1. Marketing’s Value to Consumers, Firms, and Society
Chapter 1
Marketing’s Value to Consumers, Firms, and Society
CHAPTER ONE
Lecture Notes for
Essentials of Marketing 14e
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2014 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin

2. At the end of this presentation, you should be able to:
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know what marketing is and why you should learn about it.
understand the difference between marketing and macro-marketing.
know the marketing functions and why marketing specialists—including intermediaries and collaborators—develop to perform them.
understand what a market-driven economy is and how it adjusts the macro-marketing system.
At the end of this presentation, you should be able to :
Know what marketing is and why you should learn about it.
Understand the difference between marketing and macro-marketing.
Know the marketing functions and why marketing specialists—including intermediaries and collaborators—develop to perform them.
Understand what a market-driven economy is and how it adjusts the macro-marketing system.

3. At the end of this presentation, you should be able to:
This slide refers to material on p. 4.
know what the marketing concept is—and how it should guide a firm or nonprofit organization.
understand what customer value is and why it is important to customer satisfaction.
know how social responsibility and marketing ethics relate to the marketing concept.
understand important new terms.
At the end of this presentation, you should be able to:
Know what the marketing concept is—and how it should guide a firm or nonprofit organization.
Understand what customer value is and why it is important to customer satisfaction.
Know how social responsibility and marketing ethics relate to the marketing concept.
Understand important new terms.

4. Marketing—What’s It All About?
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All Those Bicycles!
More Than Selling and Advertising
Summary Overview
Many people are surprised when they realize how many different ideas and activities are included in the term “marketing.”
Key Issues
Most people think that marketing involves selling and advertising.
 Think about a manufacturer of bicycles:
many brand names;
many different bicycles;
many types of bicycles with various features;
prices range from low to very high.
Discussion Question: Why are there so many varieties of bicycles?

5. Things a Firm Should Do in Producing a Bike
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Analyze Needs
Predict Wants
Estimate Demand
Summary Overview
By focusing on the many tasks involved in producing a bicycle, it is possible to get a feel for the wider range of marketing activities.
Key Issues
Among the different things a manager must do in producing a bicycle, he/she must:
 analyze the needs of people for various models of bicycles;
 predict the types of bicycles consumers will want and decide which consumers to satisfy;
 estimate the number of bicycle riders and how many bicycles they might buy;
 determine where the consumers will be and how to get bicycles to them;
 estimate the price consumers are willing to pay for a bicycle, and if that price will result in a profit for the firm;
 decide what kinds of promotion should be used to inform consumers about the firm and its bicycles;
 estimate the impact of competition from other bicycle producers;
 determine how to provide customer service if a customer has a problem after purchasing a bike.
Discussion Question: How many of these activities are marketing activities?
Determine Where
Estimate Price
Decide Promotion
Estimate Competition
Provide Service

6. Production vs. Marketing
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Creates Customer Satisfaction
Marketing
Makes sure right goods & services are produced
Summary Overview
Production and marketing are both fundamental economic activities. However, some people misunderstand the relationship between them. Thus, it helps to have a clear picture of how production and marketing interact with each other.
Key Issues
Production involves: making goods or performing services.
Discussion Question: Is it true that a good product is the only thing that makes a business a success? What is needed in addition to the product?
Products do not sell themselves!
 Marketing:
makes sure that the right goods and services are produced;
creates customer satisfaction: the extent to which an organization fulfills a customer’s needs, desires, and expectations.
Discussion Question: If you were buying a bicycle, what needs would you have? How would your desires or wants be different from your needs? What expectations would you have about the bicycle you were purchasing?
Production
Making goods
Performing services

7. Marketing Is Important to You
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Important to every consumer!
Summary Overview
Marketing is a pervasive activity. It is something that eventually touches everyone, and it dramatically affects peoples’ daily lives. The principles learned in marketing courses are directly and immediately applicable to students’ daily lives.
Key Issues
 Marketing is important to every consumer.
People bear the costs of marketing via price.
Everyone buys or uses a product or service.
People shop, are exposed to advertising, and provide information to businesses.
 Marketing is important to your job.
Selling your ideas.
Marketing offers career opportunities.
Organizations exist to satisfy customers; marketing contributes to success.
Marketing is important to your next job.
People have to market themselves.
Discussion Question: How would a knowledge of marketing benefit an accountant? A computer system designer? An attorney? A physician?
 Marketing affects innovation and the standard of living.
Stimulates research and innovation.
Creates new/improved products.
Generates a higher standard of living.
Important to your job!
(and your next job, too)
Affects innovation and standard of living

