1. BUAD 307—MARKETING FUNDAMENTALS
MARKETING OVERVIEW

2. Note: Topic summaries are available

3. What purposes—other than immediate sales— do these machines serve?

4. Learning Objectives Identifying
The scope and basic objectives of the marketing function
Customer value
Obstacles to delivering the value to the customer
Benefits of and opportunities for relationship marketing

5. Usage and Reach of Marketing
Who markets?
Businesses
Government units
Non-profit organizations
Cause related organizations
What is marketed?
Goods
Services
Ideas
Who buys?
Ultimate consumers
Organizational buyers
For internal use
For resale (wholesalers, retailers)
Manufacturers (components)
Customer benefits?
Utility
Consumption
Convenience

6. 2007 American Marketing Association (AMA) Definition
Marketing: “The (1) activity, (2) set of institutions, and (3) processes for (4) creating, (5) capturing, (6) communicating, (7) delivering, (8) and exchanging (9) offerings that have (10) value for (11) customers, (12) clients, (13) partners, and (14) society at large.” (Numbering added.)
Definition not needed for the exam!

7. MARKETING ACTIVITY INSTITUTIONS PROCESSES CREATION COMMUNICATION
DELIVERY
EXCHANGE
CUSTOMERS
OFFERINGS
VALUE
CLIENTS
PARTNERS
SOCIETY

8. Marketing As an Exchange
Each side receives something more valuable than what it gave up  “win-win” deal and customer value
Part of the value may be assurance of continued quality over time (value of the brand)
In principle, money does not have to be exchanged.
For goods and services, this is usually the most convenient way of trade.
For ideas, there may be no monetary exchange as such. E.g.,
Voting for a candidate
Engaging in recycling

9. Customer Benefits and Value
IS THE CUSTOMER BENEFIT GREATER THAN THE SACRIFICE (COST)?
YES NO
POOR VALUE
POTENTIAL GOOD VALUE

10. Myth vs. Reality
Imitating successful competitors is usually NOT an effective strategy
Selling things online is usually MORE expensive than selling through conventional retailers (Amazon is estimated to lose some $5-6 billion per year on tangible merchandise shipped to customers!)
Products with high value-to-bulk ratio and high absolute (dollar) margins tend to be better suited for online sale
Having a great product does NOT necessarily mean you will be successful—you also need
Awareness by customers
Access to distribution

11. Communicating value to customers
Customers must know that the product exists
Awareness through advertising requires a very elaborate, lengthy, and expensive campaign
Social media and “guerilla” marketing
Exposure through retail setting
Retailers must carry the product—for every new one they take on, they generally must sacrifice an existing one
Even if carried, a product may “drown” among the “sea” of other products
For some products, the customer must see what the product actually does in order to recognize value (e.g., a Pillow Pet is not just “another stuffed animal.”

12. Delivering value to the customer in a convenient and cost effective manner
Brick-and-mortar stores
Existing stores must generally drop an existing product to make room for a new one (and retailers may have relationships with existing brands)
Some stores—e.g., convenience stores—have room for few brands in each category. Stores in many foreign countries are smaller than typical U.S. stores
The customer must be able to find the product
Online
Delivery to customer must be cost effective
The customer must know where to order (easier if carried at major sites such as Amazon)
The product must be findable at the site
Showed up in search if done by customer
Specific brand (requires awareness)
General category
Featured product
Suggested--e.g.,
“Customers who bought this also bought…”
Individualized recommendation based on prior purchases

13. Relationship Marketing
Selling (selling existing products with whatever methods are necessary) vs. marketing orientation (serving customer needs whether in current or new forms)
Maintaining a relationship with the customer over time rather than just focusing on immediate sales
Anticipating customer needs
Providing solutions
Investing in products and services optimized for the customer

14. Products vs. Solutions NETFLIX STARTED OUT SHIPPING DVDs TO CUSTOMERS
ABILITY TO WATCH MOVIES
ORIGINAL PRODUCT
OFFERING
ACTUAL CUSTOMER
BENEFIT
PRACTIVE OF
CUSTOMER RATINGS
BROUGHT
RECOMMENDATION DATA BASE
NOW MOST MOVIES ARE OFFERED THROUGH STREAMING
EXISTING CUSTOMER BENEFIT BROUGHT ALONG TO NEW FORM
(COMPETITIVE ADVANTAGE)
ENHANCED WAY OF PROVIDING THE CUSTOMER BENEFIT
(SOLUTION)
You will NOT be asked to reproduce this specific model on the exam!

