1. Chapter 2:
Marketing’s Role within the Firm or Nonprofit Organization

2. Chapter 2 Objectives When you finish this chapter, you should
1. Know what the marketing concept is—and how it should affect strategy planning in a firm or nonprofit organization. 2. Understand what customer value is and why it is important to customer satisfaction. 3. Understand what a marketing manager does. 4. Know what marketing strategy planning is—and why it is the focus of the book.
5. Understand target marketing. 6. Be familiar with the four Ps in a marketing mix. 7. Know the difference between a marketing strategy, a marketing plan, and a marketing program. 8. Understand the important new terms.
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3. Marketing’s Changing Role
This slide relates to the material on pp See also Transparency 7.
Simple Trade Era
Production Era
Sales Era
Marketing Department
Era
Marketing Company
Sell Surplus
Increase Supply
Beat Competition
Coordinate and Control
Long-Run
Customer Satisfaction
Focus:
Focus :
Summary Overview
This slide illustrates five stages of marketing evolution. In general, the idea of marketing has moved from a focus on products to a focus on customer needs. An important point to remember is that some managers have not made it all the way to the final stages.
The Changing Role of Marketing
Simple Trade Era. As specialization developed, families traded or sold their output to local middlemen. Local middlemen, in turn, resold these goods to other consumers or more distant middlemen. This early role of marketing is still the focus of much of the marketing activity in the less-developed areas of the world.
Production Era. During the production era, the company focuses on production of a few specific products. A production focus is more common when few products are available in a given market.
Discussion Note: A production era focus helps economies increase capacity where demand exceeds supply.
Sales Era. As production rises, competition increases. As more companies move to meet demand, the focus shifts to selling activities to beat the competition and win customers.
Teaching Tip: Point out to students that through the sales era, marketing activities are still separated and that each era brings an emphasis on one or more tools of marketing that had previously been underutilized or were not recognized as necessary to meet the demand conditions applicable at that time.
Marketing Department Era. During this era, all the marketing activities are brought under the control of one department. When executed well, this improves short-run policy planning by integrating and coordinating the firm’s activities.
Marketing Company Era. Here marketing people develop long-range plans in addition to short-run marketing planning and the whole company effort is guided by the marketing concept.
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4. The Marketing Concept The Marketing Concept Profit Customer
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-1 on p. 34 and Transparency 8. See also Transparency 9 and Overheads
There are several slides in this series; see student handout pages
Profit
Customer
Satisfaction
Total Company
Effort
The
Marketing
Concept
Summary Overview
This slide and lecture material provide an introduction to the marketing concept. Additional information contrasts the production and marketing orientations and reviews the difficulties involved in adopting the marketing concept.
The Marketing Concept
Marketing Concept. The marketing concept means that the organization aims all its efforts at satisfying its customers -- at a profit.
Production Orientation. Specific businesses and their managers may still focus on more narrow concerns than satisfying customers. A typical example is the focus on a production orientation -- making whatever products are easy to produce and then trying to sell them.
The Importance of Profit. Profits refer to the difference between a firm’s revenue and its total costs. Identifying, developing, and implementing the products and product changes that consumers demand requires that the company be profitable. Profits provide the resources to pay for satisfying customers.
Adoption of the Marketing Concept. While consumer product companies adopted the marketing concept early on, many industrial products companies still have failed to do so. More surprisingly, many service companies, such as banks, have also been slow to adopt a philosophy of total commitment to customer satisfaction--but this has changed dramatically in recent years
Customer’s point of view. To better understand what it takes to satisfy a customer, it’s useful to take the customer’s point of view.
Customer value reflects benefits and costs. Customer value is the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits.
Exhibit 2-1
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5. Marketing Orientation Sounds Easy,Isn’t
Even the “best” firms sometimes backslide into a production orientation
In today’s highly competitive markets it is often difficult to
keep up with changing customer needs
beat aggressive competitors to the punch
find the right focus -- one that matches the firm’s objectives and resources to market opportunities
offer customers superior value
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6. Customer Value Reflects Benefits and Costs
This slide relates to the material on pp
There are several slides in this series; see student handout pages
Customer value concerns the difference between the benefits a customer sees from a firm’s market offering and the costs of obtaining those benefits
Summary Overview
This slide and lecture material cover the customer value concept. The basic points to be made are on the slides (there is another slide not shown here)
Customer Value Reflects Benefits and Costs
Customer Value. Customer value is the difference between the benefits a customer sees from a marketing offering and the costs of obtaining those benefits. The customer is likely to be more satisfied with the customer value is higher--when benefits exceed costs by a larger margin. On the other hand, a customer who sees the costs as greater than the benefits isn’t likely to become a customer.