8. Marketing Affects Innovation
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Marketing stimulates the development of innovations. This ad for the Whirlpool Duet washer and dryer shows how marketing not only generates completely new products, but improvements to mature products—such as major appliances.
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9. How Should We Define Marketing?
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Micro View
Anticipates customers’ needs
Directs flow of goods and services
Performed by individual organizations
Macro View
Accomplishes the objectives of society
Matches supply with demand
Concerned with how marketing affects society and vice versa
and
Summary Overview
Marketing is more than selling and advertising, but it also possible to define marketing too broadly. In defining marketing, there are really two alternative views—a micro view and a macro view.
Key Issues
The micro view of marketing includes activities that:
anticipate customer needs;
direct flows of goods and services to customers;
are performed by individual organizations.
 The macro view of marketing includes a social process that:
accomplishes the objectives of society;
effectively matches supply and demand;
is concerned with how marketing activities affect society, and vice versa.
Discussion Question: Why is it important for marketers to understand both the micro and macro views of marketing?

10. Identify Customer Needs
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Summary Overview
Marketing stimulates new ways to identify customers’ needs.
Key Issues
Creative marketing managers are always looking for innovative ideas for products that really meet customers’ needs.
This ad for Help Remedies offers a dirt-simple solution that many customers were looking for.
Marketers must look for new ideas to stay ahead of competition.
Discussion Question: Can you think of other industries or product/service categories in which marketers have been particularly innovative over the past few years? What are some of these innovations? Why are these industries more innovative? Students might note that innovation is more common where there is more competition, consumer needs are rapidly changing, or new technology changes costs.

11. Marketing Profit and Nonprofit More than Persuasion Key
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Profit and Nonprofit
More than Persuasion
Key
Characteristics
Summary Overview
Managerial marketing is done by organizations; beyond that general definition, there are several specific aspects of marketing that marketers should consider.
Key Issues
Marketing:
 Applies to both profit and nonprofit organizations;
More than persuasion.
Discussion Question: What are some of the marketing activities other than persuasion?
 Begins with customer needs – not the production process;
 Does not do it alone or take the place of other business activities;
 Involves exchanges – consumers exchange something of value to acquire something of value;
 Builds a relationship with the customer that will lead to repeat purchase.
Begins with Needs
Builds Relationships
Involves Exchanges
Doesn’t do it Alone

12. Emphasis Is on Whole System
Macro-Marketing
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Emphasis Is on Whole System
Every Economy Needs It
Key
Characteristics
Summary Overview
 Macro-marketing’s emphasis is on how the whole marketing system works.
Key Issues
 Every economy needs a macro-marketing system, because:
It helps to match supply and demand;
Different producers in a society have different objectives, resources, and skills;
Every consumer has a different set of needs;
System must effectively match consumers and producers.
 Functions of an effective macro-marketing system:
Delivering the goods and services that consumers want and need;
Getting products to them at the right time, in the right place, and at a price they’re willing to pay;
Keeping the consumers satisfied after the sale, and bringing them back to purchase again when they are ready.
Discussion Question: Which countries’ macro-marketing systems might be viewed by Americans as unfair or ineffective? Which countries’ citizens might think that the American macro-marketing system is unfair or ineffective? Try to think of specific mismatches between customer needs and the outputs of producers.
Matches Producers and Consumers

