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
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
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.

9. 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 sold!)
Having a great product does NOT necessarily mean you will be successful

10. 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

11. WHAT IS THE CUSTOMER BENEFIT OF THIS OFFERING?
CRITICAL
QUESTION:
WHAT IS THE CUSTOMER BENEFIT OF THIS OFFERING?

12. Products vs. Solutions NETFLIX STARTED OUT SHIPPING DVDs TO CUSTOMERS
ABILITY TO WATCH MOVIES
ACTUAL CUSTOMER
BENEFIT
ORIGINAL PRODUCT
OFFERING
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)

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

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

15. 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!

16. 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

17. Customer Value: AFLAC Insurance

18. 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)

19. 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.
Different customer segments will have different value perceptions and desires
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
Cost may be in terms of money or other sacrifice

20. 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)

21. Examples of Customer Value to Different Customers

22. Customer Value: Raw Fish (Ugh!)

23. Customer Value: Ziploc Bags

24. Customer Value: iPhone 6

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

26. Value: Nordstrom’s

27. Value: Walmart

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

30. Customer Value: Soda Vending

31. Customer Value: Netflix

32. Customer Value: Starbucks

33. 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