1. What is Marketing? Marketing in a Changing World
Chapter 1

2. Marketing Defined
A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and values with others

3. Needs, Wants, Demands Need—states of felt deprivation
Physical—food, clothing, shelter, safety
Social—belonging and affection
Individual—knowledge and self-expression
Part of the human make-up
Want—the form taken by a human need as shaped by culture and individual personality
Need food, want a hamburger
Need transportation, want a cool car
unlimited
Demand—human wants that are backed by buying power

4. Products, Services, and Experiences
Product—anything that can be offered to a market to satisfy a need or want
Includes:
Service—activities or benefits offered for sale that are essentially intangible and do not result in ownership of anything
Experiences—travel, destinations, websites
Ideas, information, organizations, people
More than just the physical property of a good
Brand’s meaning to a customer
Benefits to customer—providing a solution to a need

5. Value, Satisfaction, and Quality
Customer Value—the difference between the values the customer gains from owning and using a product and the costs of obtaining the product
Often customers act on perceived value—not objective or accurate information
Companies work to change value perceptions

6. Value, Satisfaction, and Quality
Customer Satisfaction—the extent to which a product’s perceived performance in delivering value matches a buyer’s expectations
If a product falls short of customer expectations, the buyer is dissatisfied
If performance matches expectations, the buyer is satisfied
If performance exceeds expectations, the buyer is delighted
Based on past buying experiences, opinions of friends, and marketer and competitor information a promises

7. Value, Satisfaction, and Quality
Quality—”freedom from defects”—satisfying stated or implied customer needs
Closely linked to customer value and satisfaction
Total Quality Management—all company employees are involved in constantly improving quality of products, services, and business processes
Customers will not tolerate average quality
Should be a top priority

8. Exchange, Transaction, and Relationships
Exchange—the act of obtaining a desired object from someone by offering something in return
Transaction—a trade between two parties that involves at least 2 things of value, agreed upon conditions, a time of agreement, and a place of agreement
Monetary
Barter

9. Exchange, Transaction, and Relationships
Relationship Marketing—building long term relationships with valued customers, distributors, dealers, and suppliers—80% of business comes from 20% of customers
Builds strong economic and social connections by promising and delivering high quality products, good service, and fair prices
Creates marketing network oriented for the long-term
Creates social benefits by personalizing products and services to meet customer needs and wants
Creates structural ties with special equipment or computer links

10. Markets
Market—the set of all actual and potential buyers of a product or service
Share a particular need or want
Size depends on the number of people who exhibit the need, have resources to exchange, and are willing to offer the resources in exchange for what they want

11. Resource Markets—raw materials, labor, money
Market Economy
Government
Resource Markets—raw materials, labor, money
Producers
Goods and services
Intermediaries
Consumers
Income
Labor

12. Resource Markets—raw materials, labor, money
Government Market
Government
Taxes
Public Services—
schools,
law enforcement,
highway maintenance
Intermediaries
Producers
Consumers

13. Marketing
Managing markets to bring about exchanges and relationships for the purpose of creating value and satisfying needs and wants
Activities:
Product development
Research
Communication
Distribution
Pricing
Service

14. Marketing Management
The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target market buyers for the purpose of achieving organizational objectives
Demand Management
Organization has a desired level of demand for its product
At any point in time there might be not enough demand, no demand, adequate demand, irregular demand, or too much demand for a product
Concerned with finding and increasing demand and/or changing and reducing demand
Demarketing—reducing demand temporarily or permanently

15. Building Profitable Customer Relationships
Managing demand means managing customers
Demand comes from two places:
New customers
Repeat customers
New marketing realities:
Changing demographics
Slow-growth economy
More sophisticated competitors
Overcapacity
Fewer new customers to go around

16. Building Profitable Customer Relationships
Costs of attracting new customers is rising
Losing a customer means:
Losing a single sale
Losing a lifetime worth of purchases and referrals
Customer lifetime value—how much a customer is worth for a lifetime of purchases:
Taco Bell--$12,000
Lexus--$600,000

