Welcome to the World of Marketing Creating and Delivering Value

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 Understand the range of services and goods that are marketed Understand value from the perspectives of customers, producers, and society Explain the basics of marketing planning and the marketing mix tools used in the marketing process Explain the evolution of the marketing concept

Real People, Real Choices: Decision Time at Ron Jon Surf Shop, Inc. How to advertise Ron Jon’s at airports? Option 1: rental car advertising Option 2: wall-mounted backlit photographs (dioramas) Option 3: escalator “gateways” Ron Jon Surf Shop

Welcome to a Branded World “Brand You” You are a product and have “market value” as a person You “position” yourself for a job Don’t “sell yourself short” You package & promote yourself MONSTER.COM

The Who & Where of Marketing Marketers: Are real people who make choices that affect themselves, their companies, & millions of consumers (see “Real People, Real Choices”) Work cross-functionally within the firm Enjoy exciting, diverse careers CHECK OUT MARKETING JOB SALARIES!

The Value of Marketing Definition of marketing (AMA, 2004) An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders

Marketing is about Meeting Needs Meeting the needs of diverse stakeholders Buyers, sellers, investors, community residents, citizens Marketing concept Identifying consumer needs and providing products that satisfy those needs

Discussion The marketing concept focuses on the ability of marketing to satisfy customer needs As a typical college student, how does marketing satisfy your needs? What areas of your life are affected by marketing? What areas of your life – if any -- are not affected by marketing?

Marketing Is about Meeting Needs (cont’d) The modern marketplace may take the form of a mall, a mail-order catalog, a TV shopping network, an eBay auction, or an e-commerce Web site SECONDLIFE.COM

Marketing Is about Creating Utility Utility: the sum of the benefits we receive from using a product/service Form utility Place utility Time utility Possession utility

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 product that satisfies need Seller receives something of equivalent value

The Evolution of Marketing The Production Era The Selling Era The Consumer Era The New Era

The Production Era Focus on the most efficient ways to make and distribute products, like Henry Ford’s Model T & Ivory soap Marketing plays an insignificant role

The Selling Era Focus on one-time sales of goods rather than repeat business Marketing viewed as a sales function

The Consumer Era Focus on satisfying customers’ needs and wants Marketing becomes more important in the firm Total Quality Management (TQM) widely followed in marketing community Marriott Video

The New Era: Make Money and Act Ethically Focus on building long-term bonds with customers. Marketing uses customer relationship management (CRM) to track consumers’ preferences and tailor the value proposition to each individual

The New Era: Focusing on Social Benefits Social marketing concept: satisfy customers’ needs and also benefit society Sustainability: meeting present needs and ensuring that future generations can meet their needs

The New Era: Focusing on Accountability * Measuring how much value is created by marketing activities ROI (Return on Investment) is the direct financial impact of a firm’s expenditure of resources such as time or money

Measuring Value Scorecard: marketing department’s report card on how company/brand is actually doing in achieving various goals Quarterly Scores 2003 Item Text 1st Qtr. 2nd Qtr. 3rd Qtr. Satisfaction with C1 Employee responsiveness 60% 65% 68% C2 Product selection 62% 63% C3 Service quality 55% Table 1.3 (Abridged)

Discussion Not all firms have implemented programs that follow the marketing concept Can you think of firms that still operate with a production orientation? A selling orientation? What changes would you recommend for these firms?

What Can Be Marketed? From serious goods and services to fun things Goods and services mirror changes in popular culture Marketing messages may communicate myths of a culture Product: any good, service, or idea Consumer goods/services Business-to-business goods/services Not-for-profit marketing Idea, place, and people marketing

The Marketing of Value Value: the benefits a customer receives from buying a good or service Marketing communicates the value proposition: a marketplace offering that fairly and accurately sums up the value that the customer will realize if he/she purchases product/service

Value from the Customer’s Perspective The ratio of costs to benefits Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product itself

Value from the Seller’s Perspective Value for the seller takes many forms Making a profitable exchange Earning prestige among rivals Taking pride in doing what a company does well Nonprofits: motivating, educating, or delighting the public

Calculating the Value of a Customer Single transactions don’t provide companies with the value they desire Lifetime value of a customer: How much profit a company expects from a customer’s purchases now and in the future

Providing Value to Stakeholders Competitive advantage: The ability of a firm to outperform the competition by providing customers with a benefit the competition cannot provide

Group Activity Break into small groups and write an outline of your ideas on the following questions: What distinctive competencies does your business college or university have? What differential benefits does it provide for students? What is its competitive advantage? How could it improve its competitive position?

Adding Value through the Value Chain Value chain: a series of activities involved in designing, producing, marketing, delivering, and supporting any product Inbound logistics Operations Outbound logistics Marketing final product Service

Discussion Think about a music CD you might buy in a store. What kind of value does the music retailer add? How about the label that signs the artist? The public relations firm that arranges a tour by the artist to promote the new CD? The production company that shoots a music video to go along with the cut?

Figure 1.2: Making & Delivering Value

Consumer-Generated Value: From Audience to Community Everyday people generating value instead of just buying it People functioning in marketing roles: creating ads, providing input into new products, or serving as retailers YOUTUBE.COM

Value from Society’s Perspective How marketing transactions add or subtract value from society Stressing ethics/social responsibility is often good business in the long run

The Dark Side of Marketing * Marketers Illegal activities such as “bait and switch” Products that encourage antisocial behavior *Consumers Terrorism Addictive consumption Exploited people Illegal activities Shrinkage Anticonsumption

Marketing as a Process Marketing planning Analyzing the marketing environment Developing a marketing plan Deciding on a market segment Choosing the marketing mix -- product, price, promotion, and place

Group Activity An old friend has been making and selling vitamin-fortified smoothies to friends for some time. He wants to open a shop in a small college town, but he wonders if he’ll have enough customers to keep the business going. What can you tell him about product, price, promotion, and place (distribution) strategies that will help him get his business off the ground? Break up into small groups to come up with ideas

Group Activity Imagine one of your friends says to you, “Marketing’s not important. It’s just dumb advertising.” Another friend says, “Marketing doesn’t really affect people’s lives in any way.” As a role-playing exercise, present your arguments against these statements to your class.

How it worked out at Ron Jon Surf Shop Bill choose option 2: wall-mounted backlit photographs (dioramas) Opened a small store in the Orlando Airport adjacent to the very busy food court Surf and sales are up at Ron Jon!

Keeping it Real: Fast Forward to Decision Time at Qode Meet Rick Szatkowski of NeoMedia Technologies Qode links your cell phone to the Web when you enter a keyword or click a SmartCode. Example: A code on a movie poster plays a trailer for the movie