1. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-1 CREATING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING C HAPTER

2. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-2 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Define marketing and identify the requirements for marketing to occur. 2.Explain how marketing discovers and satisfies consumer needs. 3.Distinguish between marketing mix elements and environmental forces.

3. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 4.Explain how organizations build strong relationships and customer value through marketing. 5.Describe how today’s customer era differs from prior eras oriented to production and selling.

4. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-4 A MARKETING AND PRODUCT PUZZLE: HOW DO COLLEGE STUDENTS STUDY? The Legend: The Product Nobody Seemed to Want

5. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-5 A MARKETING AND PRODUCT PUZZLE: HOW DO COLLEGE STUDENTS STUDY? Discovering Student Studying Needs 3M Post-it ® Notes or Post-it ® Flags = 3M product that will combine Post-it ® Notes or Post-it ® Flags and Highlighters + Felt Tip Highlighters

6. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-6 A MARKETING AND PRODUCT PUZZLE: HOW DO COLLEGE STUDENTS STUDY? Satisfying Student Studying Needs 3M’s Technology, Marketing, and You

7. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-7 The Office Market Segment How can 3M reach this segment with the Post-it ® Flag Highlighter ?

8. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-8 3M Post-it ® Flag Highlighter How do college students study?

9. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-9 FIGURE 1-1 FIGURE 1-1 The see-if-you’re-really-a- marketing-expert test 1.True 2.(c) 30% 3.True 4.(c) plastic bottles

10. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-10 WHAT IS MARKETING? Marketing: Using Exchanges to Satisfy Needs  Marketing Marketing  Exchange Exchange The Diverse Forces Influencing Marketing Activities

11. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-11 FIGURE 1-2 FIGURE 1-2 An organization’s marketing department relates to many people, groups, and forces

12. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-12 1. What is marketing? A: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Concept Check

13. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-13 Concept Check 2. Marketing focuses on __________ and ________ consumer needs. discovering satisfying

14. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-14 HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS Discovering Consumer Needs  The Challenge of Meeting Consumer Needs With New Products “Focus on the consumer benefit” “Learn from the past”

15. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-15 Dr. Care Vanilla-Mint Aerosol Toothpaste What “benefits” and what “showstoppers”?

16. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-16 Hot Pockets Subs Microwaveable Snacks What “benefits” and what “showstoppers”?

17. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-17 Scooba Robotic Floor Washer What “benefits” and what “showstoppers”?

18. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-18 Coca Cola C2 What “benefits” and what “showstoppers”?

19. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-19 HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS Discovering Consumer Needs  Consumer Needs and Consumer Wants  What a Market Is What a Market Is Need Want

20. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-20 FIGURE 1-3 FIGURE 1-3 Marketing’s first task: discovering consumer needs

21. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-21 Satisfying Consumer Needs  The Four P’s: Controllable Marketing Mix Factors The Four P’s: Controllable Marketing Mix Factors  Target Market Target Market Product Promotion Price Place  The Uncontrollable, Environmental Forces The Uncontrollable, Environmental Forces HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS Social Technological Economic Competitive Regulatory

22. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-22 FIGURE 1-A FIGURE 1-A Summary of factors that affect an organization’s marketing program

23. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-23 THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT  Best Product  Best Price Customer Value and Customer RelationshipsCustomer Value and Customer Relationships  Best Service

24. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-24 Costco, Starbucks, and Lands’ End What customer value strategy?

25. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-25 THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT  The Marketing Program The Marketing Program  Relationship Marketing: Easy to Understand, Hard to Do Relationship Marketing: Easy to Understand, Hard to Do Relationship Marketing and the Marketing Program

26. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-26 FIGURE 1-4 FIGURE 1-4 Marketing’s second task: satisfying consumer needs

27. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-27 A 3M Product and Marketing Program to Help Students Study  Moving from Ideas to a Marketable Highlighter Product THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

28. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-28 A 3M Product and Marketing Program to Help Students Study  A Marketing Program for the Post-it ® Flag Highlighter and Pen THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT  Extending the Product Line

29. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-29 FIGURE 1-5 FIGURE 1-5 Marketing programs for two new 3M Post-it ® brand products targeted at two distinctly different customer segments: college students and office workers

30. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-30 Concept Check 1. An organization can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________. target markets

31. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-31 Concept Check 2. What are the four marketing mix elements that make up the organization’s marketing program? A: product, price, promotion, place

32. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-32 Concept Check 3. What are environmental forces? A: Environmental forces are those that the organization’s marketing department can’t control. These include social, economic, technological, competitive, and regulatory forces.

33. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-33 HOW MARKETING BECAME SO IMPORTANT Evolution of the Market Orientation  Production Era  Customer Era  Sales Era  Marketing Concept Era Marketing Concept Era Market Orientation Customer Relationship Management (CRM)

34. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-34 FIGURE 1-B FIGURE 1-B Four different orientations in the history of American business

35. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-35 Societal Marketing Concept Ethics and Social Responsibility: Balancing Interests  Ethics  Social Responsibility HOW MARKETING BECAME SO IMPORTANT

36. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-36 The Breadth and Depth of Marketing  Who Markets?  What Is Marketed? Goods Services  Who Buys and Uses What Is Marketed? Ultimate Consumers Ultimate Consumers Organizational Buyers Organizational Buyers HOW MARKETING BECAME SO IMPORTANT Ideas

37. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-37 Arizona Highways Who markets and what is marketed?

38. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-38 The Breadth and Depth of Marketing  Who Benefits?  How Do Consumers Benefit? Utility Utility  Form Utility  Place Utility  Time Utility  Possession Utility HOW MARKETING BECAME SO IMPORTANT

39. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-39 Concept Check 1. What are the two key characteristics of the marketing concept? A: (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals.

40. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-40 Concept Check 2. What is the difference between goods and services? A: Goods are physical objects whereas services are complex intangible items, such as legal advice, a college education, or airline travel.

41. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-41 YOUR PERSONAL MECHANIZED “TRANSPORTER” GOING ONLINE

42. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-42 1. What do you see as the advantages and disadvantages of the Segway HT? Going Online

43. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-43 2. For businesses, what applications could the Segway HT be used for? Going Online

44. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-44 3. Why would consumers want to buy a Segway HT? Going Online

45. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-45 ROLLERBLADE: BENEFITS BEYOND EXPECTATIONS VIDEO CASE 1

46. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-46 VIDEO CASE 1 Rollerblade

47. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-47 VIDEO CASE 1 Rollerblade 1. What trends in the environmental forces (social, economic, technological, competitive, and regulatory) (a) work for and (b) work against Rollerblade’s potential growth in the 21 st century?

48. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-48 VIDEO CASE 1 Rollerblade 2. Compare the likely marketing goals for Rollerblade (a) in 1986 when Rollerblade was launched and (b) today?

49. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-49 VIDEO CASE 1 Rollerblade 3. What kind of focused communication and promotion actions might Rollerblade take to reach the (a) Fitness/Recreation and (b) Junior market segments? For some starting ideas, visit rollerblade.com.

50. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-50 VIDEO CASE 1 Rollerblade 4. In searching for global markets to enter, (a) what are some criteria that Rollerblade should use to select countries to enter, and (b) what three or four countries meet these criteria best and are the most likely candidates?

51. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-51 THE MARKETING CHALLENGES FACING ROLLERBLADE, INC. SUPPLEMENTAL LECTURE NOTE 1-1

52. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-52 FIGURE 1-C FIGURE 1-C Number of in-line skaters in the United States

53. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-53 Rollerblade Print ad from the Early 1990s What was Rollerblade’s focus?

54. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-54 Rollerblade Print ad from the Early 2000s What was Rollerblade’s focus?

55. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-55 DESIGNING A CANDY BAR IN-CLASS ACTIVITY 1-1

56. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-56

57. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-57 WHAT MAKES A BETTER MOUSETRAP? IN-CLASS ACTIVITY 1-2

58. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-58 If a man (woman)…makes a better mousetrap, the world will beat a path to his (her) door.”  Ralph Waldo Emerson A Victorious Mouse

59. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-59 Victor ® Metal Bait Pedal and Live Catch Mousetraps

60. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-60

61. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-61

62. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-62 DEVELOPING A MARKETING PROGRAM FOR ROLLERBLADE IN-CLASS ACTIVITY 1-3

63. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-63 Rollerblade 2006 Consumer Brochure

64. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-64 Rollerblade’s Crossfire 4D/Activa 4D Skates That Target the Fitness Segment Crossfire 4D Activa 4D

65. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-65 Rollerblade’s Spiritblade Skate That Targets the Recreation Segment

66. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-66 Rollerblade’s Micro TFS Skate That Targets the Junior Segment

67. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-67

68. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-68 Marketing AMA Definition of Marketing Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

69. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-69 Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. Exchange

70. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-70 A market consists of people with both the desire and ability to buy a specific product. Market

71. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-71 The target market consists of one or more specific groups of potential customers toward which an organization directs its marketing program. Target Market

72. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-72 The marketing mix consists of the marketing manager’s controllable factors—product, price, promotion, and place (the 4Ps)—that can be used to solve a marketing problem. Marketing Mix

73. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-73 Environmental forces are the uncontrollable factors involving social, economic, technological, competitive, and regulatory forces. Environmental Forces

74. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-74 Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-time delivery, and both before-sale and after-sale service. Customer Value

75. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-75 Relationship marketing links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. Relationship Marketing

76. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-76 A marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. Marketing Program

77. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-77 The marketing concept is the idea that an organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals. Marketing Concept

78. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-78 An organization that has a market orientation focuses its efforts on (1) continuously collecting information about customers’ needs, (2) sharing this information across departments, and (3) using it to create customer value. Market Orientation

79. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-79 The societal marketing concept is the view that an organization should satisfy the needs of consumers in a way that provides for society’s well-being. Societal Marketing Concept

80. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-80 Ultimate consumers are the people who use the goods and services purchased for a household. Ultimate Consumers

81. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-81 Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale. Organizational Buyers

82. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 1-82 Utility is the benefits or customer value received by users of the product. Utility