13. Marketing Facilitates Production and Consumption (Exhibit 1-1)
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Production Sector
Spatial Separation
Separation in Time
Separation of Information
Separation in Values
Separation of Ownership
Marketing needed to overcome discrepancies and separations
Discrepancies of Quantity
Discrepancies of
Assortment
Summary Overview
Discrepancies of quantity and discrepancies of assortment complicate exchange between producers and consumers.
Key Issues
Production sector: Specialization and division of labor result in heterogeneous supply capabilities.
Consumption sector: Heterogeneous demand for different goods and services and when and where they need to be to satisfy needs and wants.
Discrepancies of quantity: Producers prefer to produce and sell in large quantities. Consumers prefer to buy and consume in small quantities.
Discrepancies of assortment: Producers specialize in producing a narrow assortment of goods and services. Consumers need a broad assortment.
Spatial separation: Producers tend to locate where it is economical to produce, while consumers are located in many scattered places.
Separation in time: Consumers may not want to consume goods and services at the time producers would prefer to produce them, and time may be required to transport goods from producer to consumer.
Separation of information: Producers do not know who needs what, where, when, and at what price. Consumers do not know what is available from whom, where, when, and at what price.
Separation in values: Producers value goods and services in terms of costs and competitive prices. Consumers value them in terms of satisfying needs and their ability to pay.
Separation of ownership: Producers hold title to goods and services that they themselves do not want to consume. Consumers want goods and services that they do not own.
Consumption Sector

14. Separation Between Producers and Consumers
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Economies of Scale - Lower Unit Cost
UnitCost $
Summary Overview
Marketing is needed to overcome the difference between maximizing production efficiency and the preferences people have for consuming products and services.
Key Issues
 Economies of scale lower cost.
As production increases, the cost of each unit of the product decreases.
Marketing helps companies find more outlets for products.
Discussion Question: How does marketing find more outlets (consumers) for products?
 Effective marketing links producers and consumers.
Consumers’ needs and patterns of consumption differ from how production facilities operate effectively.
Marketing activities create more efficient links between consumers and producers.
Marketing functions narrow the gap.
The universal marketing functions helps to narrow the gap.
How these functions are performed and by whom may differ among economic systems.
Output
Producers
Consumers
Marketing
Functions
Marketing Bridges the Gap!

15. Overcoming Spatial Separation
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Summary Overview
Effective marketing provides consumers with a variety of ways to meet their unique needs. Most companies have few locations, but would like to purchase world-wide.
Key Issues
Marketing helps to bring producers and consumers together.
Acai berries are popular in the United States as a supplement and as an ingredient in juices and smoothies.
Many marketing functions are needed to overcome the spatial separation between the Central and South American farms, where the fruit is harvested from acai palms, and American consumers.
Discussion Question: Try to think of a product or service category in which consumers tend to expect—and receive—more choices over time. How have marketers responded to these needs?

16. Universal Functions of Marketing
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Buying
Selling
Marketing
Functions
Market
Information
Transporting
Summary Overview
The universal marketing functions help the macro-marketing system overcome separations and discrepancies between those wishing to participate in an exchange. The fulfillment of these functions in a particular country or culture varies widely, but all the functions are needed in any macro-marketing system.
Key Issues
Buying: Looking for and evaluating goods and services.
Selling: Promoting the product to prospective buyers.
Transporting: Moving the goods from place to place.
Storing: Holding an inventory of goods until needed by customers.
Standardization and grading: Sorting products by size and quality.
Discussion Question: Can you think of products that have to be sorted or evaluated before you can purchase them? Hint: think about agriculture.
Financing: providing necessary cash and credit to produce, transport, store, promote, sell, and buy products.
Risk taking: assuming responsibility for uncertainties.
Discussion Question: What are some examples of the risks taken in business enterprise?
Market information: the collection, analysis, and distribution of all the information the marketer needs to plan, implement, and control need-satisfying marketing activities.
Risk Taking
Storing
Financing
Standardization
& Grading

17. Who Performs Marketing Functions?
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Producers
Wholesalers
Other
Specialists
Retailers
Transport
Firms
ISP's
Product
Testing
Ad Agencies
Research
Summary Overview
Individuals and organizations perform marketing functions. It is often easiest to think of  Producers (in blue), as manufacturers of tangible products and providers of intangible services. However, there are many other marketing performers.
Key Issues
Intermediaries (in green): Firms that specialize in trade rather than production and execute tasks related to buying and selling.
Collaborators (in gold): Firms that aid in the exchange process and provide marketing functions other than buying and selling.
Advertising agencies, marketing research firms
Independent product-testing laboratories
Internet service providers (ISP’s); transporting firms, etc.
Universal functions of marketing need to be performed by someone.
There can be specialization in the performance of these functions.
Functions can also be shared and shifted among the marketing performers.
Discussion Question: Why doesn’t each of the organizations or individuals in a macro-marketing system perform all of the marketing functions?
Consumers

