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Chapter 1 An Overview of Contemporary Marketing. Jason C. H. Chen, Ph.D. Professor School of Business Administration Gonzaga University Spokane, WA 99223 [email protected] OPENING VIGNETTE. WWW.AMAZON.COM What is the basis for Amazon.com’s initial success?

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Chapter 1 an overview of contemporary marketing l.jpg

Chapter 1An Overview ofContemporary Marketing

Jason C. H. Chen, Ph.D.

Professor

School of Business Administration

Gonzaga University

Spokane, WA 99223

[email protected]


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OPENING VIGNETTE

WWW.AMAZON.COM

  • What is the basis for Amazon.com’s initial success?

  • What are some of the marketing services used by Amazon.com to build their customer base?



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MARKETING

WANTS

Customer Satisfaction

NEEDS


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Customer Satisfaction

  • Customer satisfaction is the extent to which a firm fulfills a consumer’s needs, desires, and expectations

  • As some needs are met, others may become more important

  • Expectations may change based on experiences

    • Satisfying experiences may lead to increasing expectations

    • Disappointing experiences may reduce expectations

    • Expectations may be realistic or unrealistic


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Types of Utility and How They Are Provided

Provided by marketing

Provided by production with

guidance of marketing

Time

Form

Utility:

Value that comes

From satisfying

Human needs

Place

Possession

Task



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Marketing and Beyond

Marketing is the business function that deals with customers’ unfulfilled needs and wants. The role of marketing in organizations is to identify and measure customer needs and wants, determine which target markets the organization can serve, decide on the appropriate products and services to serve these markets, and determine the optimal methods of pricing, promoting, and distributing the products or services. Successful organizations are those that integrate the objectives and resources of the organization with the needs and opportunities in the marketplace.


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Marketing and Beyond

In today’s competitive environment, market-oriented thinking is a necessity. A successful implementation of the marketing concept requires knowledge of the internal (company) and external (competitors and customers) environments, and how they are influenced by marketing mix variables -- product, price, distribution, and promotion.


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What is Marketing?

“The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organization goals.”

American Marketing Association


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Marketing

“Human activities of satisfying needs and wants through the exchange processes.”

Another Definition


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What is Marketing

  • MICRO-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 producers to customer or client

  • 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

  • AMA COMMITTEE DEFINITION:

    • marketing is the process of planning and executing conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives


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Ranges of Applications of Marketing

Service

Physical

Good

PRODUCT


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The Importance of Marketing

Marketing is Valuable to a Variety of Organizations:

  • Corporate For-Profit

  • Nonprofit

  • The Military

  • Religious & Ethnic Groups

  • Small Firms

  • Individual Marketers


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Marketing as an Organizational Philosophy

Can be Stated Formally

as a Mission Statement

Can be Established Informally through

The Communications and Actions

of Top Management

Indicates the Types of Activities

the Organization Values


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Three Marketing Philosophies

  • Production Philosophy

  • Selling Philosophy

  • Marketing Philosophy


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Three Marketing Philosophies

  • Production Philosophy

    A business philosophy that emphasizes the production function. An organization following such a philosophy values activities related to improving production efficiency or producing sophisticated products and services.

The guiding belief is “the best-produced products can be easily marketed.”


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Three Marketing Philosophies

  • Selling Philosophy

    A business philosophy that emphasizes the selling function. Organizations following such a philosophy focus on the selling process to address changes in market conditions.

The guiding belief is “any product can be old, if enough selling effort is given to it.”


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Three Marketing Philosophies

  • Marketing Philosophy

    A business philosophy that emphasizes satisfying the needs of the customer. Organizations following such a philosophy have organizational wide commitment to satisfying the needs of the customer.

The guiding belief is “long term success depends on satisfying the needs of the customer.”


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The Marketing Concept

  • The purpose of an organization aims all its efforts at satisfying its customers – at a profit.

  • Satisfying needs requires integrated and coordinated efforts through out the organization.

  • Organizations should focus on long-term success.


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Organizations with a Marketing Orientation Carry Out the Marketing Concept

Customer satisfaction

Total company effort

The

marketing

concept

Profit (or another

measure of long-term

success) as an

objective


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Building Customer Equity

Customer Equity is the Financial Value of a Firm’s Customer Relationships and Consists Of:

  • Profits from first-time customers, and,

  • Expected profits from all future sales.


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Three Ways to Increase Customer Equity

  • Decrease the cost of acquiring new customers.

  • Retain more customers longer.

  • Increase profits from retained customers by selling them more at higher margins and with lower marketing expenses.

IT ROLE?


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Building Customer Equity Integrates:

Short-term

Orientations

New

Customers

Long-term

Orientations

Existing

Customers


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Exhibit 1-1: Customer equity relationships (process)

Organizational

strategy &

execution

Providing

exceptional

customer

value

Achieving

completely

satisfied

customers

Earning

high

customer

loyalty

Increasing

sales growth

&

profits

Building

customer

equity


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3 Keys to Building Customer Equity

  • High loyalty levels lead to increased sales growth, higher profitability & higher customer equity.

  • Completely delighted & satisfied customers are best for earning customer loyalty.

  • Exceptional value is needed to delight & completely satisfy customers.

Customer equity relationships (Exhibit 1-1)


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Customer Value

The Calculation:

The revenue stream from repeat purchases

+ The revenue stream from referrals

= The Lifetime Value of a Loyal Customer

What is customer value?


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Marketing as a Societal Process

  • Defined as “a process that facilitates the flow of goods and services from producers to consumers in a society.”

