Chapters 10 & 11
Marketing: Creating,
Communicating and Delivering
Value for Customers
McGraw-Hill/Irwin
Introduction to Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Learning Objectives
1. Define marketing in today’s business
environment and how the role of marketing has
evolved and continues to evolve.
2. Explain the five steps involved in the marketing
process and explore the elements of each
step, including:
a.
b.
c.
How marketers obtain insight into what consumers
want
The importance of a market-oriented mission
statement;
How to identify growth opportunities;
Marketing Unit, Slide No. 2
Learning Objectives (continued)
d.
e.
f.
g.
h.
How companies differentiate their products from
their competitors’ products;
How companies divide up their market into
segments and decide which segment(s) to pursue;
The tactics companies use to meet the needs of
their customers and deliver value, that is, the 4 Ps
of marketing—product, price, place (distribution),
and promotion;
The steps marketers take to build and maintain
relationships with customers; and
How companies receive value in return for their
marketing efforts, beyond sales and profits.
Marketing Unit, Slide No. 3
What Is Marketing?
Defining Marketing and
The Marketing Process
Marketing Unit, Slide No. 4
Survey Results: Marketing Views
The extent to which you agree/disagree with each statement
(1 = “Strongly Disagree” and 7 = “Strongly Agree”)
Marketing is an admirable profession
5.2
Marketing benefits the consumer
4.9
Marketing should be about selling what you make,
rather than making what you can sell
As Emerson said, "Build a better mousetrap and the
world will beat a path to your door."
4.9
4.9
Marketing is a prestigious profession
4.9
Marketing results in higher prices
4.7
"Give the customer what he/she wants" are good words
for a marketer to live by
Marketing should be about satisfying needs, rather than
creating desires
Mean
4.5
4.2
It is a marketer's job to make the world a better place
3.9
All marketing-related activities involve some degree of
deception
3.9
Marketing is what you do when your product is no good
2.1
1
2
3
4
5
6
7
Marketing Unit, Slide No. 5
Survey Results: Art vs. Science
What percentage of marketing do you believe is art and what
percentage do you believe is science?
46%
54%
Art
Science
Marketing Unit, Slide No. 6
Survey Results: Views About
Advertising and Branding
The extent to which you agree/disagree with each statement
(1 = “Strongly Disagree” and 7 = “Strongly Agree”)
Advertising helps me keep up-to-date about
products and services I need/want
5.2
Too many products do not perform as well as their
ads claim
5.1
Too many ads try to sell people things that they
don't need
5.1
Most advertising is money well-spent
4.4
Brand name is the best indicator of product quality
4.1
Most advertising is way too annoying
Mean
4.0
I think that we could do without most advertising
3.5
In general, brands that are advertised are better
than brands that are not advertised
3.5
Price is the best indicator of product quality
3.1
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Marketing Unit, Slide No. 7
The Evolution of Marketing
• The Production Orientation
- Focus is mainly internal—the firm’s operations—not on
the customer. Attempt to lower costs by improving
efficiency and creating economies of scale. “Make and
sell” philosophy.
- Ford was a leading proponent of this approach back in
1920s. Famous for saying, “Customers can have any
color car they want, as long as it’s black.”
- Might be appropriate in some situations, for example,
highly competitive, price-sensitive industries. But in
many instances does not meet customers’ needs and
leaves firm vulnerable to firms that do.
Marketing Unit, Slide No. 8
The Evolution of Marketing (continued)
• The Sales Orientation
- “Tell and sell, i.e., “advertise and sell,” philosophy. Persuading
consumers that a product meets their needs and convincing them
to buy it.
- Focus is on large-scale, aggressive selling and promotion efforts
to build high volume. Mass marketing., sell to everyone and
anyone.
- Generating transactions, rather than building long-term, profitable
relationships.
- Problems with this approach:
• Over-hyping can lead to lower customer satisfaction; and
• “Buying” higher market share through heavy sales promotion,
i.e., discounting, and heavy spending on advertising can lead to
lower profitability. For example, General Motors!
Marketing Unit, Slide No. 9
The Evolution of Marketing (continued)
• Where We Are Today: The Marketing
Orientation
- Achieving organizational goals, i.e., sales and profits,
depends on knowing the needs of target market(s) and
delivering the desired satisfaction better than
competitors do.
- Customer focus and value are the paths to sales and
profits. Opposite of “make and sell” approach. Instead,
find and make the right products for your customers.
- And unlike the “tell and sell,” focus is on using all
marketing tools, i.e., product, price, promotion, and
distribution, and finding the right customers.
Marketing Unit, Slide No. 10
The Sales and Marketing
Orientations Contrasted
Another Distinction:
Firms adhering to the selling orientation pursue anyone and everyone, and treat
everyone the same way, i.e., use a one-size fits all approach. In contrast, firms following
the marketing orientation, identify the best customers to pursue,. And instead of a onesize-fits-all approach, they typically divide the market into homogeneous segments and
design a customized approach
for each
pursue.
Figure
1.3 segment theyMarketing
Unit, Slide No. 11
Current Definition of Marketing
• Simple definition:
-
Marketing is managing profitable customer relationships.
The twofold goal is to attract NEW customers by
promising superior value, and keeping and growing
CURRENT customers by delivering satisfaction.
• Expanded definition:
-
An organizational function and a set of processes for 1)
creating, communicating, and delivering value to
customers; and 2) managing customer relationships in
ways that benefit the organization and its stakeholders.
(Per the American Marketing Association, 2004.)
Marketing Unit, Slide No. 12
The Evolution of Marketing
(continued)
• Where Marketing Is Heading: The Societal Marketing
Orientation
- The Marketing Orientation is often taken to mean, “Give the
customer what he or she wants,” or “The customer is always
right.” But what if the customer wants something that is not good
for him or her, such as cigarettes or unhealthy food?
- Or what if what the consumer wants isn’t harmful to him/her, but
is not in the best interest of society, such as gas guzzling SUVs?
- The Societal Marketing Orientation is a response to these
concerns. This philosophy holds that marketing strategy should
deliver value to customers in the short-term, in a way that
maintains or improves the consumer’s and society’s long-term
well-being.
Marketing Unit, Slide No. 13
The Societal Marketing Orientation:
Balancing Competing Interests
The AMA’s Newly
Adopted Definition of
Marketing (2008)
“Marketing is the
activity, set of
institutions, and
processes for creating,
communicating,
delivering, and
exchanging offerings
that have value for
customers, clients,
partners, and society at
large.”
Marketing Unit, Slide No. 14
The Marketing Process
Marketing involves a 5-step process for
creating, communicating, and delivering value
to customers, developing profitable
relationships, and capturing value in return.
Marketing Unit, Slide No. 15