18. Market-Directed Economy
Economics Systems
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Command
Economy
Government officials decide about production and distribution
May work well if:
Simple economy
Little Variety
Adverse Conditions
Market-Directed Economy
Adjusts itself
Price is value measure
Freedom of choice
Government’s role limited
Public interest groups OR
Summary Overview
Every society needs an economic system: the way an economy organizes to use scarce resources in production and consumption. Decisions about resource allocation are made differently depending on the type of economic system,.
Key Issues
Command economy (also called “planned” economy):
 Government officials make decisions about production and distribution;
 Can work well:
In simple economies
When the variety of goods and services is small
Under adverse conditions.
Market-directed economy: individuals govern resource allocation, production and consumption.
Characteristics of market-directed economies include:
 Adjusts itself.
 Price is a measure of value:
Consumers pay what they think things are worth;
Producers try to meet those price expectations.
 Greatest freedom of choice:
Less intervention from government planners;
More choices are available to producers and consumers.
 The role of government is to ensure fairness and the common good.
 Public interest groups and consumers spread the news
In many Western economies, public interest groups and consumers provide an additional check on a market-directed economy.
Discussion Question: What are examples of things government officials compel consumers to buy, even in a largely market-directed economy?

19. Model of a Market-Directed Macro-Marketing System (Exhibit 1-2)
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Many Individual Producers
(heterogeneous supply)
Intermediaries
Collaborators
Summary Overview
The American economy and most other Western economies are mainly market-directed— but not completely. Society assigns supervision of the system to the government.
Key Issues
Government tries to be sure that property is protected, contracts are enforced, individuals are not exploited, no group unfairly monopolizes markets, and producers deliver the kinds and quality of goods and services they claim to be offering.
The effectiveness and fairness of a particular macro-marketing system must be evaluated in terms of that society’s objectives.
All nations don’t share the same objectives.
Whether a system is judged “fair” or “effective” depends on the objectives of the society.
Perform universal marketing functions
To overcome discrepancies and
separation of producers / consumers
Monitor by government(s)
& public interest groups
To create value and direct flow of
need-satisfying goods and services
Many Individual Consumers
(heterogeneous demand)

20. Marketing’s Role Has Changed a Lot Over the Years
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Simple Trade Era
Focus:
Sell Surplus
Production Era
Focus:
Increase Supply
Summary Overview
Early “producers for the market” made products that were needed by themselves and their neighbors.
Key Issues
Simple trade era - when families traded or sold their “surplus” output to local distributors.
Production era - when a company focuses on production of a few specific products—perhaps because few of these products are available in the market.
Sales era - when a company emphasizes selling because of increased competition.
Marketing department era - when all marketing activities are brought under the control of one department to improve short-run policy planning and to try to integrate the firm’s activities.
Marketing company era - when, in addition to short-run marketing planning, marketing people develop long-range plans—sometimes five or more years ahead—and the whole company effort is guided by the marketing concept.
Sales Era
Focus:
Beat Competition
Marketing Department Era
Focus:
Coordinate & Control
Marketing Company Era
Long-Run Customer Satisfaction
Focus:

21. Discovering Customer Needs
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Summary Overview
In the past, many banks created products but left it to the marketing department to sell them. In today’s more competitive environment, banks are doing research to discover customer needs.
Key Issues
A bank that develops products that meet its users’ needs will have more satisfied customers.
When Bank of the Wichitas added an online branch, it decided to use an untraditional approach and called it Redneck Bank.
Redneck Bank offers customers “flat out free checking” and convenience served with a healthy dollop of humor.
The approach has been successful as the small bank from Oklahoma quickly added customers from all over the United States.

22. The Marketing Concept (Exhibit 1-3)
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Customer
satisfaction
Total company effort
Profit (or another measure of long-term success) as
an objective
The
Marketing
Concept
Summary Overview
The cornerstone of the marketing-oriented company is the marketing concept.
Key Issues
Production orientation - making whatever products are easy to produce and then trying to sell them.
Marketing orientation - designing marketing programs that will meet customer needs.
Marketing concept:
 Customer satisfaction guides the whole organization;
 All individuals work together to accomplish this goal;
Discussion Question: What can managers do to motivate everyone in the organization to satisfy customer needs?
 Requires that the company be profitable
Organizations consider the triple bottom line which measures an organization’s economic, social, and environmental outcomes

23. Checking Your Knowledge
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A store that is popular with newlyweds runs a wedding gift registry. Five minutes before closing time on a Sunday, a young couple enters the store and wants to register—a process that usually takes 30 minutes or more. A sales associate advises the couple to come back when they have more time, even though a recent memo from the store’s regional manager specifically instructed store personnel to stay after closing time to help such customers. Which key element of the marketing concept is the main problem area in this situation?
A. Customer need
B. Total company effort
C. Customer satisfaction
D. Marketing orientation
E. Product orientation
Checking Your Knowledge
Answer: B
Feedback: The marketing concept means that an organization aims all its efforts at satisfying its customers—at a profit. Three basic ideas are included in the definition of the marketing concept: (1) customer satisfaction, (2) total company effort, and (3) profit. Selection ‘B’ is the best answer for this question because when the sales associate asked the customers to return later, she was going against the company memo that stated personnel should stay after closing time to assist customers. The main problem in this situation then is “total company effort.”

24. Some Differences in Outlook between Adopters of the Marketing Concept and Production-Oriented Managers (Exhibit 1–4)
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Topic
Marketing Orientation
Production Orientation
Attitudes toward customers
Customer needs determine company plans.
They should be glad we exist, trying to cut costs and bringing out better products.
Product offering
Company makes what it can sell.
Company sells what it can make.
Role of marketing research
To determine customer needs and how well company is satisfying them.
To determine customer reaction, if used at all.
Interest in innovation
Focus is on locating new opportunities.
Focus is on technology and cost cutting.
Summary Overview
Adoption of the marketing concept has varied by type of organization, but the concept continues to penetrate organizations of all types. Exhibit 1-4 shows some differences in outlook between adopters of the marketing concept and typical production-oriented managers. As the exhibit suggests, the marketing concept forces the company to think through what it is doing—and why.

25. Some Differences in Outlook between Adopters of the Marketing Concept and Production-Oriented Managers (Exhibit 1–4)
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Topic
Marketing Orientation
Production Orientation
Customer service
Satisfy customers after the sale and they’ll come back again.
An activity required to reduce consumer complaints.
Focus of advertising
Need-satisfying benefits of goods and services.
Product features and how products are made.
Relationship with customer
Customer satisfaction before and after sale leads to a profitable long-run relationship.
Relationship ends when a sale is made.
Costs
Eliminate costs that do not give value to customer.
Keep costs as low as possible.
Key Issues
Consumer product companies were first to accept the marketing concept.
Service industries are catching up.
It is easy for firms to slip back into a production orientation. It is often difficult to:
keep up with changing customer needs;
beat aggressive competitors to the punch;
find the right focus;
offer customers superior value.
Discussion Question: Considering Redneck Bank’s ad, what challenges will it face in continuing to meet customer needs?

26. The Marketing Concept and Customer Value
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Take Customer’s Point of View
Customer Value Reflects
Benefits and Costs
Summary Overview
To better understand what it takes to satisfy a customer, it’s useful to take the customer’s point of view.
Key Issues
Customer value is the difference between the benefits a customer sees from a marketing offering and the costs of obtaining those benefits.
Different customers may see the benefits and costs in different ways.
The customer may not always dwell on value as a key determinant of buying behavior.
Discussion Question: Can you give examples of firms that provide you with superior customer value? Do other consumers view this value in the same way?
A consumer is more satisfied when the customer value is higher— benefits exceed costs by a larger margin.
Where does competition fit?
Customer value builds relationships.
Customer May Not Dwell on Value
Costs
Benefits
Where Does Competition Fit?
Customer Value Builds Relationships

27. Costs, Benefits, and Customer Value (Exhibit 1-5)
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High
Perceived
superior
value
Benefits target
customer sees in a firm’s goods and services
Summary Overview
A consumer is likely to be more satisfied when the customer value is higher—when benefits exceed costs by a larger margin. On the other hand, a consumer who sees the costs as greater than the benefits isn’t likely to become a customer.
Customer’s perceived fair value line
Perceived
inferior
value
Low
Low
Costs target customer sees to obtain benefits
High

