welcome to the world of marketing: create and deliver value chapter one
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Welcome to the World Welcome to the World of Marketing:of Marketing:
Create and Deliver ValueCreate and Deliver Value
Chapter OneChapter One
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-2
Chapter ObjectivesChapter Objectives
Understand who marketers are, where they work, Understand who marketers are, where they work, and marketing’s role in the firmand marketing’s role in the firm
Explain what marketing is and how it provides value Explain what marketing is and how it provides value to everyone involved in the marketing processto everyone involved in the marketing process
Explain the evolution of the marketing conceptExplain the evolution of the marketing concept Understand the range of services and goods that Understand the range of services and goods that
organizations marketorganizations market Understand value from the perspectives of Understand value from the perspectives of
customers, producers, and societycustomers, producers, and society Explain the basics of market planning and the Explain the basics of market planning and the
marketing mix tools we use in the marketing marketing mix tools we use in the marketing processprocess
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-3
Welcome to “Brand You”Welcome to “Brand You”
You are a product You are a product and have “market and have “market value” as a personvalue” as a person
You “position” You “position” yourself for a job yourself for a job interview in a interview in a number of waysnumber of ways
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-4
The Who and Where of The Who and Where of MarketingMarketing
Marketers:Marketers:
• Come from many different Come from many different backgroundsbackgrounds
• Work in many locationsWork in many locations
• Maintain cross-functional Maintain cross-functional relationships within the relationships within the firmfirm
• Enjoy exciting, diverse Enjoy exciting, diverse careerscareers
Get the scoop on marketing salaries! Visit the Occupational Outlook Handbook!
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-5
The Value of MarketingThe Value of Marketing
Definition of Marketing Definition of Marketing (AMA, 2007)(AMA, 2007)• Marketing is the Marketing is the
activity, set of activity, set of institutions, and institutions, and processes for creating, processes for creating, communicating, communicating, delivering and delivering and exchanging offerings exchanging offerings that have value for that have value for customers, clients, customers, clients, partners, and society at partners, and society at large.large.
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-6
Marketing Meets NeedsMarketing Meets Needs
Marketing meets the needs of diverse Marketing meets the needs of diverse stakeholdersstakeholders
• Stakeholders are buyers, sellers, Stakeholders are buyers, sellers, investors, community residents, investors, community residents, citizens, consumerscitizens, consumers
Marketing conceptMarketing concept
• Identifying and satisfying consumer Identifying and satisfying consumer needs to ensure long-term profitabilityneeds to ensure long-term profitability
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-7
Needs, Wants, and Benefits
Needs• Can be physical or psychological
Benefits• Outcome sought by consumer that satisfies
need or want and motivates buying behavior Want
• Desire to satisfy needs in specific ways Demand
• Customers’ desires for products coupled with the resources needed to obtain them
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-8
Marketing Meets NeedsMarketing Meets Needs
The modern marketplace The modern marketplace
• Takes many forms, including a mall, eBay Takes many forms, including a mall, eBay auction, e-commerce Web siteauction, e-commerce Web site
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-9
Marketing Creates UtilityMarketing Creates Utility
Utility: Utility: The sum of the benefits we receive The sum of the benefits we receive from using a product/servicefrom using a product/service
• Form utilityForm utility
• Place utilityPlace utility
• Time utilityTime utility
• Possession utilityPossession utility
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-10
Place UtilityPlace Utility
Rent the Runway is a Rent the Runway is a new service that rents new service that rents high-end dresses high-end dresses from fashion from fashion designers and rents designers and rents them at a one-tenth of them at a one-tenth of the cost of buying the the cost of buying the same garment in the same garment in the store.store.
