Marketing’s Role in the Global Economy Chapter One

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Types of Utility and How They Are Provided Exhibit 1-1

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Universal Functions of Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Marketing Facilitates Production and Consumption Exhibit 1-3

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Facilitators Ad agencies Marketing research firms Information technology suppliers Product testing labs Public warehouses Transporting specialists Financial institutions... and others

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Economics Systems Marketing-Directed Economic Systems Planned Economic Systems Consumer choices are the invisible hand that guides the economy Government planners decide what consumers should get

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing What is Marketing MICRO-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 producers to customer or client 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

Marketing Orientation Trying to carry out the marketing concept Maintaining a customer orientation –All departments work together guided by customer needs –Focus on profit objective (or other overall objective) –NOT just trying to "unload" what the firm has produced

Some Differences in Outlook Between Adopters of the Marketing Concept and the Typical Production-Oriented Managers

The Marketing Concept and Customer Value Customer value concerns the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits Customer value takes the customer’s point of view –But customer may not explicitly think in terms of costs and benefits Costs and benefits are not just limited to economic considerations –Examples: Convenience in purchasing – Emotional reactions (status needs, etc.) In a competitive market, the firm that offers superior value is likely to win business and get repeat customers

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Organizations with a Marketing Orientation Carry Out the Marketing Concept

Customer Satisfaction Customer satisfaction is the extent to which a firm fulfills a consumer’s needs, desires, and expectations As some needs are met, others may become more important Expectations may change based on experiences –Satisfying experiences may lead to increasing expectations –Disappointing experiences may reduce expectations –Expectations may be realistic or unrealistic

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Micro-Macro Dilemma Micro-macro dilemma: what is "good" for some producers and consumers may not be good for society as a whole. Examples: –some consumers want handguns, but guns can be dangerous –all terrain vehicles are fun for some people, but may result in injuries or damage to wilderness areas –non-returnable soft drink bottles are convenient, but sometimes result in litter and dangerous broken glass along highways. –repairing an old air-conditioning system might save the owner money, but might require continued use of ozone depleting fluorocarbons (used as coolant)

Nonprofit Organizations and the Marketing Concept Both public and private nonprofit organizations are turning to marketing concepts Some nonprofits differ from business in important ways: –those who get benefits may not provide the support –may be difficult to agree on basic objective –each volunteer tends to do what he or she wants to do!

Social Responsibility and Marketing Ethics Social responsibility concerns a firm's obligation to improve its positive effects on society and reduce its negative effects Marketing ethics are the moral standards that guide marketing decisions and actions

Excerpt from the Code of Ethics of the American Marketing Association “...Participants in the marketing exchange process should be able to expect that: 1. Products and services offered are safe and fit for their intended uses; 2. Communications about offered products and services are not deceptive; 3. All parties intend to discharge their obligations, financial and otherwise, in good faith; and 4. Appropriate internal methods exist for equitable adjustment and/or redress of grievances concerning purchases…”

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Sample Criticisms of Marketing Exhibit 1-5 Advertising is often annoying, misleading, or wasteful. Product quality and safety are poor. There are too many unnecessary products. Packaging and labels are often confusing and deceptive. Middlemen just add to the cost of distribution. Marketing serves the rich and exploits the poor. Service often stinks, and nobody cares when a consumer has a problem. Marketing creates interest in products that pollute the environment. Private information about consumers is collected to sell them things they don’t want. Marketing makes people too materialistic. Easy credit makes people buy things they can’t afford.