© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-2 CREATING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING C HAPTER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Define marketing and identify the requirements for marketing to occur. 2.Explain how marketing discovers and satisfies consumer needs. 3.Distinguish between marketing mix elements and environmental factors.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-4 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 4.Explain how organizations build strong relationships and customer value through marketing. 5.Describe how today’s customer era differs from prior eras oriented to production and selling. 6.Explain how marketing creates utilities for consumers.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-5 AERO? THE NEXT ACT AFTER LAUNCHING AN INDUSTRY? A New Idea That Wasn’t So New Understanding the Consumer Success Invites Imitation, Which Stimulates Innovation

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin WHAT IS MARKETING? Slide 1-7 Marketing: Using Exchanges to Satisfy Needs  Marketing Marketing  Exchange Exchange Rollerblade Skates, Marketing, and You The Diverse Factors Influencing Marketing Activities

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin WHAT IS MARKETING? Slide 1-10 Requirements for Marketing to Occur  Two or More Parties with Unsatisfied Needs  Desire and Ability to Satisfy These Needs  A Way for the Parties to Communicate  Something to Exchange

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS Slide 1-14 Discovering Consumer Needs  The Challenge of Meeting Consumer Needs With New Products  Consumer Needs and Consumer Wants  What a Market Is What a Market Is “Focus on the consumer benefit” “Learn from the past”

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-19 FIGURE 1-4 FIGURE 1-4 Marketing’s first task: discovering consumer needs

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-21 Satisfying Consumer Needs  The Four P’s: Controllable Marketing Mix Factors The Four P’s: Controllable Marketing Mix Factors  Target Market Target Market Product Promotion Price Place  The Uncontrollable, Environmental Factors The Uncontrollable, Environmental Factors HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-22 FIGURE 1-A FIGURE 1-A Summary of factors that affect an organization’s marketing program

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT Slide 1-23 Relationship Marketing:Relationship Marketing:  Difficult to Implement  Easy to Understand The Marketing ProgramThe Marketing Program Global Competition, Customer Value, and Customer RelationshipsGlobal Competition, Customer Value, and Customer Relationships

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-27 FIGURE 1-5 FIGURE 1-5 Marketing’s second task: satisfying consumer needs

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-28 A Marketing Program for Rollerblade  Listening to Consumers to Stay Ahead of the Trends  Focusing the Marketing Program on Four Key Segments  Exploiting Strengths in Technology THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-33 FIGURE 1-6 FIGURE 1-6 Marketing programs for two of Rollerblade’s skates, targeted at two distinctly different customer segments: fitness/recreational skaters and children

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin HOW MARKETING BECAME SO IMPORTANT Slide 1-37 Evolution of the Market Orientation  Production Era  Customer Era  Sales Era  Marketing Concept Era Marketing Concept Era Market Orientation Customer Relationship Management (CRM)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-38 FIGURE 1-7 FIGURE 1-7 Four different orientations in the history of American business

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-39 Societal Marketing Concept Ethics and Social Responsibility: Balancing the Interests of Different Groups  Ethics  Social Responsibility Macromarketing Micromarketing HOW MARKETING BECAME SO IMPORTANT

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-40 The Breadth and Depth of Marketing  Who Markets?  What Is Marketed? Goods Services  Who Buys and Uses What Is Marketed? Ultimate Consumers Ultimate Consumers Organizational Buyers Organizational Buyers HOW MARKETING BECAME SO IMPORTANT Ideas

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-44 The Breadth and Depth of Marketing  Who Benefits?  How Do Consumers Benefit? Utility Utility  Form Utility  Place Utility  Time Utility  Possession Utility HOW MARKETING BECAME SO IMPORTANT

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-58 FIGURE 1-B FIGURE 1-B How Rollerblade’s marketing mix actions today differ from those in 1986

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-59 ROLLERBLADE: BENEFITS BEYOND EXPECTATIONS VIDEO CASE 1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-60 VIDEO CASE 1 Rollerblade

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-61 VIDEO CASE 1 Rollerblade 1. What trends in the environmental forces (social, economic, technological, competitive, and regulatory) identified in Figure 1-3 in the chapter (a) work for and (b) work against Rollerblade’s potential growth in the 21 st century?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-62 VIDEO CASE 1 Rollerblade 2. Compare the marketing goals for Rollerblade (a) in 1986 when Rollerblade was launched and (b) today?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-63 VIDEO CASE 1 Rollerblade 3. What kind of focused communication and promotion actions might Rollerblade take to reach the (a) recreational and (b) children market segments? For some starting ideas, visit rollerblade.com.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-64 VIDEO CASE 1 Rollerblade 4. In searching for global markets to enter, (a) what are some criteria that Rollerblade should use to select countries to enter, and (b) what three or four countries meet these criteria best and are the most likely candidates?

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-71 Marketing AMA Definition of 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.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-72 Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. Exchange

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-73 A market consists of people with both the desire and ability to buy a specific product. Market

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-74 The target market consists of one or more specific groups of potential customers toward which an organization directs its marketing program. Target Market

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-75 The marketing mix consists of the marketing manager’s controllable factors—product, price, promotion, and place (the 4Ps)—that can be used to solve a marketing problem. Marketing Mix

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-76 Environmental factors are the uncontrollable factors involving social, economic, technological, competitive, and regulatory forces. Environmental Factors

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-time delivery, and both before-sale and after-sale service. Customer Value Slide 1-77

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-78 Relationship marketing links the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. Relationship Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-79 A marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. Marketing Program

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-80 The 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. Marketing Concept

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-81 An organization that has a market orientation 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. Market Orientation

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-82 Customer relationship management (CRM) is the process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the marketplace. Customer Relationship Management (CRM)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-83 The societal marketing concept is the view that an organization should satisfy the needs of consumers in a way that provides for society’s well-being. Societal Marketing Concept

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-84 Macromarketing is the study of the aggregate flow of a nation’s goods and services to benefit society. Macromarketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-85 Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers. Micromarketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-86 Ultimate consumers are the people who use the goods and services purchased for a household. Ultimate Consumers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-87 Organizational buyers are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale. Organizational Buyers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 1-88 Utility is the benefits or customer value received by users of the product. Utility