One complication is that different customers may see the benefits and costs in different ways. That makes it difficult to satisfy everyone with one offering.
Competition and Customer Value
Customer’s point of view. To better understand what it takes to satisfy a customer, it’s useful to take the customer’s point of view. They have choices about how to meet their needs. So, a firm that offers superior customer value is likely to win and keep customers. This is especially important when what different firms have to offer is very similar.
Customer value reflects benefits and costs. Customer value is the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits.
Costs
Benefits
The customer’s view of costs and benefits is not just limited to economic (or even rational) considerations--and a low price may NOT result in superior value...
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7. Customer Value
Costs
Benefits
One customer’s view of the benefits and costs of a firm’s market offering may vary from another customer’s view, so firm may not be able to satisfy everybody with the same offering.
Customer value concept takes the customers point of view, but customers may not explicitly weigh costs and benefits and even if they do their view may not match some “objective” reality.
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8. Nonprofits Need Marketing, Too
This slide relates to the material on pp See also Overheads
Poorly
Organized
for Marketing
Non-
Customer
Support
Economic
Measures
Characteristics
of Nonprofit
Organizations
Summary Overview
Nonprofit organizations may have different reasons than traditional businesses for operating but they still need an understanding of marketing ideas.
The Marketing Concept Applies in Nonprofit Organizations
While the objectives of nonprofit organizations are not strictly economic, they may still be operated much as for-profit businesses. However, they differ in several ways:
Non-Customer Support. Nonprofits often exist to accomplish a goal unrelated to traditional “paying customer” satisfaction. In fact, many nonprofits specifically raise money from non-customer groups and then spend it on “customers” who define a cause.
Non-Economic Measures of Success. They may not have a traditional “bottom line” economic measure of success, such as profit or return on investment. While the costs associated with achieving nonprofit success may be measured, objectives, such as preserving a wetland, restoring an historical building, or making health-care available to the poor usually require a measure of success other than profit.
Poorly Organized for Marketing. Partly due to the nature of nonprofit businesses, they may not be set up to take advantage of and use marketing-related concepts and tools.
Marketing Concept Provides Focus. Each nonprofit organization IS trying to satisfy some group of consumers in some way.
Objectives Achieved by Satisfying Needs. Marketing thinking helps to identify what is REALLY needed.
Ethics
Organizations exist in a society and consequently face a social responsibility -- a firm’s obligation to improve its positive effects on society and reduce its negative effects. Because some goals, such as profits or economic efficiency, can diminish other goals, such as high levels of customer satisfaction or cleaner environments, businesses must strive to reach acceptable balances between these conflicts. The long-run significance of ethical behavior in business and in marketing activities will be emphasized throughout the course.
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9. The Marketing Management Process
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-4 on p. 45 and Transparency 10.
Whole-Company
Strategic
Management
Planning
Marketing
Implement Marketing
Plan(s) and Program
Control Marketing
Adjust Plans
As Needed
Summary Overview
The marketing management process refers to the planning, implementation, and control of marketing activities. As indicated on the slide, these activities are continuous and decisions made in the past in one area can have implications on the other areas as well.
The Marketing Management Process
The ongoing process of marketing management requires attention to three key areas:
Planning. Planning is required because marketing managers must seek attractive new opportunities. Customers’ needs and wants change. Marketing managers must anticipate such changes and plan how the firm will move to meet them with satisfying products. At the company-wide level, this is called strategic (management) planning -- the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities.
Implementation. Implementation is the process of putting marketing plans into action. Instructor’s Note: This topic is covered in greater detail in Exhibit 2-10.
Control. Control deals with assessing and evaluating marketing performance. Marketing managers are responsible for seeing to it that an implemented strategy is working. Goals and objectives are typically set and one or more measures of progress are taken to assess performance. When performance falls short of expectations, it is up to the marketing manager to take corrective action.
Exhibit 2-4
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10. Marketing Strategy Planning
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-5 on p. 46 and Transparency See also Overhead 16.
The
Marketing
Mix C
Summary Overview
As noted previously, marketing strategic planning is the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities. Marketing strategy planning means finding these opportunities and developing profitable marketing strategies that the company can use to capitalize on them.
Understanding Marketing Strategy Planning
Marketing Strategy. A marketing strategy specifies a target market and a related marketing mix. This provides the “big picture” of what the firm will do in some market. The two interrelated parts are:
Target Market. A target market is a fairly homogeneous (similar) group of customers to whom a company wishes to appeal.
Marketing Mix. A marketing mix consists of the controllable variables the company puts together to satisfy this target group.
The importance of target customers cannot be over-emphasized. On the slide, the customer (C) is in the center of the controllable variables of the marketing mix. This arrangement is to remind the marketer that the efforts of the firm should always be aimed at meeting customer needs.
Teaching Tip: Remind students that this diagram is also a visual reminder of the marketing concept. It does not suggest that the marketer controls the customers’ needs and wants, but rather that marketing mix decisions should meet customer needs.
Target Marketing. Target marketing says that the marketing mix is tailored to meet the needs of a specific group of target customers. A company may need a different marketing mix for each distinct group of customers.
Mass Marketing. This approach is not target marketing and treats all customers as the same, offering a single marketing mix combination to everyone.
Exhibit 2-5
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11. The Four Ps of the Marketing Mix
This slide relates to the material on p. 47.
Instructor’s Note: This slide corresponds to Exhibit 2-7 on p. 47 and Transparency 14.
Product
Place
Price
Promotion C
Summary Overview
It is useful to categorize all the variables in the marketing mix into four basic ones of Product, Place, Promotion, and Price. These “Four Ps” are combined in differing ways to match the offer made by a company to the needs and wants of different target markets.
Instructor’s Note: Remind students that the customer is not part of the marketing mix. Then lead them in discussion to identify why: Because the four Ps are controllables for the marketer -- customer behavior is not.
Exhibit 2-7
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12. Strategy Decision Areas Organized by the Four Ps
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-8 on p. 48 and Transparency 15. See also Transparency 13 and Overhead 17.
Product
Physical Goods
Service
Features
Quality Level
Accessories
Installation
Instructions
Warranty
Product Lines
Packaging
Branding
Place
Objectives
Channel Type
Market Exposure
Kinds of Middleman
Kinds and Locations of Stores
How to Handle Transporting and Storing
Service Levels
Recruiting Middlemen
Managing Channels
Promotion
Blend
Salespeople
Kind
Number
Selection
Training
Motivation
Advertising
Targets
Kinds of Ads
Media Type
Copy Thrust
Who Prepares?
Sales Promotion
Publicity
Price
Flexibility
Level over PLC
Geographic Terms
Discounts
Allowances
Decision Areas of the Four Ps
Product. The product is often a tangible good that customers buy, but it can also be an intangible service, such as tax and legal preparations. Product-area decisions involve the characteristics of various kinds of products. While exceptions arise, generalizations about product classes can be learned that help marketers develop different product mixes quickly.
Place. Place refers to where a product is made available to target market customers. In addition, place decisions also involve making products available when customers want them. A channel of distribution refers to the series of firms or persons between the producer of the product and the final user or consumer.
Promotion. Promotion involves telling the target market about the product. Key tools of promotion include:
Personal Selling. This involves direct communication between sellers and potential customers, either face-to-face or over the phone.
Mass Selling. Mass selling communicates with large numbers of customers at the same time. Advertising, its main form, is any paid form of nonpersonal presentation of ideas, goods, and services by an identifying sponsor.
Sales Promotion. This refers to the other types of promotion that marketers use to stimulate interest, trial, or purchase by final consumers or others in the channel.
Price. In setting a price, marketing managers must consider the kind of competition in the target market as well as possible customer reactions to different price levels.
Exhibit 2-8
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13. Four Examples of Basic Channels of Distribution for Consumer Products
This slide relates to the material on p. 49.
Instructor’s Note: This slide corresponds to Exhibit 2-9 on p. 49 and Transparency 16.
