

27. 1-27 Marketing Shaped by External Forces LO2

28. 1-28 Core Four: Marketing Can Be Performed by Both Individuals and Organizations B2B: Wholesaling is often only Business to Business B2C: All retailing is Business to Consumer selling C2C: Swap Meets, EBay, yard sales, etc. LO2 ETSY WebsiteWebsite

29. 1-29 Core Five: Marketing Occurs in Many Settings Both profit and non-profit entities Developing economies Entire industries LO2

30. 1-30 Social Media Marketing Facebook – social utility or marketing tool? > 46 million members used by TD Bank, Molson, AOL Canada, Boston Pizza, LouLou magazine to reach target audiences privacy concerns? LO2

31. 1-31 Core Six: Marketing Helps Create Value LO2,03 Production-oriented era Sales-oriented era Market-oriented era Value-based marketing era

32. 1-32 Orientations Product – focus on developing and distributing innovative products with little concern to customers Sales – views marketing as a selling function where companies try to sell as many products as possible – heavy personal selling Marketing – focus on what consumers want and need before designing and selling products – “customer is King” Value Based – attempt to discover and satisfy customer needs and wants

33. 1-33 Value-Based Marketing Focuses on providing customers with benefits that far exceed the cost of acquiring and using a product or service while providing a reasonable return to the firm Firms must offer customers something in excess of that being offered by the competitors. Firms must understand how each aspect of their product/service creates value for customers. Works seamlessly with other functional areas of the company to design, promote, price and distribute products LO2,03

34. 1-34 Value is in the Eye of the Beholder That movie was a waste of money. That movie was so worth seeing! Discussion question If they saw the same movie, what could account for the difference in value derived from the experience? LO2,03

35. 1-35 How Firms Compete on the Basis of Value Constantly changing consumer perceptions Firms must constantly monitor the marketplace in order to create value LO2,03

36. 1-36 What must firms do to become value driven? A)Share information, balance benefits and costs, and build customer relationships. B)Set low prices, put profit above service, and use effective marketing strategies. C)Make logistics a priority, expand globally, and always offer new goods and services. D)Keep a vigilant eye on the market-place, undercut competitors, and provide competitive salaries. Test Your Knowledge

37. 1-37 Entrepreneurial Marketing Carmen Creek Gourmet Meats based in Calgary specializes in grade A Canadian bison distributes in Canada, US and Europe brings value to consumers, retailers and food service businesses LO2

38. 1-38 Becoming Value Driven: Sharing Information Information technology such as Customer Relationship Management (CRM) programs are increasingly used by marketers to ensure that data is transmitted throughout the firm. LO4

39. 1-39 Sharing Information Why is sharing and coordinating information such a critical success factor for any firm? LO4

40. 1-40 Case in Point: Zara Zara Challenge Answer Results How does the flagship brand of Europe’s fastest growing apparel retailer keep up with the latest trends? By implementing sophisticated information technology into its customer tracking and supply chain functions. Zara now has over 1500 women’s clothing stores in 78 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks. LO4

41. 1-41 ZaraZara: Conquering Fashion with IT LO4

42. 1-42 Becoming Value Driven: Balancing Benefits and Cost Understand key benefits Focus on key benefits Eliminate cost of less strategic benefits LO4

43. 1-43 Becoming Value Driven: Building Relationships With Customers Take a long term view of customer relationships Use data to assist in maintaining the relationship LO4 Transactional orientation: no buyer-seller relationship/ just a series of individual transactions Relational orientation: Building long-term relationships with customers

44. 1-44 Why is Marketing Important? LO5 7 Reasons: Expands global presence is pervasive across organization and supply chain makes life easier provides career opportunities Enriches society Can be entrepreneurial

45. 1-45 Marketing Expands Firms Global Presence Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks Canada Starbucks Germany Starbucks TaiwanStarbucks Australia LO5

46. 1-46 Marketing As Pervasive Across the Supply Chain Each step in the supply chain involves marketing All members in the chain must ultimately focus on creating value for their customer and the end user consumer LO5

47. 1-47 Which of the following would NOT be considered part of a supply chain? A)consumer B)retailer C)manufacturer D)customer service representative Test Your Knowledge

48. 1-48 Marketing Makes Life Easier and Provides Employment Opportunities Employment in diverse fields such as research, sales, promotions, global marketing Choices of products and services choices as well as information about those choices LO5

49. 1-49 Marketing Enriches Society Discussion question Why do you think breast cancer is a good cause for Avon Foundation to support? LO5

50. 1-50 Marketing Can Be Entrepreneurial Though important to large firms, marketing is equally important to the success of small ventures—especially new ventures. LO5