2When we finish this lecture you should This slide relates to material on page 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 middlemen intermediaries and marketing 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: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 middlemen, intermediaries and marketing collaborators—develop to perform them.Understand what a market-driven economy is and how it adjusts the macro-marketing system.
3When we finish this lecture you should This slide relates to material on page 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.At the end of this presentation, you should:5. 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.
4Marketing—What’s It All About? This slide relates to material on p. 4.: Indicates place where slide “builds” to include the corresponding point.More than Selling or AdvertisingAll Those Bicycles!More than Selling and AdvertisingSummary OverviewMany people are surprised when they realize how many different ideas and activities are included in the term “marketing.”Key IssuesMost people think that marketing involves selling and advertising.Marketing is much more than selling or advertising.Think about a manufacturer of bicycles:many brand namesmany different bicyclesmany types of bicycles with various featuresprices range from low to very highDiscussion Question: Why are there so many varieties of bicycles?::
5Things a Firm Should Do in Producing a Bike This slide relates to material on pp. 4-5.: Indicates place where slide “builds” to include the corresponding point.Analyze NeedsPredict WantsAnalyze NeedsPredict WantsEstimate DemandEstimate DemandPredict WhenPredict WhenDetermine WhereSummary OverviewBy 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 IssuesAmong the different things a firm must do in producing a bicycle, it 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;Predict when consumers will want to 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 warranty service after a customer purchases a bike.Discussion Question: How many of these activities are marketing activities?Determine WhereEstimate PriceEstimate PriceDecide Promotion::Decide PromotionEstimate Competition::Estimate CompetitionProvide Service:::::
6Production vs. Marketing Creates Customer SatisfactionMarketingMakes sure right goods & services are producedThis slide relates to material on p. 5.: Indicates place where slide “builds” to include the corresponding point.ProductionMaking GoodsPerforming ServicesSummary OverviewProduction 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 IssuesProduction 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?::
7Marketing Is Important to You! This slide relates to material on pp. 5-6.: Indicates place where slide “builds” to include the corresponding point.Important to every consumer!Important to every consumer!Important to your job!Summary OverviewMarketing 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 IssuesMarketing 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.People have to market themselves.Marketing offers career opportunities.Organizations exist to satisfy customers; marketing contributes to success.Discussion Question: How would a knowledge of marketing benefit an accountant? A computer system designer? An attorney? A physician?Marketing also 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!Affects innovation andstandard of living!:::
8Marketing Stimulates New Ideas This slide relates to material on p. 6.Summary OverviewMarketing stimulates research, new ideas, and new innovations, such as replay TV.Key IssuesThis advertisement illustrates being proactive rather than reactive:searching for opportunities to meet the emerging needs.Technology is advancing very rapidly.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?
10Micro View Macro View What Is Marketing? Set of activities This slide relates to material on p.6 and p.8.: Indicates place where slide “builds” to include the corresponding point.Micro ViewSet of activitiesPerformed by individual organizationsMacro ViewSocial processMatches supply with demandandSummary OverviewMarketing 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 IssuesThe 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?::
11Managerial (Micro) Marketing This slide relates to material on pp. 6-7.: Indicates place where slide “builds” to include the corresponding point.Profit and NonprofitProfit and NonprofitMore than PersuasionMore than PersuasionKeyCharacteristicsFocus of Your TextBegins with NeedsBegins with NeedsSummary OverviewManagerial marketing is done by organizations; beyond that general definition, there are several specific aspects of marketing that marketers should consider.Key IssuesMarketing: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.The focus of the text is on management-oriented micro-marketing.Doesn’t Go It AloneBuilds RelationshipsBuilds RelationshipsDoesn’t Go It Alone::Involves ExchangesInvolves Exchanges:::::
12Building Customer Relationships This slide relates to material on p. 7.Summary OverviewIn this ad, SAP explains how important it is to maintain ongoing relationships with customers.Key IssuesSAP helps businesses keep their focus on customers:Meets customer expectationsFor the focus of a business planDiscussion Question: Can you think of other ways in which an organization can work to satisfy its customers?
13Emphasis on Whole System Emphasis on Whole System Macro-MarketingThis slide relates to material on pp. 8-9.: Indicates place where slide “builds” to include the corresponding point.Emphasis on Whole SystemEmphasis on Whole SystemKeyCharacteristicsEvery Economy Needs ItEvery Economy Needs ItSummary OverviewMacro-marketing’s emphasis is on how the whole marketing system works.Key IssuesEvery economy needs a macro-marketing system, because:variation exists among the types of producers that can meet needs;every consumer has a different set of needs;system must effectively match consumers and producers.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:
14Can Mass Production Satisfy a Society’s Consumption Needs? This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Economies of Scale Lower CostCost $Summary OverviewMarketing is needed to overcome the difference between maximizing production efficiency and the preferences people have for consuming products and services.Key IssuesEconomies of scale lower cost.As production increases, the cost of each good 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 “how” and “by whom” aspects of marketing vary.The universal marketing functions that must occur can be identified.OutputProducersConsumersMarketingFunctionsMarketing Bridges the Gap!::
15Overcoming Spatial Separation This slide relates to material on p. 9.Summary OverviewEffective 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. Big Vine helps to overcome this spatial separation.Key IssuesBig Vine connects users worldwide through the internet.Big Vine appeals to businesses who want to cut costs by bartering for goods and services.Other customers want to see a large selection at a local store--and the retail store might provide extra services.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?
16Universal Functions of Marketing This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.BuyingMarketingFunctionsBuyingSellingSellingMarketInformationTransportingTransportingSummary OverviewThe 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 IssuesBuying: 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 TakingRisk TakingStoringStoring:FinancingStandardization& Grading::FinancingStandardization& Grading:::::
17Who Performs Marketing Functions? This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.ProducersWholesalersOtherSpecialistsRetailersTransportFirmsISP'sProductTestingAd AgenciesResearchSummary OverviewIndividuals and organizations perform marketing functions. It is often easiest to think of producers, such as manufacturers of tangible products and providers of intangible services. However, there are many other marketing performers.Key IssuesConsumers:needs drive the marketing responses of many organizations;provide marketing information to organizations.Marketing specialists: such as middlemen intermediaries, execute tasks related to buying and selling.Marketing collaborators: firms that 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::
18How Decisions are Made in an Economic System This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.CommandEconomyMarket-Directed EconomyGovernment officials decideMay work well if:Simple economyLittle VarietyAdverse ConditionsAdjusts itselfPrice is value measureFreedom of choiceGovernment’s role limitedORSummary OverviewEvery society needs an economic system: the way an economy organizes to use scarce resources in production and consumption. Depending upon the type of economic system, decisions about resource allocation are made differently.Key IssuesCommand economy (also called “planned” economies):government officials make decisions about production and distribution;can work well in simple economies or 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.Discussion Question: What are examples of things government officials compel consumers to buy, even in a largely market-directed economy?::::::::
19Marketing’s Role Has Changed Over Time This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Increase SupplySell SurplusSimple Trade EraFocus:Production EraSell SurplusFocus:Simple Trade EraIncrease SupplyBeat CompetitionProduction EraFocus:Sales EraSummary OverviewAs marketing has evolved, its focus has changed from a focus on products to a focus on customer needs. An important point to remember is that some managers have not made it all the way to the final stages of marketing evolution.Key IssuesSimple trade era--families trade or sell their output to local middlemen.Production era--company focuses on production of a few specific products:no ceiling on demand for the firm's products;focus on producing more efficiently, selling what it's easy to produce.Sales era--competition increases:finite demand for firm's products and services;surplus of products for sale;focus on pushing products via promotion, beating competition.Marketing department era--emphasis on coordinating marketing activities in a marketing department.Marketing company era--marketing is an overall philosophy:everyone in the organization is involved in increasing customer satisfaction;short-run and long-term planning;guided by the marketing concept.Discussion Question: Many companies profess to be customer-oriented, but their customer service still leaves a lot to be desired. Why?Sales EraBeat CompetitionCoordinate and ControlFocus:Marketing Department Era:Marketing Department EraCoordinate and ControlMarketing Company EraLong-RunCustomer SatisfactionFocus:::::
20The Marketing Concept (Exhibit 1-3) This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Customer SatisfactionTotal Company EffortThe Marketing ConceptSummary OverviewThe cornerstone of the marketing-oriented company is the marketing concept.Key IssuesProduction 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 goalDiscussion Question: What can managers do to motivate everyone in the organization to satisfy customer needs?requires that the company be profitable.:Profit::
21Creating Customer Satisfaction Title hereCreating Customer SatisfactionThis slide relates to material on pSummary OverviewThis ad from Benadryl demonstrates that the firm attempts to create customer satisfaction by giving customers what they need—often ease and convenience.Key IssuesBenadryl: high quality, expensive.Not every consumer will be interested in paying for the brand name or ease of use.Benadryl meets the needs of people who are willing to pay more.Benadryl has responded to the need for an easier way to deliver its medicine.The company has also provided easy dosing for its customers’ children.
22Checking your knowledge This slide relates to material on ppA 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?Customer needTotal company effortCustomer satisfactionMarketing orientationProduct orientationANSWER: BChecking your knowledge (answer explanation)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 associates asked the customers to return later, they were going against the company memo that stated personnel should stay after closing to assist customer. The main problem in this situation then is “total company effort.”
23Adopting the Concept of Marketing This slide relates to material on ppSummary OverviewAdoption of the marketing concept has varied by type of organization, but the concept continues to penetrate organizations of all types.Key IssuesConsumer product companies were first to accept the marketing concept.Service industries are catching up.FedEx is an example of a service firm adopting the marketing concept.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 FedEx’s ad (serving more European destinations), what challenges will it face in continuing to meet customer needs?
24The Marketing Concept and Customer Value This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Take Customer’s Point of ViewCustomer May Not Dwell On ValueTake Customer’s Point of ViewCustomer May Not Dwell On ValueWhere Does Competition Fit?Summary OverviewTo better understand what it takes to satisfy a customer, it’s useful to take the customer’s point of view.Key IssuesCustomer 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?Where does competition fit?A firm that offers superior customer value is likely to win customers.Customer value builds relationships.Understanding customer value is especially important when products and services are very similar.:Where Does Competition Fit?Customer Value Builds RelationshipsCostsBenefits:::
26Checking your knowledge This slide relates to material on ppWhich of the following statements, made by marketing managers,illustrates an understanding of the concept of customer value?“It’s more important to acquire new customers than to retain old ones.”“The only time it’s really necessary to demonstrate superior customer value is right before the actual sale.”“My main concern is with meeting this month’s sales quota—I’ll worry about relationship building later.”“I might think my product is a good value, but what really counts is if the customer thinks it’s a good value.”“Customer value really boils down to which product is the least expensive.”ANSWER: DChecking your knowledge (answer explanation)A manager who adopts the marketing concept sees customer satisfaction as the path to profits (p.18). Selection ‘D’ is the best option because it is the only option that clearly identifies the importance of the customer’s point of view.
27Checking your knowledge This slide relates to material on ppA 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?Reduce price.Increase technical support for customers.Increase warranty coverage.Offer free shipping.Any of the above, depending on the needs of the target market.ANSWER: EChecking your knowledge (answer explanation)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 (p.18). In the above question, selection ‘E’ is the best option because all of the options (A-D) are possible ways to increase value.
28Putting It All Together (Exhibit 1-6) This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Offer Superior Customer ValueTotal Company Effort to Satisfy CustomersOffer Superior Customer ValueTotal Company Effort to Satisfy CustomersAttract New CustomersSatisfyCustomersSatisfyCustomersRetainAttract New CustomersSummary OverviewThis model summarizes the important ideas presented to this point.Key IssuesIn 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.As the firm maintains this profitable relationship, the profit gives the firm the incentive and the resources to offer superior customer value.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!::Build Profitable Customer Relationships::RetainCustomers
29The Marketing Concept Applies in Nonprofit Organizations This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Newcomers to MarketingCharacteristics of Nonprofit OrganizationsNewcomers to MarketingSupport and “Satisfied Customers”Support and “Satisfied Customers”Summary OverviewThe marketing concept is also applicable to nonprofit organizations such as museums, libraries, charities, and political parties.Key IssuesNonprofit 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.Discussion Question: What is the “profit” for a political party? A library? A museum? A symphony orchestra? A blood bank?Nonprofit organizations may not be organized for marketing.The marketing concept provides a focus on what is really needed.Marketing Concept Provides FocusThe Bottom Line?The Bottom Line?::May Not Be Organized for MarketingMay Not Be Organized for Marketing:::
30Government Marketing This slide relates to material on pp. 20-21. Summary OverviewAdoption of the marketing concept has brought focus to the U.S. Postal Service, a government agency, in the face of increased competition from more traditional profit-oriented delivery and transportation service firms.Key IssuesThe United States Postal Service is promoting its services:to firms that are trying to target personalized communications;to help develop closer customer relationships.Discussion Question: What obstacles will the Postal Service have to overcome in persuading businesses to use the Postal Service as the vehicle for direct mail promotional campaigns? Are these obstacles related to the differences between profit and nonprofit organizations?
32The Marketing Concept, Social Responsibility, and Marketing Ethics This slide relates to material on pp: Indicates place where slide “builds” to include the corresponding point.Micro - MacroDilemmaGroup NeedsIndividual NeedsSocial ResponsibilitySocial ResponsibilityShould All Needs Be Satisfied?Summary OverviewOrganizations 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 IssuesSocial responsibility--an obligation to improve the organization’s positive effects on society.Businesses must strive to reach acceptable balances.“Should all 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.“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.Should All Needs Be Satisfied?What if Profits Suffer?::::The Marketing Concept Guides Ethics:
33The Micro-Macro Dilemma Title hereThe Micro-Macro DilemmaThis slide relates to material on ppSummary OverviewWhat is good for some firms and consumers may not be good for society as a whole.Key IssuesEnvironmental 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?While society might benefit from having more open spaces, this could slow economic growth. It may also harm individuals who want to use their land as they see fit.These are not easy questions to resolve.
35You now Know what marketing is and why you should learn about it. This slide refers to material on page 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 middlemen intermediaries and marketing collaborators—develop to perform them.Understand what a market-driven economy is and how it adjusts the macro-marketing system.You should now :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 middlemen, intermediaries and marketing collaborators-develop to perform them.Understand what a market-driven economy is and how is adjusts the macro-marketing system.
36You nowThis slide refers to material on page 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.You should now:Know what the marketing concept is--and how is 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.
37Key Terms Production Buying Customer satisfaction Selling Transporting This slide refers to boldfaced terms appearing in Chapter 1.ProductionCustomer satisfactionInnovationMarketingPure subsistence economyMacro-marketingEconomies of scaleUniversal functions of marketingBuyingSellingTransportingStoringStandardization and gradingFinancingRisk-takingMarket informationIntermediary (or middleman)Summary OverviewThese are key terms you should be familiar with based upon the material in this presentation.Key IssuesProduction: 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 and 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 of these products goes down.Universal functions of marketing: buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information.Buying: looking for and evaluating goods and services.Selling: promoting the product (includes the use of personal selling, advertising, and other direct and mass selling methods) .Transporting: the movement of goods from one place to another.Storing: holding goods until customers need them.Standardization and grading: sorting products according to size and quality.Financing: provides 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: 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 (or middleman): someone who specializes in trade rather than production-plays a role in the exchange process.
38Key Terms Marketing company era Collaborators Marketing concept This slide refers to boldfaced terms appearing in Chapter 1.Marketing company eraMarketing conceptProduction orientationMarketing orientationCustomer valueMicro-macro dilemmaSocial responsibilityMarketing ethicsCollaboratorsE-commerceEconomic systemCommand economyMarket-directed economySimple trade eraProduction eraSales eraMarketing department eraSummary OverviewThese are additional key terms.Key IssuesCollaborators: 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 application 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.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 middlemen.Production era: a time when a company focuses on production of a few specific product—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 product and then try to sell them.Marketing orientation: means trying to carry out the marketing concept (try to offer customers what they need).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.