17. Marketing Management Practices
Three stages of marketing practice:
Entrepreneurial Marketing
involves visualizing an opportunity and constructing and implementing flexible strategies
Formulated Marketing
involves developing formal marketing strategies and following them closely
Intrepreneurial Marketing
involves the attempt to reestablish an internal entrepreneurial spirit and refresh marketing strategies and approaches

18. Marketing Management Philosophies
There are five alternative concepts under which organizations conduct their marketing activities:
Production
Product
Selling
Marketing
Societal marketing concepts

19. Production Concept
Idea that customers will favor products that are available and highly affordable
Management should focus on improving productions and distribution efficiency
Useful in two situations:
When demand exceeds supply
When product cost is too high and improved productivity is needed to bring it down
Companies who use this run the risk of focusing too narrowly on their own operations—lose sight of competition and of customer needs

20. Product Concept
Idea that consumers will favor products that offer the most in quality, performance, and innovative features
Organizations devote energy to making continuous product improvements
Leads to marketing myopia—buyers may not be looking for the specific product, but alternative solutions to a problem
Example:
Transportation vs. train, bus, car, airplane

21. Selling Concept
Idea that consumers will not buy enough of an organization’s products unless it undertakes a large-scale selling and promotion effort
Typically practiced with unsought goods such as insurance
Practiced when companies have overcapacity
Sell what they make vs. what market wants
Focuses on creating sales transactions versus building long term relationships

22. Marketing Concept
Idea that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do
Outside-in perspective
Customer focus and value are the paths to sales and profits
Builds customer satisfaction into the fabric of the company
Customer driven
Research is done on current customers to learn about their desires, gather new product and service ideas, and test proposed product improvement

23. Societal Marketing Concept
Idea that the organization should determine the needs, wants, and interests of target markets. It should then deliver superior value to customers in a way that maintains or improves the consumer’s and society’s well being.
Newest concept
Questions whether the pure marketing concept is adequate in an age of environmental problems, resource shortages, rapid population growth, world-wide economic problems, and neglected social services
Looks at the long run impacts of decisions

24. Marketing Challenges Connecting with More Carefully Selected Customers
Most companies are targeting fewer, more profitable customers
Diversity and new customer connections mean greater market fragmentation
“ono-to-one” marketing
Value to customers
Value of the customers to the company
Profitable customers
earn their loyalty

25. Marketing Challenges Connecting for a Customer’s Lifetime
Companies choosing what customers to serve and serving them in deeper, more lasting ways
Building relationships
Goal shifting—making a profit to making long-term profits by managing the lifetime value of a customer
Goal--keeping old customers and offering greater variety

26. Marketing Challenges Connecting Directly
Most products are available without going to a store
Online availability of products, shopping consultants, payment
Customers are active participants in shaping the marketing offer and process

27. Marketing Challenges Connecting with Marketing Partners
Connecting within the company
Every functional area can interact with customers
Marketing no longer has sole ownership of customer interactions
Every employee must be customer focused
Cross-functional customer teams are created to increase success

28. Marketing Challenges Connecting with Marketing Partners
Connecting with Outside Partners
Supply Chain Management
Stretches from raw materials to components to final products that are carried to final buyers
Success depend on how well the chain works together versus competitors supply chains

29. Marketing Challenges Connections with the world around us
Global Connections
Marketers are connected globally with customers
Companies have expanded market coverage
Challenges from skillful European market and Asian multinationals
Selling more in international markets
Buying from international supplies and components

30. Marketing Challenges Connections with the world around us
Values and Social Responsibility
Social and environmental impacts of corporate actions
Ethics and social responsibility place strict demands on companies
Forward looking companies deal with these issues before legislation is enacted
“Do well by doing good”

31. Marketing Challenges Connections with the world around us
Broadening Connections
Marketing becoming important to non profit organizations as well
Hospitals, museums, colleges, symphony orchestras, even churches
Competing for funds
Improving communication and promotion to respond to needs and wants
Government agencies also market
U.S. Army
U. S. Post Office

32. Marketing Challenges