Manufacturer or producer
Consumer
Procter &
Gamble
Del
Monte
Nissan
Citibank
Wholesaler
Retailer
Summary Overview
A channel of distribution refers to any series of firms or persons used to move goods from producers to final users.
Channel systems can be either very long or very short. They may be relatively simple or complex. The key for understanding the contribution of the channel to better marketing effort is the matching of the best kinds and types of channels for the product or service and the effective management of the channel.
Instructor’s Note: You may wish to discuss the use of added-value channels as a competitive advantage for better marketing efforts and link this to the discussion of Exhibit 2-12.
Exhibit 2-9
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14. Elements of the Marketing Program
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-11 on p. 55 and Transparency 18. See also Transparencies 17 and 19 and Overheads
Target
Market
Marketing
Mix
Strategy
Time-Related
Details
Plan
Other
Plans
A Firm’s
Program + =
Summary Overview
A marketing program blends all of the firm’s marketing plans into one “big” plan. The marketing program combines strategy and tactics, ideas and actions, and serves as the link between planning and implementation and control.
Elements of the Marketing Program
Marketing Plan. A marketing plan is a written statement of a marketing strategy and the time-related details for carrying out the strategy. Marketing plans should make clear the following:
1. What marketing mix will be offered, to whom, and for how long.
2. What company resources will be needed at what rate.
3. What results are expected (this should also specify some means of control).
Implementation. Implementation involves putting the marketing plan into action. During implementation, marketing managers make many operational decisions -- short-run, often “on-the-spot,” decisions to help implement strategies.
Discussion Note: Effective operational decision making is critical to successful implementation. Marketing managers must use the marketing plan as a context for overall guidance -- what the company wants to do -- and then adapt individual decisions to align company efforts and objectives to changing situations.
Control. Control is an ongoing process of analyzing and correcting the actions taken in implementation. Control jobs provide feedback to managers that leads them to modify their marketing strategies.
Teaching Tip: Students should understand that control is not a punishment mechanism to be used only when someone makes mistakes. Businesses expect that all plans require some fine tuning and even more than that when competitive forces change quickly.
Exhibit 2-11
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15. Distribution of Different Firms Based on Performance
This slide relates to the material on pp
Instructor’s Note: This slide corresponds to Exhibit 2-12 on p. 57 and Transparency 20. 2%
14%
Total
Failure
Poor
Fair
Good
Exceptional
(Well below
average)
(Below
(Well above
(Above
68%
(Average
Marketing
Program)
Death-wish
marketing
Best-practices
Summary Overview
Planning is crucial because it sets the course the company will follow in everything else it does. Good plans implemented poorly might still be profitable. Ill-conceived plans, even implemented well, can lose money and even threaten the survival of the company itself.
The Importance of Marketing Strategy Planning
Creative Strategy. Dramatic shifts in strategy are increasingly the norm is fast-moving markets. A focus on consumer needs and wants forces strategic planners to recognize that consumer’s don’t care about company problems -- they want products that provide superior customer value. Creative strategy is more than an interesting approach to business: It is needed for company survival.
Instructor’s Note: Planning does not take place in a vacuum. Managers work within an environment of controllable variables (the 4Ps) that interacts with and is affected by other variables (marketing environment variables).
Focus on Best Practices. In too many firms, managers do a poor job of planning and implementing marketing strategies and programs. This type of “death-wish” marketing is both costly and ineffective. The average marketing program does not produce great results--and that accounts for the majority of firms. On average, too many new products fail, customer satisfaction levels are too low, customer retention rates are low, return on promotional spending is close to 0, and there’s conflict in channels of distribution. It’s important to do better than what’s typical!
Exhibit 2-12
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16. Key Terms Simple Trade Era Production Era Sales Era
Marketing Department Era
Marketing Company Era
Marketing Concept
Production
Orientation
Marketing
Customer Value
Nonprofit
Organizations
Social Responsibility
Marketing
Management Process
Strategic (Management)
Planning
Marketing Strategy
Target Market
Marketing Mix
Target Marketing
Mass Marketing
Channel of Distribution
Personal Selling
Mass Selling
Advertising
Publicity
Sales Promotion
Marketing Plan
Implementation
Operational
Decisions
Marketing Program
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