Download Welcome to the World of Marketing: Create and Deliver Value

Chapter One
Welcome to the World
of Marketing:
Create and Deliver Value
Marketing: Real People, Real Choices, 8e
Solomon, Marshall, and Stuart
Copyright © 2016 Pearson Education, Inc.
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Chapter Objectives
• Explain what marketing is, including the
marketing mix, what can be marketed, and the
value of marketing
• Explain the evolution of the marketing
concept
• Understand value from the perspectives of
customers, producers, and society
• Explain the basics of market planning
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Real People, Real Choices:
Decision Time at Pandora
• Which option should be pursued?
– Option 1: Launch an ad campaign on radio
stations, in music magazines, and at record stores
– Option 2: Build buzz about Pandora through word
of mouth
– Option 3: Sell the service to a large chain of record
stores, a music magazine, or even a record label
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Marketing: What is it?
• As consumers, you all know a lot about it!
• Marketing is first and foremost about
satisfying customer needs in a profitable
manner
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AMA Definition of Marketing
• 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.
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Marketing Defined: Activities,
Institutions, Processes
• Marketing includes many different activities
– More than just sales and advertising
– Involves interactions with non-marketers:
Finance, HR, MIS, Operations, Accounting, NPD …
• Marketing is also a decision process
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Marketing Defined: Create,
Communicate, Deliver Value
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Marketing Facilitates Exchange
• Exchange occurs when one party gives up
something and in return for receiving
something else
• Conditions for Exchange
– At least two people or organizations must be
willing to make a trade.
– Have something the other party wants
– Agree on value of exchange and terms
– Each party free to accept or reject exchange
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Marketing Defined: What is Marketed?
• Product: any good,
service, or idea
- Consumer goods/services
- Business-to-business
goods/services
- Not-for-profit marketing
- Idea, place, and
people marketing
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What is Marketing?
• Anything from “everyday” goods/services to
“fun” experiences and “interesting” people to
“serious” social issues
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Marketing Defined: Meeting
Stakeholder Needs
• Marketing concept
– Modern marketers practice the marketing
concept: identifying and satisfying the needs of
consumers to ensure profitability.
• Marketing meets the needs of diverse
stakeholders
- Stakeholders include consumers, business buyers,
sellers, investors, and community residents.
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Needs, Wants, and Benefits
• Needs
– Difference between actual and desired state
– Can by physiological or psychological
• Wants
– Desire to satisfy a need in a particular way
– Influenced by history, past experience, and culture
• Benefits
– Consumer received benefit when need satisfied
• Demand
– Customers’ desires for products coupled with the
resources needed to obtain them
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Markets and Marketplaces
• A market consists of all consumers who share
a common need that can be satisfied by a
specific product, and who have resources,
willingness and authority to purchase.
• A marketplace is any location or medium used
to facilitate an exchange.
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Collaborative Consumption
• Consumers increasingly would rather rent
than purchase the products they use.
– Examples?
• Traditional marketers are also looking to take
advantage of this trend.
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Marketing Creates Utility
• Utility represents the sum of benefits a
consumer receives from use of a product
– Form utility
– Place utility
– Time utility
– Possession utility
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Place Utility
• Rent the Runway is a new
service that rents high-end
dresses from fashion
designers and rents them at
a one-tenth of the cost of
buying the same garment in
the store.
Rent the Runway
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Marketing Defined: Value for Society
• Is it possible to make profits and contribute to
society and the planet in a positive way?
• Corporate responsibility at Target
– In 2012, Target set goals for all seafood sold in
stores to be sustainable and traceable.
– Reusable bag program saves consumers $7 million
– 50+% of apparel is labeled “machine wash cold” to
help reduce energy consumption.
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Summary: Marketing Defined
• Marketing encompasses activities and process
that create, communicate, deliver value-based
exchanges.
– Benefits to stakeholders beyond just businesses
and consumers
How does the definition of marketing relate to you as
a consumer? To your future career?
