Essentials of Marketing
A Global
Managerial
Approach
William D. Perreault Jr.
E. Jerome McCarthy
For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin
CHAPTER ONE
Marketing’s Value
to Consumers,
Firms, and Society
For use only with
Perreault and McCarthy
texts.
© 2006 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
When we finish this lecture you should
1. Know what marketing is and why you should learn
about it.
2. Understand the difference between micro-marketing
and macro-marketing.
3. Know the marketing functions and why marketing
specialists—including intermediaries and
facilitators—develop to perform them.
4. Understand what a market-driven economy is and
how it adjusts the macro-marketing system.
5. Know what the marketing concept is—and how it
should guide a firm or nonprofit organization.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
When we finish this lecture you should
6. Understand what customer value is and why it is
important to customer satisfaction.
7. Know how social responsibility and marketing ethics
relate to the marketing concept.
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Marketing—What’s It All About?
More than Selling and Advertising
All Those
More than Selling
and Advertising
Bicycles!
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Things a Firm Should Do in Producing a Bike
Analyze Needs
Predict Wants
Estimate Demand
Predict When
Determine Where
Estimate Price
Decide Promotion
Estimate Competition
Provide Service
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Production vs. Marketing
Marketing
Makes sure right goods &
services are produced
Production
• Making Goods
• Performing Services
Creates Customer Satisfaction
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Exhibit 1-1
Types of Utility and How They Are Provided
Provided by production with
guidance of marketing
Provided by marketing
Time
Form
Utility
Value that comes
from satisfying
human needs
Task
Place
Possession
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Interactive Exercise: Utility
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Marketing Is Important to You!
Important to every consumer!
Important to your job!
Affects economic growth and
standard of living!
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Marketing Stimulates New Ideas
+
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Affects Economic Growth
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What Is Marketing?
Micro
Macro
• Set of activities
• Performed by
organizations
• Social process
OR
• Matches supply
with demand
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Micro-Marketing
Profit and
Nonprofit
Focus of
Your Text
Builds
Relationships
More than
Persuasion
Key
Characteristics
Involves
Exchanges
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Begins with
Needs
Doesn’t Go
It Alone
Building Customer Relationships
+
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Macro-Marketing
Emphasis on
Whole System
Every Economy
Needs It
Key
Characteristics
Matches
Producers and
Consumers
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Can Mass Production Satisfy a Society’s
Consumption Needs?
Economies of Scale Lower Cost
Cost
$
Output
Marketing Bridges the Gap!
Producers
Marketing
Functions
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Consumers
Overcoming Spatial Separation
+
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The Universal Functions of Marketing
Buying
Market
Information
Selling
Transporting
Marketing
Functions
Risk Taking
Storing
Financing
Standardization
& Grading
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Who Performs Marketing Functions?
Producers
Wholesalers
Transport
Firms
Retailers
Ad Agencies
ISP's
Product
Testing
Firms
Other
Specialists
Research
Firms
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Consumers
How Decisions Are Made in an Economic System
Planned Economic
System
Market-Directed
System
• Adjusts itself
• Government
planners decide
• Can work well if:
• Simple
economy
• Adverse
Conditions
OR
• Price is value
measure
• Freedom of choice
• Government’s role
limited
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Marketing’s Role Has Changed Over Time
Simple Trade Era
Focus:
Sell Surplus
Production Era
Focus:
Increase Supply
Sales Era
Focus:
Beat Competition
Marketing Department
Era
Focus:
Coordinate and Control
Marketing Company Era
Focus: Long-Run
Customer Satisfaction
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 1-4
The Marketing Concept
Customer
Satisfaction
Total Company
Effort
The
Marketing
Concept
Profit
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Creating Customer Satisfaction
+
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Adoption of the Marketing Concept
+
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The Marketing Concept and Customer Value
Take Customer’s
Point of View
Customer May
Not Dwell On
Value
Costs
Benefits
Where Does
Competition Fit?
Customer Value
Builds
Relationships
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Interactive Exercise: Customer Value
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Putting It All Together
Superior
Customer Value
Total Company
Effort to Satisfy
Customers
Customer
Acquisition
Profitable
Relationships with
Customers
Customer
Satisfaction
Customer
Retention
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Marketing Concept Applies in
Nonprofit Organizations
Support and
“Satisfied
Customers”
Newcomers to
Marketing
Marketing
Concept
Provides Focus
Characteristics
of Nonprofit
Organizations
May Not Be
Organized for
Marketing
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The Bottom
Line
Government Marketing
+
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Marketing Concept Use by Nonprofit Services
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The Marketing Concept, Social
Responsibility, and Marketing Ethics
Group Needs
Micro-Macro
Dilemma
Individual Needs
0
Social
Responsibility
Should All
Needs Be
Satisfied?
What if Profits
Suffer?
The Marketing Concept Guides Ethics
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Production
• Customer satisfaction
• Utility
• Form utility
• Task utility
• Time utility
• Place utility
• Possession utility
• Innovation
• Micro-marketing
•
•
•
•
Pure subsistence economy
Macro-marketing
Economies of scale
Universal functions of
marketing
• Buying
• Selling
• Transporting
• Storing
• Standardization and
grading
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Financing
• Risk-taking
• Market information
• Intermediary
• Middleman
• Facilitators
• E-commerce
• Economic system
• Planned economic
system
•
Market-directed economic
system
• Simple trade era
• Production era
• Sales era
• Marketing department era
• Marketing company era
• Marketing concept
• Production orientation
• Marketing orientation
• Customer value
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Micro-macro dilemma
• Social responsibility
• Marketing ethics
© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin