Welcome to the World of Marketing: Create and Deliver Value Chapter One © 2012 Pearson Education, Inc. publishing as Prentice-Hall.

1-2 Chapter Objectives  Understand who marketers are, where they work, and marketing’s role in the firm  Explain what marketing is and how it provides value to everyone involved in the marketing process  Explain the evolution of the marketing concept  Understand the range of services and goods that organizations market  Understand value from the perspectives of customers, producers, and society  Explain the basics of market planning and the marketing mix tools we use in the marketing process

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-3 Real People, Real Choices: Decision Time at Pandora.  Which option should be pursued? Option 1: Launch an ad campaign on radio stations, in music magazines, and at record stores Option 1: Launch an ad campaign on radio stations, in music magazines, and at record stores Option 2: Build buzz about Pandora through word of mouth Option 2: Build buzz about Pandora through word of mouth Option 3: Sell the service to a large chain of record stores, a music magazine, or even a record label Option 3: Sell the service to a large chain of record stores, a music magazine, or even a record label

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-4 Welcome to “Brand You”  You are a product and have “market value” as a person  You “position” yourself for a job interview in a number of ways

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-5 The Who and Where of Marketing  Marketers: Come from many different backgrounds Come from many different backgrounds Work in a variety of locations Work in a variety of locations Maintain cross-functional relationships within the firm Maintain cross-functional relationships within the firm Enjoy exciting, diverse careers Enjoy exciting, diverse careers

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-6 The Value of Marketing  Definition of Marketing (AMA, 2007) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-7 Marketing Meets Needs  Marketing meets the needs of diverse stakeholders  Successful firms practice the marketing concept  Needs, wants, and benefits  Demands and markets  The modern marketplace

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-8 Marketing is about Creating Utility  Utility: The sum of the benefits we receive from using a product/service Form utility Form utility Place utility Place utility Time utility Time utility Possession utility Possession utility

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-9 Marketing is about Exchange Relationships  An exchange occurs when something is obtained for something else in return—like cash for goods or services Buyer receives a product (an object, service, or idea that satisfies a need) Buyer receives a product (an object, service, or idea that satisfies a need) Seller receives something of equivalent value Seller receives something of equivalent value

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Evolution of Marketing  The Production Era Production orientation Production orientation  The Sales Era Selling orientation Selling orientation  The Relationship Era Consumer orientation Consumer orientation Total quality management Total quality management  The Triple Bottom Line Era

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Production Era  Dominated by production orientation A management philosophy that emphasizes the most efficient ways to produce and distribute products A management philosophy that emphasizes the most efficient ways to produce and distribute products  Marketing played an insignificant role  Henry Ford’s Model T and Ivory soap are examples of products that were created under a production orientation

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Sales Era  When product availability exceeds demand, businesses may focus on a one-time sale of goods rather than repeat business  Dominated by selling orientation Managerial view of marketing is as a sales function, or a way to move products out of warehouses to reduce inventory Managerial view of marketing is as a sales function, or a way to move products out of warehouses to reduce inventory

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Relationship Era  Focused on a customer orientation A management philosophy that emphasizes satisfying customers’ needs and wants A management philosophy that emphasizes satisfying customers’ needs and wants  Marketing becomes more important in the firm  Total Quality Management (TQM) is widely followed in the marketing community

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Triple Bottom Line Era: Make Money and a Contribution  Focuses on building long-term bonds with customers Triple orientation seeks to maximize the financial, social, and environmental bottom lines Triple orientation seeks to maximize the financial, social, and environmental bottom lines Marketing uses customer relationship management (CRM) to build bonds with consumers Marketing uses customer relationship management (CRM) to build bonds with consumers

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Triple Bottom Line Era: Make Money and a Contribution  Social marketing concept : Management philosophy that marketers must satisfy customers’ needs in ways that also benefit society and deliver value to the firm Management philosophy that marketers must satisfy customers’ needs in ways that also benefit society and deliver value to the firm Sustainability is a key trend that applies to many aspects of business Sustainability is a key trend that applies to many aspects of business  Triple bottom line firms place a greater focus on accountability

© 2012 Pearson Education, Inc. publishing as Prentice-Hall What Can Be Marketed?  From “serious” goods to fun things Products mirror changes in popular culture Products mirror changes in popular culture Marketing messages often communicate myths Marketing messages often communicate myths  Product: any good, service, or idea Consumer goods/services Consumer goods/services Business-to-business goods/services Business-to-business goods/services Not-for-profit marketing Not-for-profit marketing Idea, place, and people marketing Idea, place, and people marketing

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Marketing of Value  Marketing creates and communicates the value proposition as: A marketplace offering that fairly and accurately sums up the value that the customer will realize if the consumer purchases a product or service A marketplace offering that fairly and accurately sums up the value that the customer will realize if the consumer purchases a product or service  Perspectives of value differ between customers, sellers, and society

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Value from the Customer’s Perspective  Customer perspective Value is the ratio of costs (price) to benefits (utilities) Value is the ratio of costs (price) to benefits (utilities) Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Value from the Seller’s Perspective  Value for the seller takes many forms  Seller’s should build value by marketing with customers, not to them Partnering with customers via brandfests Partnering with customers via brandfests  Customers have value – it is more expensive to attract new customers than to retain current ones

© 2012 Pearson Education, Inc. publishing as Prentice-Hall  Lifetime value of a customer Calculate the projected profit from a particular customer to allow a firm to decide which customers are “worth keeping” vs. which should be “fired” Calculate the projected profit from a particular customer to allow a firm to decide which customers are “worth keeping” vs. which should be “fired”  Creating a competitive advantage Identify a distinctive competency Identify a distinctive competency Turn distinctive competencies into differential benefits Turn distinctive competencies into differential benefits Value from the Seller’s Perspective

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Adding Value Through the Value Chain  Value chain: A series of activities involved in designing, producing, marketing, delivering, and supporting any product  Steps in the value chain  Measuring value Marketing scorecards Marketing scorecards Marketing metrics Marketing metrics

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Consumer-Generated Value: From Audience to Community  Everyday people are generating value instead of just buying it Marketers need to think of consumers as communities Marketers need to think of consumers as communities Amafessionals gain physic income Amafessionals gain physic income  Social networking continues to grow Web 2.0, folksonomy, and the wisdom of crowds Web 2.0, folksonomy, and the wisdom of crowds  Open source business models

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Value from Society’s Perspective  Marketing transactions add or subtract value from society: Stressing socially responsible and ethical decisions is good business Stressing socially responsible and ethical decisions is good business Marketing is often criticized Marketing is often criticized Marketing’s dark side Marketing’s dark side  Some marketing activities have detrimental effects on society

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing Is a Process  Marketing planning is a major portion of the process and it involves the following: Analyzing the marketing environment Analyzing the marketing environment Developing a marketing plan Developing a marketing plan Deciding on a market segment Deciding on a market segment Choosing the marketing mix— product, price, promotion, and place Choosing the marketing mix— product, price, promotion, and place

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Real People, Real Choices: Decision Made at Pandora  Joe chose option 2 Why do you think that Joe chose personal communication and social networking to build awareness? Why do you think that Joe chose personal communication and social networking to build awareness?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Keeping It Real: Fast-Forward to Next Class Decision Time at First Flavor  Meet Jay of First Flavor  First Flavor markets edible film strips that allow users to taste flavors. Other potential uses of film strips beyond sampling are being investigated  The decision to be made includes whether or not to diversify into new product categories

© 2012 Pearson Education, Inc. publishing as Prentice-Hall 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