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Evolution of the Marketing Concept
•
•
•
•
Production era
Selling era
Relationship era
Triple bottom-line era
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Production Era
• Marketing dominated by a production
orientation
– A management philosophy that emphasizes the
most efficient ways to produce and distribute
products
• Marketing promotions played a minor role
• Henry Ford’s Model T and Ivory soap are
examples of products that were created under
a production orientation
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Sales Era
• Dominated by selling orientation
– A managerial view of marketing as a sales
function, or a way to move products out of
warehouses to reduce inventory
– Emphasis on aggressive promotional activities
• Post WWII, production capacity exceeded
demand
– Led businesses to focus on one-time sales of
goods rather than repeat business
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Relationship Era
• Focused upon a consumer orientation
– A management philosophy that emphasizes
satisfying customers’ needs and wants
• Marketing plays a more central role
– Emergence of the marketing concept
– Total Quality Management (TQM) and other
quality initiatives gains wide acceptance
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Triple Bottom-Line Era
• Management seeks to
maximize financial,
environmental, and social
bottom lines.
– Emergence of societal
marketing concept
– Emphasis on ROI
measurement across all
three areas
This ad focuses on the
environmental bottom line
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Sustainability
• Sustainability is about creating products that
meet present needs while ensuring future
generations can have their needs met
– Green marketing is one type of sustainable
business practice
Visit adsoftheworld.com/ to see examples of
Volkswagen’s green marketing and sustainable
business practices
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What’s Next in the Evolution
of Marketing?
• The Attention Economy
– In the Internet Era, success measured by share of
mind rather than simply share of market.
• Big Data
– Ford employs 200+ data scientists to generate
insights leading to valuable auto innovations
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The Changing World of Marketing
• Marketing has experienced many changes
– Production  Selling  Relationship  Triple
Bottom Line
• Marketing in the midst of an exciting period of
rapid change right now!
What skills will marketers need to succeed in a “Big
Data” era?
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Ethical/Sustainable Decisions in the
Real World
• “Vaping” is the process of inhaling vapors from an
electronic cigarette or a similar device
– Thanks to clever (and unregulated) marketing, many
young people don’t believe vaping is dangerous
– However, many flavors still contain nicotine
Should e-Cigarettes be marketed like any other widely
available consumer product, such as milk or music?
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The Value of Marketing and the
Marketing of Value
• Value is benefits received by the consumer
from a product relative to total costs
• Marketing activities lead to value creation
through innovations that enhance customer
benefits and reduce costs
• Marketing promotional activities
communicate the value proposition
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Value from the Customer’s Perspective
• Customer perspective:
– Value is the ratio of perceived benefits to
perceived costs
– Value proposition includes the whole bundle of
benefits the firm promises to deliver, not just the
benefits of the product itself
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Value from the Seller’s Perspective
• Value for the seller can take many forms
• What is the economic value of a single
customer?
– Typically more costly to acquire than to retain
• Marketers should look to increase value
through co-creation
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Table 1.2: An Example of a Customer
Service Scorecard
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Table 1.3: How Some Firms Achieve a
Competitive Advantage with a
Distinctive Competency
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Figure 1.2
A Value Chain for the Apple iPod
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Figure 1.3
Steps in the Value Chain
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Consumer Generated Value: From
Audience to Community
• Everyday people are generating value instead
of just buying it
http://www.crashthesuperbowl.com
• Social networking continues to grow and
leverages Web 2.0
• Open source business models are on the rise.
http://www.moodle.com
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Value from Society’s Perspective
• Marketing transactions may add or subtract
value from society
– Stressing socially responsible and ethical decisions
is good for business
• Marketing often faces criticisms
– “Dark side” marketing and consumption issues
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Value of Marketing
• Marketing activities facilitate exchanges that
create, communicate, and deliver value to
customers.
• Sellers and society at large also derive value
from these exchanges.
-
But marketing is sometimes misused
Are criticisms of marketing justified?
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Marketing is a Process
• Marketing planning is a major portion of the
process and involves:
– Analyzing the marketing environment
– Developing the marketing plan
– Deciding on a market segment
– Choosing the marketing mix – product, price,
promotion place
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Real People, Real Choices
Decision Made at Pandora
• Joe chose option 2
– Implementation: Pandora chose personal
communication to build awareness. Town halls
were led by the firm’s founder; email, blogs,
tweets, and Facebook were also instrumental.
Listeners wore branded merchandise. Service was
made available on as many devices as possible
– Measuring success: As of mid-2010, Pandora
boasted 50 million listeners
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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America.
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