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Chapter 1 An Overview of Marketing What is Marketing? A Philosophy An Attitude A Perspective A Management Orientation A Set of Activities, including: Products Pricing Promotion Distribution What is Marketing? American Marketing Association Definition Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Marketing Management Philosophies Philosophy Production Sales Market Societal Key Ideas Focus on efficiency of internal operations Focus on aggressive techniques for overcoming customer resistance Focus on satisfying customer needs and wants Focus on satisfying customer needs and wants while enhancing individual and societal well-being The Marketing Concept Focuses on customer wants and needs to distinguish products from competition Integrates all organization’s activities to satisfy customer wants and needs Achieves organization’s long-term goals by satisfying customer wants and needs http://acsi.asqc.org Customer Satisfaction is Key How satisfied are your customers? How do you know? What causes different levels of satisfaction? What Customers Like - Q1/2000 Top: Nondurables - How can you screw up ketchup? Middle: Durables - More complexity means more can go wrong Bottom: Services - Stressed frontline workers/low wages Most recent Results Example Industry Satisfaction Score Last Change Beverage 84 + 1.2% Apparel 79 NC Autos 78 - 1.3% Police (suburban) 78 + 9.8% Commercial Banks 68 - 2.9 National News 64 + 3.2% Internal Revenue 51 - 3.8% American Satisfaction Index Results http://acsi.asq.org/) The American Customer Satisfaction Index Customization & Reliability Quality Relative to the Price Paid Perceived Quality Customer Complaints + - + + Perceived Value + + Overall Customer Satisfaction (ACSI) + Customer Expectations Past Experiences, Word-of-Mouth Future Predictions + Customer Loyalty Ultimate Dependent Variable (proxy for profitability) 100% Satisfaction/Retention Metrics Apostles zone of indifference 20 40 60 Retention 80 zone of affection 0 Terrorists zone of defection Extremely Somewhat Slightly Satisfied Very Dissatisfied Dissatisfied Dissatisfied Satisfied Satisfaction “Putting the Service-Profit Chain to Work,” James L. Heskett, et al, Harvard Business Review, March-April, 1994, PP 164-174. The Profit Chain Internal Service Quality Employee Satisfaction Workplace design Job design Employee Selection Employee development Employee rewards Employee recognition Tools for serving customers Employee Retention External Service Value Employee Productivity Operations designed and delivered to meet customer needs Retention Repeat business Referral Relationship Marketing Customer Satisfaction Customer Loyalty Revenue Growth & Profitability Sales vs. Market Orientations Organization’s Focus Sales Orientation Market Orientation Firm’s Business For Whom? Primary Profit Goal? Tools to Achieve Inward Selling goods Everybody Maximum Primarily promotion and services sales volume Outward Satisfying wants and needs Specific Customer Coordinated groups of satisfaction use of all marketing people activities The Organization’s Focus Key Issues in Developing Competitive Advantage Create Customer Value Maintain Customer Satisfaction Build Long-Term Relationships Defining a Firm’s Business “Benefits” instead of “goods/services” Ensures a customer focus Encourages innovation Stimulates an awareness of customer change Marketing Process Activities Understand the organization’s mission Set marketing objectives Gather, analyze, interpret “SWOT” information Develop a marketing strategy Implement the marketing strategy Design performance measures Evaluate marketing efforts--change if needed