Chapter 1 Marketing’s Value to Consumers, Firms, and Society

1. Chapter 1 Marketing’s Value to Consumers, Firms, and Society

2. 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 mico-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: • 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.

4. More than Selling or Advertising All Those Bicycles! More than Selling and Advertising The Management Job in Marketing(brand names, different kinds & types of bicycles with various features, price range),

5. Things a Firm Should Do in Producing a Bike Analyze Needs—various models of bicycles The The Predict Wants—types of bicycles/which consumers to satisfy marketingmix marketingmix Estimate Demand—# of riders/buying estimates Predict When—consumer will want to buy Determine Where—consumers will be Estimate Price—consumer will pay/profit Decide Promotion—kinds Estimate Competition--producers Provide Service--problems

6. Production vs. Marketing Marketing Makes sure right goods & services are produced • Production • Making Goods • Performing Services Creates Customer Satisfaction

7. Marketing Is Important to You! Important to every consumer! (people pay; buy products; advertising) Important to your job! (market themselves; career opportunities) Affects innovation and standard of living (stimulates research/innovation)

8. Marketing Stimulates New Ideas Courtesy of The Procter & Gamble Company.

9. Marketing Affects Innovation(Whirlpool Duet washer and dryer shows how marketing not only generates completely new products, but improvements to mature products—such as major appliances). © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

10. Macro View (meets objectives of society) • Social process • Matches supply with demand What Is Marketing? Micro View (anticipate customer need) and • Set of activities • Performed by individual organizations

11. Marketing Profit and Nonprofit More than Persuasion Key Characteristics Begins with Needs (not the production process) Builds Relationships (lead to repeat purchase) Doesn’t Go It Alone (or take the place of other business activities) Involves Exchanges (something of value to acquire something of value)

12. Building Customer Relationships It’s not just a laptop. It’s knowing each pilot’s aircraft is fit to fly before an urgent mission. (withstand drops, bangs, dust, and moisture)

13. Matches Producers and Consumers Macro-Marketing Emphasis is on Whole System Every Economy Needs It Key Characteristics

14. Marketing Bridges the Gap! Marketing Functions Producers Consumers Can Mass Production Satisfy a Society’s Consumption Needs? Economies of Scale - Lower Unit Cost UnitCost $ Output

15. Overcoming Spatial Separation overcome space, time, and information between producers and consumers

16. Marketing Facilitates Production and Consumption (cost/competitive prices---satisfying need/ability to pay) Production Sector Spatial Separation Separation in Time Discrepancies of Quantity Marketing needed to overcome discrepancies and separations Separation of Information Discrepancies of Assortment Separation in Values Separation of Ownership Consumption Sector

17. Universal Functions of Marketing Buying (looking and evaluating) Selling (Promoting) Transporting (moving Goods from A to B) Marketing Functions Market Information Risk Taking (assuming responsibility for uncertainties) Storing (Holding) Financing (providing Cash) Standardization & Grading (sorting by Size & quality)

18. Producers Wholesalers Other Specialists Transport Firms Retailers Ad Agencies ISP's Product Research Testing Firms Consumers Firms Who Performs Marketing Functions? Rather than production; some organizations specialize in trade (buying/selling); other organizations specialize in activities other than buying/selling.

19. How Decisions are Made in an Economic System Command Economy Market-Directed Economy • Adjusts itself • Price is value measure • Freedom of choice • Government’s role limited • Government officials decide • May work well if: • Simple economy • Little Variety • Adverse Conditions OR

20. Many Individual Consumers (heterogeneous demand) Model of a Market-Directed Macro-Marketing System Many Individual Producers (heterogeneous supply) Collaborators Intermediaries Perform universal marketing functions Monitoring by government(s) and public interest groups To overcome discrepancies and separation of producers and consumers To create value and direct flow of need-satisfying goods and services

21. Focus: Long-RunCustomer Satisfaction Marketing’s Role Has Changed Over Time Focus: Sell Surplus Simple Trade Era Production Era Focus: Increase Supply Sales Era Focus: Beat Competition Marketing Department Era Focus: Coordinate and Control Marketing Company Era