16. Value
Benefits—perceived by the customer (may not be objectively accurate)
Convenience
In delivery
In usage
Reliability
Durability
Performance
Style/aesthetics
Prestige
Service component
Sacrifices—examples
Money
Time
Risk

17. Creating, Communicating, and Capturing Customer Value
AVAILABILITY
EASE OF USE
DELIVERY:
DISTRIBUTION, EXECUTION OF SERVICES
UTILITY
CONVENIENCE
EXCHAGE
OFFERINGS:
PRODUCTS, SERVICES, AND IDEAS
COMMUNICATION
VALUE:
CUSTOMER BENEFITS
BUYER
CAPTURE
SECURITY
EFFECTIVENESS
CREATION:
RESEARCH, DESIGN, MANUFACTURING
SELLER
PLEASURE
MONEY, BEHAVIOR
Exact model is NOT needed for exam!

18. Creating Customer Value
PERCEIVED NEEDS OF OTHERS
INSTINCTS
BELIEFS ABOUT WHAT IS “RIGHT”
MARKET RESEARCH, ANALYSIS, AND DEVELOPMENT
CUSTOMER DESIRES
SELLER OFFERINGS
COSTS OF OFFERINGS
(NEGATIVE)
BELIEFS ABOUT THE WORLD
BELIEFS ABOUT OFFERINGS
Exact model is NOT needed for exam!
CUSTOMER VALUE

19. Customer Value: AFLAC Insurance

20. Customer Value, Part I
Value is the ratio of the benefits received (usually goods or services) to what is given up (usually money)
For a transaction to take place, the benefits received must usually be greater than the sacrifice for both parties—usually
The customer values the goods and services received more than the money spent
The seller values the money received more than the goods or services given up (i.e., it is worthwhile to produce these in order to get this payment)

21. Customer Value, Part II
A low priced product may not represent value to a customer if the benefits received are perceived to be low, too
E.g., bargain garbage bag that does not last
Different customer segments will have different value perceptions and desires
E.g., “tough truck” vs. “sporty car”
A product which is adapted to the needs of a particular segment can be very valuable to that segment even if the overall “quality” is not seen as superior by most other consumers
E.g., some people like a “clumsy” Hummer
Cost may be in terms of money or other sacrifice (e.g., travel time, delay)

22. Examples of Customer Value to Different Customers

23. Tools to Provide Customer Value (4Ps)
Product (both the tangible item and associated services)
Price (different segments of customers will pay different amounts depending on their product needs and preferences)
Place (distribution—making the product available where it is convenient to the customer)
Promotion (advertising, sales promotion, publicity, selling, special events)

24. Customer Value: Raw Fish (Ugh!)

25. Customer Value: Ziploc Bags

26. Customer Value: iPhone 7
Many customers are willing to pay a large premium on the iPhone relative to competing Android based brands offering very similar features
Part of the value is supplied by
Cell phone service providers
Distributors
App developers
Online tutorial makers and info produced by others
Some sources of value:
Ease of use
Multiple functions within one easy-to-carry device
Elegance of design
Prestige
Reliability
Integration with iPad and Apple computers

27. Customer Value: Sally Hansen Nail Polish
Cost
Reduction
Choice
Convenience
Durability
Performance
Risk reduction

28. Value: Nordstrom’s

29. Value: Walmart

30. Value Engineering Increasing offering value by Decreasing cost
Improving
Durability
Performance
Reliability
Convenience
Aesthetics
No box  lower
cost, less waste,
less bulk,
less hassle

31. Some VERY high-tech products with carefully engineered value

33. Customer Value: Soda Vending

34. Customer Value: Netflix

35. Customer Value: Starbucks

36. Value: Recap
A low quality, low price product represents poor value for many customers
A very high benefit product at a high price can represent value for some segments
Customer segments differ in what they find valuable