Rent the Runway
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-11
Marketing and ExchangeMarketing and Exchange
An exchange occurs when something An exchange occurs when something is obtained for something else in is obtained for something else in return, like cash for goods or servicesreturn, like cash for goods or services
• Buyer receives an object, service, or Buyer receives an object, service, or idea that satisfies a needidea that satisfies a need
• Seller receives something of equivalent Seller receives something of equivalent valuevalue
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-12
The Evolution of Marketing The Evolution of Marketing
The Production EraThe Production Era• Production orientationProduction orientation
The Sales EraThe Sales Era• Selling orientationSelling orientation
The Relationship EraThe Relationship Era• Consumer orientationConsumer orientation
• Total quality managementTotal quality management The Triple Bottom Line Era The Triple Bottom Line Era
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-13
The Production EraThe Production Era
Dominated by production orientation:Dominated by production orientation:
• A management philosophy that A management philosophy that emphasizes the most efficient ways to emphasizes the most efficient ways to produce and distribute productsproduce and distribute products
Marketing played an insignificant roleMarketing played an insignificant role Henry Ford’s Model T and Ivory soap Henry Ford’s Model T and Ivory soap
are examples of products that were are examples of products that were created under a production orientationcreated under a production orientation
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-14
The Selling EraThe Selling Era
When product availability exceeds When product availability exceeds demand, businesses may focus demand, businesses may focus on a one-time sales of goods on a one-time sales of goods rather than repeat businessrather than repeat business
Dominated by selling orientation:Dominated by selling orientation:
• Managerial view of marketing as a Managerial view of marketing as a sales function, or a way to move sales function, or a way to move products out of warehouses products out of warehouses to reduce inventoryto reduce inventory
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-15
The Relationship EraThe Relationship Era
Focused on a customer orientation:Focused on a customer orientation:
• A management philosophy that A management philosophy that emphasizes satisfying customers’ emphasizes satisfying customers’ needs and wantsneeds and wants
Marketing becomes more important in Marketing becomes more important in the firmthe firm
Total Quality Management (TQM) is Total Quality Management (TQM) is widely followed in the marketing widely followed in the marketing communitycommunity
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-16
The Triple Bottom Line Era: The Triple Bottom Line Era: Make Money Make Money andand a a
ContributionContribution Focuses on building Focuses on building
long-term bonds with long-term bonds with customerscustomers
• Triple orientation Triple orientation seeks to maximize seeks to maximize the financial, social, the financial, social, and environmental and environmental bottom linesbottom lines
This ad focuses on the environmental bottom line
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-17
The Triple Bottom Line Era: The Triple Bottom Line Era: Make Money Make Money andand a a
ContributionContribution Marketing uses customer relationship Marketing uses customer relationship
management (CRM)management (CRM)
• CRM involves systematically tracking CRM involves systematically tracking consumers’ needs in ways that also benefit consumers’ needs in ways that also benefit society and delivers profit to the firmsociety and delivers profit to the firm
Social marketing concept: Social marketing concept:
• Management philosophy that marketers must Management philosophy that marketers must satisfy customers’ needs in ways that also satisfy customers’ needs in ways that also benefit society and deliver value to the firm benefit society and deliver value to the firm
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-18
The Triple Bottom Line Era: The Triple Bottom Line Era: Make Money Make Money andand a a
ContributionContribution Sustainability: Sustainability:
• Creating products that Creating products that meet present needs meet present needs and ensuring that and ensuring that future generations can future generations can have their needs methave their needs met
• Green marketing is one Green marketing is one type of sustainable type of sustainable business practicebusiness practice
ROI measures valueROI measures value
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-19
Green Marketing in ActionGreen Marketing in Action
Green marketing is Green marketing is practiced by many practiced by many forward-thinking forward-thinking firms today. firms today.
Visit Ads of the World to see examples of Volkswagen’s green marketing and sustainable business practices
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-20
What Can Be Marketed?What Can Be Marketed?
From “serious” goods and services to From “serious” goods and services to fun thingsfun things
• Products mirror Products mirror changes in changes in popular culture popular culture
• Marketing Marketing messages often messages often communicate communicate mythsmyths
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-21
What Can Be Marketed?What Can Be Marketed?