28. Interactive Exercise: Customer Value
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The objective of this exercise is to show a graphic illustratration of the concept of customer value, using eight different brands of vacuum cleaners. They are positioned against each other based on: (a) the benefit ratings they received as a result of an independent lab test, and (b) their retail prices.
Working through the exercise, the students will learn:
How to use the available information to compute a price index and a benefit index for each brand;
How to compute a customer value index for each brand;
How the judgments about value differ depending on the type of index used and the total number of brands considered.
For complete information and suggestions on using this Interactive Exercise, please refer to the “Notes on the Interactive Exercise” section for this chapter in the Multimedia Lecture Support Package to Accompany Essentials of Marketing. That same information is available as a Word document in the assets folder for the PowerPoint file.

29. Checking Your Knowledge
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Which of the following statements, made by marketing managers, illustrates an understanding of the concept of customer value?
A. “It’s more important to acquire new customers than to retain old ones.”
B. “The only time it’s really necessary to demonstrate superior customer value is right before the actual sale.”
C. “My main concern is with meeting this month’s sales quota—I’ll worry about relationship building later.”
D. “I might think my product is a good value, but what really counts is if the customer thinks it’s a good value.”
E. “Customer value really boils down to which product is the least expensive.”
Checking Your Knowledge
Answer: D
Feedback: A manager who adopts the marketing concept sees customer satisfaction as the path to profits. Selection ‘D’ is the best option because it is the only option that clearly identifies the importance of the customer’s point of view.

30. Checking Your Knowledge
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A computer manufacturer is attempting to increase the customer value associated with purchases of its products. Which of the following might be a way to achieve this increase in value?
A. Reduce price.
B. Increase technical support for customers.
C. Increase warranty coverage.
D. Offer free shipping.
E. Any of the above, depending on the needs of the target market.
Checking Your Knowledge
Answer: E
Feedback: The concept of customer value is the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits. In the above question, selection ‘E’ is the best option because all of the options (A-D) are possible ways to increase the value.

31. Putting It All Together (Exhibit 1-6)
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Total Company Effort to Satisfy Customers
Total Company Effort to Satisfy Customers
Build Profitable Customer Relationships
Offer Superior Customer Value
Summary Overview
This model summarizes the important ideas presented to this point.
Key Issues
In a firm that has adopted the marketing concept, everyone focuses on customer satisfaction.
The organization offers superior customer value.
Value, in turn, helps attract customers and  keeps them satisfied after they buy.
This satisfaction then leads to repeat purchase and most likely purchases of other products offered by the firm.
In this way, the firm builds profitable relationships with its customers.
Discussion Question: If a firm’s customers are already satisfied with the firm’s offerings, why does the firm need to look for new and better ways to provide customer value?
Adopting the marketing concept is a “win-win” situation for marketers and consumers!
Increase Sales to Customers
Attract
Customers
Retain Customers
Satisfy
Customers

32. The Marketing Concept Applies in Nonprofit Organizations
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Newcomers to Marketing
Will “Satisfied Customers” Offer Support?
Characteristics of Nonprofit Organizations
Summary Overview
The marketing concept is also applicable to nonprofit organizations such as museums, libraries, charities, and political parties.
Key Issues
Nonprofit organizations are relative newcomers to marketing.
Nonprofit organizations often have a different idea of support and “satisfied customers” than do business firms.
Nonprofits often exist to accomplish a goal unrelated to traditional customer satisfaction.
Many nonprofits raise money from non-customer groups and then spend it on other “customers”.
They may not have a traditional “bottom line” economic measure of success.
Nonprofit organizations may not be organized for marketing.
Discussion Question: What is the “profit” for a political party? A library? A museum? A symphony orchestra? A blood bank?
May Not Be Organized for Marketing
The Bottom Line?

