Defining Marketing
• Marketing
–The process of creating, distributing, promoting,
and pricing goods, services, and
ideas to facilitate satisfying exchange
relationships with customers
in a dynamic environment
• Customers
–The purchasers of organizations’
products; the focal point of all
marketing activities
Copyright © Houghton Mifflin Company. All rights reserved.
1–1
Components
of Strategic
Marketing
FIGURE 1.1
Copyright © Houghton Mifflin Company. All rights reserved.
1–2
Marketing Focuses on Customers
• Target Market
–A specific group of customers on whom an organization
focuses its marketing efforts
•
•
•
•
Large or small customer groups
Single or multiple product markets
Single or multiple products
Local to global markets
• What about Milk?
• Chevy?
• Corvette?
Copyright © Houghton Mifflin Company. All rights reserved.
1–3
Marketing Deals with Products,
Distribution, Promotion, and Price
• The Marketing Mix
–Four marketing activities—product, distribution,
promotion, and pricing—that a firm can control to meet
the needs of customers within its target market
Product
Distribution
Promotion
Target
Market
Pricing
Copyright © Houghton Mifflin Company. All rights reserved.
1–4
Marketing Mix Variables
Product
Distribution
Goods, services, or ideas that satisfy
customer needs
The ready, convenient, and timely
availability of products
Promotion
Activities that inform customers about
the organization and its products
Pricing
Decisions and actions that establish
pricing objectives and policies and set
product prices
Copyright © Houghton Mifflin Company. All rights reserved.
1–5
Marketing Builds Satisfying Exchange
Relationships
• Exchange
–The provision or transfer of goods, services, or ideas in
return for something of value
FIGURE 1.2
Copyright © Houghton Mifflin Company. All rights reserved.
1–6
Marketing Builds Satisfying Exchange
Relationships (cont’d)
• Exchange Conditions
–Two or more participants have something of value that
the other party desires.
–Exchange provides mutual benefit/satisfaction.
–Each party has confidence in the exchange value of the
other party’s offering.
–Each party must meet the expectations of the exchange
to become trusted by the other parties.
–So…..does this sound like a date?
Copyright © Houghton Mifflin Company. All rights reserved.
1–7
Marketing Occurs in a Dynamic
Environment
• Marketing Concept
–A philosophy that an organization should try to satisfy
customers’ needs through a coordinated set of activities
that also allows the organization to achieve its goals
–Question: Do all companies practice mktg concept?
–Customer satisfaction
• Analysis of customers’ current and long-term needs
• Analysis of competitors’ capabilities
• Integration of firm’s resources
• How?……research!
Copyright © Houghton Mifflin Company. All rights reserved.
1–8
Evolution of the Marketing Concept
Product
Orientation
Late 19th century: efficient production of goods
allowed firms to meet strong customer demand.
Sales
Orientation
Mid-1920s–early 1950s: weakened demand
required that products would have to be “sold.”
(personal selling, advertising, and distribution
was the focus)
Marketing
Orientation
Early 1950s–2000s: adopting a customer focus
means a commitment to researching and
responding to customer needs.
FIGURE 1.3
Copyright © Houghton Mifflin Company. All rights reserved.
1–9
Implementing the Marketing Concept
• Becoming marketing oriented requires
–establishing an information system to discover
customers’ needs and using the information to create
satisfying products. MIS majors….That’s you!
–coordinating all marketing activities
by restructuring the organization. Mktg majors!
–obtaining the support of all
managerial and staff levels
in the organization. Mgmt majors!
Copyright © Houghton Mifflin Company. All rights reserved.
1–10
Managing Customer Relationships
• Relationship Marketing
–Establishing long-term, mutually satisfying buyer-seller
relationships allowing for cooperation and mutual
dependency
• Increased value of customer (loyalty) over time results in
increased profitability.
Copyright © Houghton Mifflin Company. All rights reserved.
1–11
Managing Customer Relationships (cont’d)
• Customer Relationship Management (CRM)
–Using information about customers to create marketing
strategies that develop and sustain desirable customer
relationships
• Identifying buying-behavior patterns of customers
• Using behavioral information to focus on the most
profitable customers
• Amazon.com
Copyright © Houghton Mifflin Company. All rights reserved.
1–12
Value-Driven Marketing
• Value
–A customer’s subjective assessment of benefits relative
to the costs in determining the worth of a product
• Customer value = customer benefits – customer costs
–Customer benefits
• Anything desired by the customer that is received in an
exchange
–Customer costs
• Anything a customer gives up in an exchange for benefits
–Monetary price of the benefit
–Search costs (time and effort) to locate the product
–Risks associated with the exchange
Copyright © Houghton Mifflin Company. All rights reserved.
1–13
The Importance of Marketing in Our
Global Economy
• Marketing Costs Consume a Sizable Portion of
Buyers’ Dollars
• Marketing Is Used in Nonprofit Organizations
• Marketing Is Important to Business and the
Economy
• Marketing Fuels Our
Global Economy
Copyright © Houghton Mifflin Company. All rights reserved.
1–14
The Importance of Marketing in Our
Global Economy (cont’d)
• Marketing Knowledge Enhances Consumer
Awareness
• Marketing Connects People Through Technology
• Socially Responsible Marketing Can Promote the
Welfare of Customers and Society
• Marketing Offers Many
Exciting Career Prospects
Copyright © Houghton Mifflin Company. All rights reserved.
1–15
Transparency Figure 1I
Starting Salaries for College Graduates
Source: American Demographics, December 2000, p. 27. Adapted with permission.
Copyright © Houghton Mifflin Company. All rights reserved.
1–16
After reviewing this chapter you should:
• Be able to define marketing as focused on customers.
• Know the meaning of important marketing terms,
including target market, marketing mix, marketing
exchanges, and marketing environment.
• Be more aware of the marketing concept and marketing
orientation.
• Understand the importance of building customer
relationships.
• Have learned about the process of marketing
management.
• Recognize the important role of marketing in our society.
Copyright © Houghton Mifflin Company. All rights reserved.
1–17
Chapter 1
Supplemental Slides
Copyright © Houghton Mifflin Company. All rights reserved.
1–18
Key Terms and Concepts
• The following slides (a listing of terms and
concepts) are intended for use at the instructor’s
discretion.
• To rearrange the slide order or alter the content
of the presentation
–select “Slide Sorter” under View on the main menu.
–left click on an individual slide to select it; hold and drag
the slide to a new position in the slide show.
–To delete an individual slide, click on the slide to select,
and press the Delete key.
–Select “Normal” under View on the main menu to return
to normal view.
Copyright © Houghton Mifflin Company. All rights reserved.
1–19
Important Terms
• Marketing
–The process of creating, distributing, promoting,
and pricing goods, services, and ideas to facilitate
satisfying exchange relationships with customers
in a dynamic environment
• Customers
–The purchasers of organizations’ products; the focal
point of all marketing activities
• Target Market
–A specific group of customers on whom an organization
focuses its marketing efforts
Copyright © Houghton Mifflin Company. All rights reserved.
1–20
Important Terms
• The Marketing Mix
–Four marketing activities—product, distribution,
promotion, and pricing—that a firm can control to meet
the needs of customers within its target market
• Product
–Goods, services, or ideas that satisfy customer needs
• Distribution
–The ready, convenient, and timely availability of
products
• Promotion
–Activities that inform customers about the organization
and its products
Copyright © Houghton Mifflin Company. All rights reserved.
1–21
Important Terms
• Pricing
–Decisions and actions that establish pricing objectives
and policies and set product prices
• Exchange
–The provision or transfer of goods, services, or ideas in
return for something of value
• Marketing Concept
–A philosophy that an organization should try to satisfy
customers’ needs through a coordinated set of activities
that also allows the organization to achieve its goals
Copyright © Houghton Mifflin Company. All rights reserved.
1–22
Important Terms
• Relationship Marketing
–Establishing long-term, mutually satisfying buyer-seller
relationships allowing for cooperation and mutual
dependency
• Customer Relationship Management (CRM)
–Using information about customers to create marketing
strategies that develop and sustain desirable customer
relationships
• Value
–A customer’s subjective assessment of benefits relative
to the costs in determining the worth of a product
Copyright © Houghton Mifflin Company. All rights reserved.
1–23
Important Terms
• Customer Benefits
–Anything desired by the customer that is received in an
exchange
• Customer Costs
–Anything a customer gives up in an exchange for
benefits
• Marketing Management
–The process of planning, organizing, implementing, and
controlling marketing activities to facilitate exchanges
effectively and efficiently
Copyright © Houghton Mifflin Company. All rights reserved.
1–24
Important Terms
• Effectiveness
–The degree to which an exchange helps an
organization achieve its objectives
• Efficiency
–The process of minimizing the resources an
organization must spend to achieve a specific level
of desired exchanges
Copyright © Houghton Mifflin Company. All rights reserved.
1–25
Transparency Figure 1D
Percentage of Sales Online by Retail Segment
Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6. Used with Permission.
Copyright © Houghton Mifflin Company. All rights reserved.
1–26