MARKETING
Real People, Real Choices
Fourth Edition
CHAPTER 1
Welcome to the
World of Marketing:
Creating and Delivering Value
Why study Marketing
• Who pays your salary when you start
working?
• Do you like meeting new people,
traveling and seeing the world?
• Would you like to have the power to
make others to do what you want?
• Would you like to own your own
business someday? Or be a President /
CEO of a company?
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Some marketing careers
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Marketing departments
Marketing Consultancies
Brand consultancy
Marketing research
International marketing
Retailing
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What is Marketing
Marketing is an organizational function
and a set of processes for creating,
communicating and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
American Marketing Association
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Marketers do it to satisfy needs…
• Most successful firms practice the marketing
concept
– first identify consumer needs and then
provide products that satisfy those needs
• A need is the difference between a
consumer’s actual state and some ideal or
desired state
– physical needs (e.g. hunger, thirst, etc.)
– psychological needs (self-esteem,
companionship, etc.)
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Needs versus Wants
• A need is the difference between the
actual and ideal states of being
• A want is a desire for a particular
product used to satisfy that need
– wants are culturally and socially
influenced (e.g. formal wear for prom;
I-Pods and peer pressure, diamond
rings and engagement, etc.)
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Benefits, Demand, and Markets
• A product delivers a benefit when it satisfies a
want
• Want coupled with the resources to satisfy it
results in demand
• A market consists of all the consumers with
demand
• E.g. you have a need to move from home to
the office; so you want a car; when you have
the money to buy you demand a car; all those
who demand a car constitute the market for a
car.
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Marketing Creates Utility
• Form utility – transforming raw-materials to
finished products (e.g. making cars from
sheet steel)
• Place utility – making products available
where they are wanted (e.g. selling surf
boards at Myrtle Beach)
• Time utility – making products available when
they are wanted (e.g. selling winter clothing in
Fall)
• Possession utility – derived by owning, using
and enjoying the product (e.g. self-expression
by wearing an i-pod)
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Exchange Relationships
• Exchange - the heart of every marketing
act
• An exchange occurs when something is
obtained for something else in return
• Both parties must willingly make the
exchange
• Each party must be at liberty to reject
the exchange
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What Can Be Marketed?
• Consumer Goods and Services
• Business-to-Business Goods and
Services – aircraft, ships, industrial
machinery
• Not-for-Profit Marketing – museums,
churches, zoos, etc.
• Idea, Place, and People Marketing (antismoking; Oregon; Paris Hilton, Jessica
Simpson, etc.)
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The Value Proposition
• Value: All benefits received from buying a
product / service (Rembrandt toothpaste
benefits?)
• Marketing communicates these benefits as
the value proposition (Rembrandt: The
whitening toothpaste)
• Costs: All costs incurred (including time and
effort) in buying the product / service
• Value = Benefits / Costs
• Value is subjective: Think about brands you
love and those you don’t love
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Providing Value to customers
• Distinctive Competency – what is it that the
firm does better than the competition? (What
does Apple do better than competition?)
• Differential Benefit – How can we leverage
the distinctive competency to provide
something unique which customers want.
(How has Apple done this?)
• Competitive advantage – Strategy-speak for
the ability to provide consumers with
something the competition cannot (What is
Apple’s competitive advantage?)
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Value Chain Activities
• The series of activities involved in converting
business inputs (e.g. raw-materials) into
finished products for final sale.
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Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service
• Competitive advantage occurs when a firm
performs one or more of these activities
better than the others
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Marketing as a Process
• Marketing planning – some questions:
– What product benefits will our customers
be looking for in 3-5 years?
– What capabilities does our firm have that
set it apart from the competition?
– What additional customer groups might
provide important segments for us in the
future?
– What legal issues may affect our business?
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Target Markets
• Mass Market - all possible customers
regardless of differences in their specific
needs and wants
– developing a basic product and a single
strategy for everyone (e.g. Morton’s salt)
• Market segments - distinct groups of
customers within a larger market (e.g. the
various I-pods and Shuffle)
• A target market - an organization’s chosen
segment (what is the target market for the
shuffle, Hollister jeans?)
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Positioning the Product
• Plan how the target market should
perceive the product in comparison to
competitors’ brands - the market
position
• What is the market position of
Mercedes? BMW? Toyota? Apple?
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The Marketing Mix
• Product – features, benefits, packaging,
brand name, size, weight, color, etc.
• Place – where is it available
• Price – list price, discounts, rebates,
pricing strategy, etc.
• Promotion – informing and persuading
consumers about our product.
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The Evolution of Marketing
• Production Era – product focus
– Manufacture at lowest cost
• Selling Era – sales focus
– Sell! Sell! Sell! At any price you can get!
• Consumer Orientation – consumer focus
– Give what the consumer needs/wants
• New Era Orientation – relationship focus
– Build customer loyalty
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New Era Orientation
• Customer relationship management
– Easier and cheaper selling to an existing
customer than finding a new customer
– E.g. Frequent Flyer programs, etc.
• Social benefits
– Pollution control, green marketing,
recyclables, etc.
• Accountability
– Marketing metrics – each marketing action
should have measurable results
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