1. McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 1 Overview of Marketing

2. 1-2 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Building Value Online Each of these innovative marketing companies succeeds because it provides good value to its customers. Prioritized searches Customized ads Customized searches Benefits buyers and sellers AIM, music, expanded communication options

3. 1-3 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What is Marketing? Marketing is an organizational function and a set of processes for creating, capturing*, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

4. 1-4 Missing capturing value Value capture is essential to successful marketers Missing Component

5. 1-5 Simply about buyers and sellers exchanging money for goods and services Simply about making a profit Marketing is NOT

6. 1-6 Marketers must address the ethical implications of their actions on society in general. Marketer’s Responsibility

7. 1-7 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Value 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.

8. 1-8 Test Your Knowledge 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.

9. 1-9 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing’s Core Aspects

10. 1-10 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Core One: Satisfying Customer Needs and Wants Begins with understanding their needs and wants Developing products and services

11. 1-11 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Satisfying Customer Needs and Wants How does a company address the diverse needs and wants of consumers for dental care products?

12. 1-12 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: CrestCrest 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.

13. 1-13 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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

14. 1-14 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Entails an Exchange Communications/Delivery Money/Information Customers/ Consumers (Buyers) Goods/Services Producers (Sellers) BARNES&NOBLE.com

15. 1-15 Test Your Knowledge 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.

16. 1-16 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Core Three: Marketing Requires Product, Price, Place, and Promotion Decisions 4P’s ProductPricePlacePromotion

17. 1-17 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Goods Services Ideas

18. 1-18 Price is everything the buyer gives up in exchange for the product. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Price moneyenergy time

19. 1-19 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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.

20. 1-20 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Place: Supply Chain Management How does a company get the product to the right customer when and where they want it?

21. 1-21 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: H&H Bagels H&H Bagels Challenge Answer Results To expand distribution beyond the New York area. Using an online distribution system to allow customers all over the world to order directly from stores in New York City. H&H now ships bagels to over 20 different countries directly from the shops in New York City. The product has become so popular that it has been featured in popular TV shows and movies.

22. 1-22 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Promotion The communication activities of marketing Used to inform, persuade and remind potential buyers Used to influence their opinions or elicit a response

23. 1-23 Test Your Knowledge 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

24. 1-24 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Entrepreneurial Marketing RBK from Reebok Sports, entertainment and fashion Competitiveness + cutting edge style + entertainment

25. 1-25 Core Four: Marketing Can Be Performed by Both Individuals and Organizations © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin B2B: Wholesaling is often only Business to Business B2C: All retailing is Business to Consumer selling C2C: Swap Meets, EBay, yard sales, etc.

26. 1-26 Core Five : Marketing Occurs in Many Settings Both profit and non-profit entities Developing economies Entire industries

27. 1-27 Core Six: Marketing Helps Create Value © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Production-oriented era Sales-oriented era Market-oriented era Value-based marketing era

28. 1-28 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Adding Value Harrods = extreme luxury Harrods “By Invitation” loyalty program Tied to level of spending with $88K or more qualifying for the Chairman’s Club

29. 1-29 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. Discussion question #2 How do the keys features vary depending on the segment of traveler? Discussion question #1 What do you think are the key features of a hotel that create value? Value-Based Marketing

30. 1-30 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Examples of Value Keys for Hotels Service Quality Hotel Personnel Convenience of Booking Room Comfort Restaurant Quality Location Rewards Program Free Internet Service

31. 1-31 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Value for a Business Traveler Service Quality Room Comfort Location Rewards Program Free Internet Service

32. 1-32 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Value for a Leisure Traveler Service Quality Hotel Personnel Room Comfort Restaurant Quality Location

33. 1-33 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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?

34. 1-34 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How Firms Compete on the Basis of Value Constantly changing consumers perceptions Firms must constantly monitor the marketplace in order to create value

35. 1-35 Test Your Knowledge 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.

36. 1-36 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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.

37. 1-37 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sharing Information Why is sharing and coordinating information such a critical success factor for any firm?

38. 1-38 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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 760 women’s clothing stores in 55 countries. Products move from design through the supply chain and onto the stores shelves in about two weeks.

39. 1-39 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Becoming Value Driven: Balancing Benefits and Cost Understand key benefits Focus on key benefits Eliminate cost of less strategic benefits

40. 1-40 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Becoming Value Driven: Building Relationships With Customers Take a long term view of customer relationships Use data to assist in maintaining the relationship

41. 1-41 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Why is Marketing Important?

42. 1-42 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Expands Firms Global Presence Starbucks often promotes the same product in different countries. What products do you see in common? Starbucks US Starbucks Germany Starbucks Taiwan Starbucks Australia

43. 1-43 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Pervasive Throughout the Organization Discussion question How did Toyota use the Scion Road Trip to ensure that all firm activities were focused on creating value for the Scion customer?

44. 1-44 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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

45. 1-45 Test Your Knowledge Which of the following would NOT be considered part of a supply chain? A)consumer B)retailer C)manufacturer D)customer service representative

46. 1-46 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Makes Life Easier and Provides Employment Opportunities Choices of products and services choices as well as information about those choices Employment in diverse fields such as research, sales, promotions, global marketing

47. 1-47 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Enriches Society Discussion question Why do you think breast cancer is a good cause for Avon Foundation to support?

48. 1-48 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Can Be Entrepreneurial Though important to large firms, marketing is equally important to the success of small ventures—especially new ventures.

49. 1-49 Customer relationship management: A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm’s most valued customers. Goods: Items that you can physically touch. Ideas: Include thoughts, opinions, and philosophies, and intellectual concepts such as these also can be marketed. Services: Intangible customer benefits that are produced by people or machines and cannot be separated from the producer. Supply chain: The group of firms that make and deliver a given set of goods and services. Supply chain management: Refers to a set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction into a seamless value chain. Chapter 1 Glossary