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Explain how marketing discovers and satisfies consumer needs. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO: Define marketing and identify the diverse factors influencing marketing activities. LO1 LO2 Explain how marketing discovers and satisfies consumer needs. LO3 Distinguish between marketing mix factors and environmental forces. 1-2

LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO: Explain how organizations build strong customer relationships and customer value through marketing. LO4 LO5 Describe how today’s customer relationship era differs from prior eras. 1-3

Discovering Student Study Needs DISCOVERING HOW COLLEGE STUDENTS STUDY HELPS LAUNCH A NEW PRODUCT AT 3M Discovering Student Study Needs Satisfying Student Study Needs 1-4

You Are a Marketing Expert Already WHAT IS MARKETING? LO1 You Are a Marketing Expert Already Involved in 1,000s of Buying Decisions May Be Involved in Selling Decisions Marketing is NOT Easy 1-5

FIGURE 1-1 The see-if-you’re-really-a-marketing-expert test True True (c) plastic bottles 1-6

WHAT IS MARKETING? DELIVERING BENEFITS AMA Definition of Marketing LO1 Marketing Seeks to: Discover Needs and Wants of Customers Satisfy Them Exchange AMA Definition of Marketing 1-7

WHAT IS MARKETING? DIVERSE FACTORS INFLUENCE MARKETING ACTIVITIES LO1 The Organization Itself and Its Departments Society Environmental Forces 1-8

FIGURE 1-2 A marketing department relates to many people, organizations, and environmental forces 1-9

WHAT IS MARKETING? REQUIREMENTS FOR MARKETING TO OCCUR LO1 Two + Parties with Unsatisfied Needs A Desire and Ability to be Satisfied A Way for the Parties to Communicate Something to Exchange 1-10

HOW MARKETING DISCOVERS CONSUMER NEEDS THE CHALLENGE: NEW PRODUCTS LO2 Consumers May Not Know or Cannot Describe What They Need or Want Most New Products Fail The Challenge: “Focus on the Consumer Benefit” “Learn From the Past” 1-11

Dr. Care Vanilla-Mint Aerosol Toothpaste What “benefits” and what “showstoppers?” LO2 1-12

Terrafugia Transition What “benefits” and what “showstoppers?” LO2 1-13

Pepsi Next What “benefits” and what “showstoppers?” LO2 1-14

HOW MARKETING DISCOVERS CONSUMER NEEDS NEEDS VS. WANTS LO2 Need Want Does Marketing Persuade People to Buy the “Wrong” Things? Market 1-15

FIGURE 1-3 Marketing seeks to discover consumer needs through research and then satisfy them with a marketing program 1-16

HOW MARKETING SATISFIES CONSUMER NEEDS LO3 Target Market The 4 Ps: Controllable Marketing Mix Factors Product Promotion Price $499 Place 1-17

HOW MARKETING SATISFIES CONSUMER NEEDS LO3 Customer Value Proposition Uncontrollable Environmental Forces Social Competitive Economic Regulatory Technological 1-18

THE MARKETING PROGRAM CUSTOMER VALUE AND RELATIONSHIPS LO4 Customer Value Value Strategies Best Price Best Service Best Product 1-19

Southwest Airlines, Starbucks, and Home Depot What customer value strategy? LO4 1-20

RELATIONSHIP MARKETING THE MARKETING PROGRAM RELATIONSHIP MARKETING LO4 Relationship Marketing Easy to Understand Hard to Do Marketing Program 1-21

3M’S STRATEGY & MARKETING PROGRAM HELPING STUDENTS STUDY LO4 Move from Ideas to a Marketable Highlighter Product Add the Post-it® Flag Pen Develop a Marketing Program for the Post-it® Flag Highlighter and Pen 1-22

FIGURE 1-4 Marketing programs for two new 3M Post-it® brand products targeted at two distinct customer segments: college students and office workers 1-23

3M STRATEGY & MARKETING PROGRAM MARKETPLACE SUCCESS? LO4 Developed Third Generation Post-it® Flag Highlighter Appeared on The Oprah Winfrey Show 1-24

