C H A P T E R © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin An Overview of Contemporary Marketing 1

1-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Learning Objectives After studying this chapter, you should be able to:  Discuss what marketing is and why it is important to organizations and individuals.  Distinguish between marketing as an organizational philosophy and a societal process.  Understand the components of a marketing strategy and the different activities involved in marketing products and services.  Be aware of the various types of marketing institutions and the different marketing positions available in these institutions.  Understand the basic elements and relationships in the contemporary marketing framework.

1-3 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Amazon: An Entrepreneurial Story Amazon.com represents an interesting entrepreneurial story. Jeff Bezos started Amazon.com as a book retailer in The company’s mission was to use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience available. Sales have increased from about $150 million in 1997 to over $7 billion today.

1-4 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Amazon and Marketing The Amazon.com story illustrates a basic principle of successful marketing:  Identify market opportunities and respond by developing and executing marketing strategies to take advantage of the opportunities better than competitors do.

1-5 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing - Definition What is marketing? Marketing is 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. - American Marketing Association

1-6 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Why is marketing important? Marketing is important to many organizations. For example, the Humane Society uses advertising to promote animal protection.

1-7 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Different Types of Organizations Social Entrepreneurs Farmers Nonprofit Individuals Small Firms The Importance of Marketing

1-8 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing as an Organizational Philosophy ProductionPhilosophy Selling Philosophy Marketing Philosophy Views of Marketing

1-9 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Selling Philosophy Marketing Philosophy A selling philosophy predominates where the selling function is most valued. A marketing philosophy suggests that the organization focuses on satisfying the needs of customers. Production Philosophy A production philosophy exists when an organization emphasizes the production function. Marketing as an Organizational Philosophy

1-10 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Practicing the Marketing Concept Marketing as an organizational philosophy has been based on the marketing concept. This concept consists of three interrelated principles: satisfy customer needs  An organization’s basic purpose is to satisfy customer needs. integrated, coordinated efforts  Satisfying customer needs requires integrated, coordinated efforts throughout the organization. focus on long-term success  Organizations should focus on long-term success.

1-11 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Developing a Market Orientation A market orientation consists of creating norms and values that encourage customer- oriented behavior throughout the organization, including: GeneratingMarketIntelligence DisseminatingMarketIntelligence Responding to MarketIntelligence

1-12 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Customer Equity Customer equity is the financial value of a firm’s customer relationships. It consists of profits from first- time customers plus expected profits from future sales to these and other customers. Customer equity can be increased in several ways:  Acquire more profitable customers at a lower cost.  Retain profitable customers longer.  Win back profitable customers.  Eliminate unprofitable customers.  Sell more to profitable customers.  Reduce service and operational costs.

1-13 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Customer Equity Relationships Marketing Concept, market Orientation, CRM Providing exceptional customer value Achieving completely satisfied customers Earning high customer loyalty Increasing sales growth and profits Building customer equity

1-14 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing as a Societal Process Emphasis on: Institution involved Activities performed Effectiveness of system Efficiency of system Consumers of Goods & Services Producers of Goods & Services Defined as a process that facilitates the flow of goods and services from producers to consumers in a society.

1-15 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed 1 2 Identify the most important benefits of the societal marketing system in the United States. What changes would you recommend for this system to be more beneficial to U.S. society? 3 Identify the most negative effects of the societal marketing system in the United States. 4 What changes would you recommend to reduce these negative effects? Thinking Critically

1-16 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Processes Marketing Exchanges Marketing Strategies Marketing Activities Marketing Institutions Marketing Positions Marketing as a Set of Processes

1-17 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Exchanges Exchange is defined as the transfer of something tangible or intangible, actual or symbolic, between two or more social actors.

1-18 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Strategies Marketing strategies consist of selecting a target market and developing a marketing mix to satisfy that market’s needs.  A target market is a defined group of consumers or organizations with which a firm wants to create marketing exchanges and relationships.  A marketing mix is the overall marketing offer to appeal to the target market.

1-19 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Mix Decisions

1-20 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Strategies The cosmetics industry is a good place to look for examples of different marketing strategies.

1-21 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Activities

1-22 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Productmanager Develops goals, objectives, plans, strategies, marketing mixes for product line or brand Marketingmanager Directs all company’s marketing activities, including planning, organizing, staffing, directing, controlling, evaluating performance more Marketing Positions

1-23 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Supply chain manager Manages distribution system, including storage and transportation for all products and services Advertisingmanager Devises advertising policy and strategy, selects advertising agencies, develops promotional campaigns, selects media, allocates advertising expenditures more Marketing Positions (con’t)

1-24 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing research manager Develops research designs for specific problems; collects, analyzes, interprets data; presents results to top management Purchasing manager Manages all purchasing activities, including buying product ingredients or components, supplies, equipment, needed materials more Marketing Positions (con’t)

1-25 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Public relations manager Manages all communications with media and company stakeholders to present favorable public image Marketing Positions (con’t) Customer service manager Provides customer service, handles customer complaints Salesmanager Organizes, develops, directs, controls, evaluates sales force

1-26 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Institutions Retailers Wholesalers Marketing research firms Advertising agencies

1-27 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Marketing Environment Exhibit 1-9

1-28 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Key Marketing Perceptive Relationship Building partnerships with firms outside the organization and encouraging teamwork among different functions within the organization to develop long-term customer relationships. Global Viewing the world as the potential marketplace to include identifying and responding both to market opportunities around the world and to different cultural groups within each market. more

1-29 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Customervalue Constantly looking for ways to give customers more for less. Ethics Addressing the morality of marketing decisions and practicing social responsibility to include ecological considerations. more Key Marketing Perceptive (con’t) Productivity Trying to get the best return for each marketing dollar spent.

1-30 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Entrepreneur- ship Focusing on innovation, on risk taking, and on being proactive in marketing efforts. Technology Translating new and emerging technologies into successful products and services, and using technology to improve marketing practice. Key Marketing Perceptive (con’t)

1-31 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed SummarySummary After studying this chapter, you should be able to:  Discuss what marketing is and why it is important to organizations and individuals.  Distinguish between marketing as an organizational philosophy and a societal process.  Understand the components of a marketing strategy and the different activities involved in marketing products and services.  Be aware of the various types of marketing institutions and the different marketing positions available in these institutions.  Understand the basic elements and relationships in the contemporary marketing framework.