33. Marketing Concept Used by Nonprofit Services
This slide relates to material on p
Nonprofit organizations have been slower to adopt the marketing concept than consumer product companies. However, many have now integrated the marketing concept into their operations.
(video length: 1:42)
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34. The Micro-Macro Dilemma
This slide relates to material on p. 24.
Summary Overview
What is good for some firms and consumers may not be good for society as a whole.
Key Issues
Environmental organizations try to promote preservation of the environment as a societal goal.
Discussion Question: How do the needs of the individual conflict with societal benefits of the environment?
Many people in New York City buy bottled water inspite of the city providing citizens with good tasting, safe tap water.
Inefficient use of resources and transporting millions of plastic bottles end up in landfills where they leach chemicals into the soil.
Discussion Question: Should future generations pay the environmental price for today’s consumer conveniences?

35. The Marketing Concept, Social Responsibility, and Marketing Ethics
This slide relates to material on p
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Micro - Macro
Dilemma
Group Needs
Individual Needs
Summary Overview
Organizations implement the marketing concept in the broader context of society. There are times when the society’s needs conflict with the needs of a particular individual or group, creating the micro-macro dilemma.
Key Issues
Social responsibility—an obligation to improve the organization’s positive effects on society.
Businesses must strive to reach acceptable balances.
Should all consumer needs be satisfied?
Some products that many people use are not good for them.
Marketers must rely on legal and ethical standards in making decisions.
Do all marketers act responsibly?
Sometimes firms or individuals advance their own short-term interests at the expense of customers.
When products are complicated, consumers may be vulnerable to unscrupulous sellers.
What if profits suffer?
Some marketers are adopting a longer-term view.
Customer satisfaction goes beyond fulfilling an immediate need.
Discussion Question: It is possible for an organization to be truly consumer-oriented and intentionally act in an unethical manner? Why or why not?
The marketing concept guides marketing ethics:
focuses the organization on the needs of consumers;
many organizations have developed codes of ethics;
marketers should take criticisms of marketing seriously.
Social Responsibility
Should All Consumer Needs Be Satisfied?
Do All
Marketers Act Responsibly?
What if Profits Suffer?
The Marketing Concept Guides Ethics

36. Social Responsibility
This slide relates to material on p
Today, companies are increasingly expected to create high quality products and demonstrate a commitment to bettering society. In this ad, Exxon Mobil is delivering a message that while it is here to help supply consumers with energy (which can involve a negative impact on the environment), it is also searching for ways to supply that energy to us with an eye toward “cleaner” solutions.
The ad relates a child’s dream of the Olympics as “dream today, achieve tomorrow” to the company’s “dream of cleaner energy today and achieving that dream tomorrow.” The tagline "Taking on the world's toughest energy problems" reinforces the social responsibility conveyed in the ad.
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Use the onscreen player controls to operate the video.
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Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

37. Sample Criticisms of Marketing (Exhibit 1-8)
This slide relates to material on p. 28.
Annoying and wasteful
Easy consumer credit
Poor quality and unsafe products
Summary Overview
Marketing activity is especially open to criticism because it is the part of business most visible to the public.
Key Issues
Advertising is everywhere, and it’s often annoying, misleading, or wasteful.
Quality of products is poor and often they are not even safe.
There are too many unnecessary products.
Retailers add too much to the cost of distribution and just raise prices without providing anything in return.
Marketing serves the rich and exploits the poor.
Marketers overpromise service, and when a consumer has a problem, nobody cares.
Marketing creates interest in products that pollute the environment.
Private information about consumers is collected and used to sell them things they don’t need.
Marketing makes people too materialistic and motivates them toward “things” instead of social needs.
Easy consumer credit makes people buy things they don’t need and can’t afford.
Discussion Question: What complaints do you have that are not covered by one of the categories in Exhibit 1-8?
Criticisms
Makes people materialistic
Unnecessary & high price products
Misuse of private information of consumers
Serves the rich and exploits the poor
Interest in polluting products
Overpromise service

38. You should now be able to:
This slide refers to material on p. 4.
know what marketing is and why you should learn about it.
understand the difference between marketing and macro-marketing.
know the marketing functions and why marketing specialists—including intermediaries and collaborators—develop to perform them.
understand what a market-driven economy is and how it adjusts the macro-marketing system.
You should now be able to :
Know what marketing is and why you should learn about it.
Understand the difference between marketing and macro-marketing.
Know the marketing functions and why marketing specialists—including intermediaries and collaborators—develop to perform them.
Understand what a market-driven economy is and how it adjusts the macro-marketing system.