FIGURE 1-A Four different orientations in the history of American business Production Era Sales Era Marketing Concept Era Customer Relationship Era Market Orientation 1-25

HOW MARKETING BECAME IMPORTANT EVOLUTION OF THE MARKET ORIENTATION LO5 Customer Relationship Management (CRM) Customer Experience Direct Contacts: Buying the Service Indirect Contacts: Word-of-Mouth 1-26

HOW MARKETING BECAME IMPORTANT ETHICS AND SOCIAL RESPONSIBILITY LO5 Ethics Social Responsibility Societal Marketing Concept 1-27

HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING LO5 Who Markets? What Is Marketed? Hermitage Products (Goods) Services Ideas 1-28

HOW MARKETING BECAME IMPORTANT BREADTH AND DEPTH OF MARKETING LO5 Who Buys & Uses What Is Marketed? Ultimate Consumers Organizational Buyers Who Benefits? How Do Consumers Benefit?: Utility Form Utility Time Utility Place Utility Possession Utility 1-29

3M’S POST-IT® FLAG HIGHLIGHTER: EXTENDING THE CONCEPT! VIDEO CASE 1 1-30

3M’s Post-it® Flag Highlighter VIDEO CASE 1 3M’s Post-it® Flag Highlighter 1. (a) How did 3M’s David Windorski get ideas from college students to help him in designing the final commercial version of the Post-it® Flag Highlighter? (b) How were these ideas important to the success of the product? 1-31

3M’s Post-it® Flag Highlighter VIDEO CASE 1 3M’s Post-it® Flag Highlighter 2. What (a) special advantages and (b) potential problems did 3M have in introducing a new highlighter-with-flags product for college students? 1-32

3M’s Post-it® Flag Highlighter VIDEO CASE 1 3M’s Post-it® Flag Highlighter 3. Visit your college bookstore before you answer. (a) Where would you display the Post-it® Flag Highlighter in a college bookstore and (b) How can the display increase student awareness of the product? 1-33

3M’s Post-it® Flag Highlighter VIDEO CASE 1 3M’s Post-it® Flag Highlighter 4. In what ways might 3M try to promote its Post-it® Flag Highlighter and make students more aware of the product? 1-34

3M’s Post-it® Flag Highlighter VIDEO CASE 1 3M’s Post-it® Flag Highlighter 5. What are the (a) special opportunities and (b) potential challenges for 3M in taking its Post-it® Flag Highlighter into international markets? (c) On which countries should 3M focus its marketing efforts? 1-35

Marketing Marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit the organization, its stakeholders, and society at large. 1-36

Exchange Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. 1-37

Market A market consists of people with both the desire and the ability to buy a specific offering. 1-38

Target Market A target market consists of one or more specific groups of potential consumers toward which an organization directs its marketing program. 1-39

Marketing Mix The marketing mix consists of the marketing manager’s controllable factors—product, price, promotion, and place—that can be used to solve a marketing problem. 1-40

Customer Value Proposition Customer value proposition is the cluster of benefits that an organization promises customers to satisfy their needs. 1-41

Environmental Forces Environmental forces consist of the uncontrollable forces in a marketing decision involving social, economic, technological, competitive, and regulatory forces. 1-42

Customer Value Customer value is the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price. 1-43

Relationship Marketing Relationship marketing links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. 1-44

Marketing Program A marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. 1-45

Marketing Concept A marketing concept is the idea that an organization should (1) strive to satisfy the needs of consumers (2) while also trying to achieve the organization’s goals. 1-46

Market Orientation A market orientation occurs when an organization focuses its efforts on (1) continuously collecting information about customers’ needs, (2) sharing this information across departments, and (3) using it to create customer value. 1-47

Societal Marketing Concept Societal marketing concept is the view that organizations should satisfy the needs of consumers in a way that provides for society’s well-being. 1-48

Product A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value. 1-49

Ultimate Consumers Ultimate consumers consist of the people who use the goods and services purchased for a household. Also called consumers, buyers, or customers. 1-50

Organizational Buyers Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale. 1-51

Utility Utility consists of the benefits or customer value received by users of the product. 1-52