Product: any good, service, or ideaProduct: any good, service, or idea
• Consumer goods/servicesConsumer goods/services
• Business-to-business goods/servicesBusiness-to-business goods/services
• Not-for-profit marketingNot-for-profit marketing
• Idea, place, and Idea, place, and people marketingpeople marketing
Linked inLinked in
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-22
The Marketing of ValueThe Marketing of Value
Value: Value: • The benefits a customer receives from The benefits a customer receives from
buying a good or servicebuying a good or service Marketing communicates the value Marketing communicates the value
proposition: proposition: • A marketplace offering that fairly and A marketplace offering that fairly and
accurately sums up the value that the accurately sums up the value that the customer will realize if he/she customer will realize if he/she purchases product/servicepurchases product/service
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-23
Value from Value from the Customer’s Perspectivethe Customer’s Perspective
Customer perspective:Customer perspective:• Value is the ratio of costs Value is the ratio of costs (price)(price) to to
benefits benefits (utilities)(utilities)
• Value proposition includes the whole Value proposition includes the whole bundle of benefits the firm promises to bundle of benefits the firm promises to deliver, not just the benefits of the deliver, not just the benefits of the product itselfproduct itself
DiscussionDiscussion
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-24
Value from Value from the Seller’s Perspectivethe Seller’s Perspective
Value for the seller takes many formsValue for the seller takes many forms Seller’s should build value by Seller’s should build value by
marketing with customers, not to themmarketing with customers, not to them
• Partnering with customers via Partnering with customers via brandfestsbrandfests
Customers have value – it is more Customers have value – it is more expensive to attract new customers expensive to attract new customers than to retain current onesthan to retain current ones
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-25
Lifetime value of a customerLifetime value of a customer
• Calculating the projected profit from a Calculating the projected profit from a particular customer allows a firm particular customer allows a firm
Creating a competitive advantageCreating a competitive advantage
• Identification of a distinctive competencyIdentification of a distinctive competency
• Turning distinctive competencies into Turning distinctive competencies into differential benefitsdifferential benefitsExamples??Examples??
Value from Value from the Seller’s Perspectivethe Seller’s Perspective
PandoraVideo
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-26
It’s DebatableIt’s DebatableClass Discussion QuestionClass Discussion Question
Does this product provide a differential benefit that is important to consumers? Are the benefits provided to consumers unique and superior to those offered by the competition, and if so, is this competitive advantage sustainable?
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-27
Figure 1.1Figure 1.1A Value Chain for the Apple A Value Chain for the Apple
iPodiPod
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Figure 1.2Figure 1.2Steps in the Value ChainSteps in the Value Chain
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Table 1.3Table 1.3An Example of a Customer An Example of a Customer
Service ScorecardService Scorecard
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Consumer-Generated Value:Consumer-Generated Value:From Audience to CommunityFrom Audience to Community
Everyday people are generating value Everyday people are generating value instead of just buying it instead of just buying it http://www.crashthesuperbowl.comhttp://www.crashthesuperbowl.com
Social networking continues to grow Social networking continues to grow and leverages Web 2.0and leverages Web 2.0
Open source business models are on Open source business models are on the rise.the rise. http://www.moodle.comhttp://www.moodle.com
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-31
Value from Society’s Value from Society’s PerspectivePerspective
Marketing transactions add or subtract Marketing transactions add or subtract value from societyvalue from society
• Stressing socially responsible and Stressing socially responsible and ethical decisions is good businessethical decisions is good business
• Marketing is often criticizedMarketing is often criticized
• Marketing’s dark sideMarketing’s dark side
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-32
Marketing Is a ProcessMarketing Is a Process
Marketing planning is a major portion Marketing planning is a major portion of the process and involves:of the process and involves:
• Analyzing the marketing environment Analyzing the marketing environment
• Developing a marketing planDeveloping a marketing plan
• Deciding on a market segmentDeciding on a market segment
• Choosing the marketing mixChoosing the marketing mix——product, price, promotion, and placeproduct, price, promotion, and place
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-33
Figure 1.3Figure 1.3The Marketing MixThe Marketing Mix
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-34
Real People, Real Choices: Real People, Real Choices: Decision Made at PandoraDecision Made at Pandora
Joe chose option 2Joe chose option 2• Implementation:Implementation: Pandora chose personal Pandora chose personal
communication to build awareness. Town communication to build awareness. Town halls were led by the firm’s founder; email, halls were led by the firm’s founder; email, blogs, tweets, and Facebook were also blogs, tweets, and Facebook were also instrumental. Listeners wore branded instrumental. Listeners wore branded merchandise. Service was made available merchandise. Service was made available on as many devices as possible on as many devices as possible
• Measuring Success:Measuring Success: As of mid-2010, As of mid-2010, Pandora boasted 50 million listenersPandora boasted 50 million listeners
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-35
Keeping It Real:Keeping It Real: Fast-Forward to Fast-Forward to Next Class Decision Time at First FlavorNext Class Decision Time at First Flavor
Meet Jay of First FlavorMeet Jay of First Flavor First Flavor markets First Flavor markets edible film stripsedible film strips
that allow users to taste flavors. Other that allow users to taste flavors. Other potential uses of film strips beyond potential uses of film strips beyond sampling are being investigated sampling are being investigated
The decision to be made: The decision to be made: Whether or not to diversify into new Whether or not to diversify into new product categoriesproduct categories
© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-36
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United
States of America.
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