Consumers of

Goods & Services

Producers of

Goods & Services


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Marketing as a Societal Process

  • Issues to Consider:

    • What institutions are involved in the system?

    • What activities do these institutions perform?

    • How effective is the system at satisfying customer needs?

    • How efficiently can the system provides desired goods and services?


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Marketing as a Societal Process

Consumer choices are

the invisible hand that

guides the economy

Government planners

decide what consumers

should get

  • A society’s marketing system is closely related to its political and economic systems.

Marketing-Directed

Economic Systems

Planned

Economic Systems


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Marketing Concerns in Eastern Europe

How to:

  • Become more market-oriented and consumer- responsive?

  • Improve product quality?

  • Change product design, assortment, finishing & packaging?

  • How to increase communications efforts?

  • Increase merchandising efforts?

  • Use competitive pricing?

  • Institute promotional pricing & price discounts


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Marketing is a Process Consisting Of:

1.Marketing Exchanges

2.Marketing Strategies

3.Marketing Activities

4.Marketing Positions

5.Marketing Institutions


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EXCHANGE is the “transfer of something tangible or intangible, actual or symbolic between 2 or more social actors.”

Transactions in marketing exchanges can use:

Money

Barter

Time & Money

Votes

Marketing Exchanges

Buyer’s

Exchange

Marketer’s Goods

Or Services


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Central Markets Help Exchange

B. Only five exchanges are required when a middleman (intermediary) in a central market is used

A. Ten exchanges are required when

a central market is not used

Pots

Pots

Hats

Baskets

Central

Market

middleman

Hats

Baskets

Hoes

Knives

Hoes

Knives


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Marketing Strategies/Decisions

Select a

Target Market

Develop a

Marketing Mix

To Satisfy

Market Needs



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A Marketing Strategy – showing the 4 P’s of a

Marketing Mix

Product

Place

Price

Promotion

C


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Exhibit 1-5: Marketing Mix Decisions

( p.11)

Product Decisions

Marketing

Mix

Integrated Marketing

Communications Decisions

Price Decisions

Distribution Decisions


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Exhibit 1-6: Marketing strategies

Maybelline Mary Kay Clinique

Target market

Product

Price

Distribution

Marketing communication

Low End

Cosmetics

Low

Mass Merchandise

Advertising through mass media

Middle

Cosmetics

Moderate

Direct to consumers

Personal selling to consumers in home

High End

Cosmetics

High

Upscale department stores

Targeted advertising and personal selling to consumers in stores


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Marketing Activities

Producers

End Users

Universal Functions of Marketing

Buying

Selling

Transporting

Storing

Financing

Risk Taking

Standardizing &

Grading

Obtaining Marketing

Information


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Marketing Positions

  • Marketing Manager

  • Product Manager

  • Advertising Manager

  • Distribution Manager

  • Purchasing Manager

  • Marketing Research Manager

  • Public Relations Manager

  • Customer Service Manager

  • Sales Manager

(Exhibit 1-8, p.14)


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Information

Information

Money (income)

Information

Model of a Market-Directed Economy

CONSUMERS

Goods and Services

PRODUCT-

MARKET

Information

Information

Money (expenditures)

GOVERNMENT

Money (income)

Production resources

Information

Information

Information

RESOURCE

MARKET

Money (expenditures)

PRODUCERS

Information

Primary direction

Secondary direction of feedback


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Model of a Market-Directed Macro-Marketing System

Many Individual Producers

(heterogeneous supply)

Middlemen

intermediaries

Facilitators

Perform universal marketing functions

To overcome discrepancies and

separation of production and consumers

Monitoring by government(s)

and public interest groups

Monitoring by government(s)

and public interest group

To create utility and direct flow of

need-satisfying goods and services

Many Individual Consumers

(heterogeneous demand)


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A Contemporary Marketing Framework

Marketing

Environment

Entrepreneurship

Marketing

Global

Ethics

Productivity

Customer

Value

Relationship

Technology

Marketing

Environment


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Exhibit 1-10: Key marketing perspectives

Marketing perspective

Definition

Viewing the world as the potential marketplace to include identifying and responding both to market opportunities around the world and to different cultural groups within each market.

GLOBAL

Building partnerships with firms outside the organization and encouraging teamwork among different functions within the organization in order to develop long-term customer relationships.

RELATIONSHIP

Addressing the morality of marketing decisions and practicing social responsibility to include ecological considerations.

ETHICS

Constantly looking for ways to give customers more for less. Trying to get the best return for each marketing dollar spent. Translating new and emerging technologies into successful products and services, and using technology to improve marketing practice.

CUSTOMER VALUE PRODUCTIVITY TECHNOLOGY

Focusing on information, on risk taking, and on being proactive in marketing efforts.

ENTREPRENEURSHIP


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E-Commerce

  • E-commerce refers to exchanges between individuals or organizations—and activities that facilitate those exchanges—based on applications of information technology.

  • Innovations in e-commerce are making many firms and markets more effective (work better) and/or more efficient (less costly)

  • Examples:

    • Websites the facilitate promotion, buying and selling

    • Shared databases that allow buyers and sellers do a better job in planning inventory requirements

    • Online Auction sites to match supply and demand

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing


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Focus on e-Business Applications

Knowledge Management/Business Intelligence

E-Commerce

E-Customer Relationship

Procurement

Network

Trading

Network

E-Channel

Management

Businesses & Consumers

Businesses

M:1

M:N

1:N

E-Portal Management

E-Services

SCM/ERP/Legacy Appls


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