1. Fundamentals of Marketing
LESSON 3:
Importance of Marketing

2. Learning Objectives
After completing this lesson, students will be able to:
Define the role of marketing within the organization
Illustrate the Market Myopia
Describe the importance of customer satisfaction

3. Marketing makes buying easy for customers.
Marketing serves as a bridge between the customer and the seller of products and services.
Marketing makes buying easy for customers.
Marketing creates new and improved products at lower prices.

4. The functions of marketing add value to a product
Utility
The functions of marketing add value to a product
The added value is called Utility
Utilities are the attributes of a product or service that make it capable of satisfying consumer’s wants and needs
There are 5 utilities involved with all products
Form
Time
Place
Possession
Information

5. Form Utility
Involves changing raw material or putting parts together to make them more useful
Form Utility deals with making or producing things

6. An Example of Form Utility
A Tree
In its original state it has value as an object of beauty, supplies oxygen, prevents soil erosion, and provides a home for animals.
When a tree is cut down and used in making other products its usefulness changes. The raw material becomes part of a new product that has a different value
Form Utility takes place also when a manufacturer assembles parts into a product pieces of wood assembled into furniture

7. Place Utility Having a product where customers can buy it
Businesses study consumer shopping habits to determine the best sales outlets for their products
Outlets include catalogs, the internet, retail stores

8. Time Utility
Having the product available at a certain time of the year or a convenient time of day
The value of the product is increased by having it available when consumers want them
Time Utility requires the marketer to plan ahead in order to have the right product at the right time
Toy companies introduce new toys for Christmas every February at the Toy Fair in New York City

9. Possession Utility The exchange of a product for some monetary value
Alternatives to cash may be accepted these include:
In business to business situations companies also grant customers credit
Credit Cards
Checks
Installment Plans
Layaway
Possession Utility is involved every time legal ownership of a product changes hands

10. Information Utility Involves communication with the consumer
Examples of sources of information:
Sales Associates
Packaging
Tags and Labels
Advertising
Owner’s Manuals
Internet Sites
Telephone Customer Service

11. Benefits of Product Utility
Added value Increases demand, increased demand allows manufacturers to produce in larger quantities which reduces the cost of each item
When a product becomes popular the number of merchants offering the product will increase, this increases competition which reduces the price
Competition also makes manufacturers improve products to better satisfy customer wants and needs

12. Marketing Myopia
Theodore Levitt proposed market definitions of a business are superior to product or technological definitions.
Target Markets/Groups and Marketing Needs.
Every major industry was once a growth industry.
Railroads, Hollywood and others.

13. Marketing Myopia
No guarantee against product obsolescence. Company’s own product research will, or another company will produce, product obsolescence.

14. Marketing’s Role
The chief executive has the inescapable responsibility for creating this environment, viewpoint, attitude and inspiration. Sets the company’s style, direction and goals.

15. Marketing’s Role
Marketing should try to mobilize the company’s resources to develop customer satisfaction. Requests from the marketing department sometime increase product design, material costs, disrupt production schedules, increase finance and accounting costs and create budget headaches.

16. Customer Satisfaction Building Customer Relationships
CRM – Customer relationship management “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.”

17. Relationship Building Blocks: Value and Satisfaction
Customer Perceived Value
The customers’ evaluation of the difference between benefits and costs.
Customers often do not judge values and costs accurately or objectively.
Customer Satisfaction
Product’s perceived performance relative to customers’ expectations.

18. Customer Relationship Levels and Tools
Basic relationships
low margin customers
Full partnerships
key customers
Frequency marketing programs
Reward customers who buy frequently or in large amounts
Club marketing programs
Offer members special discounts and create member communities

19. The Changing Nature of Customer Relationships
Relating with more Carefully Selected Customers
Relating for the Long-Term
Relating Directly