39. You should now be able to:
This slide refers to material on p. 4.
know what the marketing concept is—and how it should guide a firm or nonprofit organization.
understand what customer value is and why it is important to customer satisfaction.
now how social responsibility and marketing ethics relate to the marketing concept.
understand the important new terms.
You should now be able to:
Know what the marketing concept is—and how it should guide a firm or nonprofit organization.
Understand what customer value is and why it is important to customer satisfaction.
Know how social responsibility and marketing ethics relate to the marketing concept.
Understand the important new terms.

40. Key Terms production customer satisfaction innovation marketing
This slide refers to boldfaced terms appearing in Chapter 1.
production
customer satisfaction
innovation
marketing
pure subsistence economy
macro-marketing
economies of scale
universal functions of marketing
buying function
selling function
transporting function
storing function
standardization and grading
financing
risk taking
market information function
intermediary
collaborators
e-commerce
economic system
Summary Overview
These are additional key terms.
Key Issues
Production: making goods or performing services.
Customer satisfaction: the extent to which a firm fulfills a customer’s needs, desires, and expectations.
Innovation: the development and spread of new ideas, goods, and services.
Marketing: the performance of activities that seek to accomplish an organization’s objectives by anticipating customer or client needs and directing a flow of need satisfying goods and services from producer to customer or client.
Pure subsistence economy: when each family unit produces everything it consumes—there is no need to exchange goods and services and no marketing is involved.
Macro-marketing: a social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.
Economies of scale: as a company produces larger numbers of a particular product, the cost of each unit of the product goes down.
Universal functions of marketing: buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information.
Buying function: looking for and evaluating goods and services.
Selling function: promoting the product.
Transporting function: the movement of goods from one place to another.
Storing function: holding goods until customers need them.
Standardization and grading: sorting products according to size and quality.
Financing: the necessary cash and credit to produce, transport, store, promote, sell, and buy products.
Risk taking: bearing the uncertainties that are part of the marketing process.
Market information function: the collection, analysis, and distribution of all the information needed to plan, carry out, and control marketing activities, whether in the firm’s own neighborhood or in a market overseas.
Intermediary: someone who specializes in trade rather than production—plays a role in the exchange process.
Collaborators: firms that facilitate or provide one or more of the marketing functions other than buying or selling.
E-commerce: exchanges between individuals or organizations—and activities that facilitate these exchanges—based on applications of information technology.
Economic system: the way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in the society.

41. Key Terms command economy market-directed economy simple trade era
This slide refers to boldfaced terms appearing in Chapter 1.
command economy
market-directed economy
simple trade era
production era
sales era
marketing department era
marketing company era
marketing concept
production orientation
marketing orientation
triple bottom line
customer value
micro-macro dilemma
social responsibility
marketing ethics
Summary Overview
These are additional key terms.
Key Issues
Command economy: government officials decide what and how much is to be produced and distributed by whom, when, to whom, and why.
Market-directed economy: the individual decisions of the many producers and consumers make the macro-level decisions for the whole economy.
Simple trade era: a time when families traded or sold their “surplus” output to local distributors.
Production era: a time when a company focuses on production of a few specific products—perhaps because few of these products are available in the market.
Sales era: a time when a company emphasizes selling because of increased competition.
Marketing department era: a time when all marketing activities are brought under the control of one department to improve short-run policy planning and to try to integrate the firm’s activities.
Marketing company era: a time when, in addition to short-run marketing planning, marketing people develop long-range plans—sometimes five or more years ahead—and the whole company effort is guided by the marketing concept.
Marketing concept: means an organization aims all its efforts at satisfying its customers—at a profit.
Production orientation: when managers make whatever products are easy to produce and then try to sell them.
Marketing orientation: means trying to carry out the marketing concept (try to offer customers what they need).
Triple Bottom Line: measures an organization’s economic, social, and environmental outcomes
Customer value: the difference between the benefits a customer sees from a market offering and the costs of obtaining these benefits.
Micro-macro dilemma: what is “good” for some firms and consumers may not be good for society as a whole.
Social responsibility: a firm’s obligation to improve its positive effects on society and reduce its negative effects.
Marketing ethics: the moral standards that guide marketing decisions and actions.