22. Customer satisfaction Total company effort Profit (or another measure of long-term success) as an objective The Marketing Concept The Marketing Concept

23. Creating Customer Satisfaction Prestige Brands Holdings, Inc.

24. 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

25. Adopting The Marketing Concept Now Flying To More Places In Europe.

26. The Marketing Concept and Customer Value(difference between benefits and costs of obtaining those benefits) Take Customer’s Point of View Customer value reflects benefits and costs Customer May Not Dwell On Value Costs Benefits Where Does Competition Fit? Customer Value Builds Relationships

27. Costs, Benefits, and Customer Value High Perceived superior value Benefits target customer sees in a firm’s goods and services Customer’s perceived fair value line Perceived inferior value Low Low High Costs target customer sees to obtain benefits

28. Interactive Exercise: Customer Value

29. 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

30. 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

31. Putting It All Together Total Company Effort to Satisfy Customers Total Company Effort to Satisfy Customers Offer Superior Customer Value Build Profitable Customer Relationships Increase Sales to Customers Attract Customers Retain Customers Satisfy Customers

32. The Marketing Concept Applies in Nonprofit Organizations Newcomers to Marketing Will “Satisfied Customers” Offer Support? Exits to accomplish a goal unrelated to traditional customer satisfaction; raise money from non-customer groups & spend it on other customers Characteristics of NonprofitOrganizations May Not Be Organized for Marketing The Bottom Line? may not have a traditional “bottom line” economic measure of success

33. Government Marketing

34. Marketing Concept Used by Nonprofit Services © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

35. Social responsibility concerns a firm's obligation to improve its positive effects on society and reduce its negative effects Marketing ethics are the moral standards that guide marketing decisions and actions Social Responsibility and Marketing Ethics

36. Group Needs Individual Needs The Marketing Concept, Social Responsibility, and Marketing Ethics Micro - Macro Dilemma Social Responsibility Should All Needs Be Satisfied? Do All Marketers Act Responsibly? What if Profits Suffer? The Marketing Concept Guides Ethics

37. Micro-macro dilemma: what is good for some producers and consumers may not be good for society as a whole. Examples: some consumers want handguns, but guns can be dangerous all terrain vehicles are fun for some people, but may result in injuries or damage to wilderness areas non-returnable soft drink bottles are convenient, but sometimes result in litter and dangerous broken glass along highways. repairing an old air-conditioning system might save the owner money, but might require continued use of ozone depleting fluorocarbons (used as coolant) Micro-Macro Dilemma

38. The Micro-Macro Dilemma How can you help protect the prairie and the penguin?

39. Social Responsibility © 2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

40. Study Question 1 . The marketing concept can be applied by: A.a nurses association.B.cosmetic manufacturers.C.nonprofit hospitals.D.national parks.E.all of the above.

41. Study Question 2 . Administrators at a university noted that they were 200 students short of their enrollment projection as the start of the school year approached. The president of the university, fearing a revenue shortage, told the director of admissions, "You need to use whatever means necessary to get enough students to meet the projection before classes start. Run ads in the newspaper, call high school guidance counselors, recruit from our pool of rejected applicants—whatever it takes." The university president is operating as though he was in the:  A. Simple trade era.B. Production era.C. Sales era.D. Marketing department era.E. Marketing company era.

42. Study Question 3 . If the family units on a South Pacific-island nation made all the products they consume, it would be a good example of: A. a pure subsistence economy.B. a market-directed economy.C. a micro-marketing system.D. a command economy.E. none of the above.

43. Study Question 4 . Managers who think of customers existing to buy the firm's output rather than of firms existing to serve customers and—more broadly—the needs of society, have a A. marketing orientation.B. production orientation.C. selling orientation.D. dynamic orientation.E. customer orientation.

44. Study Question 5 . Marketing could NOT take place without  A. intermediaries.B. collaborators.C. two or more parties who are willing to exchange something for something else.D. a high standard of living.E. all of the above.